FORM OF SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
FORM
OF
SETTLEMENT
AGREEMENT AND RELEASE OF CLAIMS
This
Settlement Agreement and Release of Claims (this “Agreement”)
is
entered into as of the [__] day of [__________], 2008 (“Effective
Date”),
by
and between g8wave Holdings, Inc. (the “Company”),
and
[_______________] (“Investor”)
(Company and Investor are hereinafter collectively referred to, at times,
as the
“Parties,”
and
each individually, as a “Party”).
RECITALS
WHEREAS,
on or about August 13, 2007, the Company issued and sold to Investor, in
a
private placement (the “Offering”),
[____] shares of the Company’s common stock and a warrant to purchase up to an
additional [_____] shares of the Company’s common stock at an exercise price of
$2.25 per share.
WHEREAS,
a potential dispute (the “Potential
Dispute”)
has
arisen between the Company and Investor in connection with the
Offering.
WHEREAS,
the Company does not believe that it has any liability to Investor in connection
with the Offering, but has determined that the economic and other costs (such
as
diversion of management’s time and attention) of defending the Potential Dispute
would exceed the costs of settling with Investor and, therefore, the Parties
desire to resolve the Potential Dispute and any and all Claims (as defined
herein) between them as of the Effective Date.
NOW,
THEREFORE, in consideration of the mutual promises, covenants, representations,
and warranties contained herein, and the releases contained herein, the Parties
agree as follows.
1.
Issuance
of Warrant.
As
consideration for the release given by Investor pursuant to Section 2, no
later
than two business days after the date hereof, the Company shall issue to
Investor a warrant to purchase up to [________] shares of the Company’s common
stock (the “New
Warrant”),
which
New Warrant shall be substantially in the form attached as Exhibit
A
to this
Agreement. The New Warrant shall have a per share exercise price of $0.05,
be
for a term of ten (10) days, and shall expire at 5:00 P.M. Eastern Standard
Time
on the tenth (10th)
day
following the date of hereof.
2.
Releases
by Investor.
Except
for such obligations, rights or claims as may be created by, contingent upon
or
arise from the terms and conditions of this Agreement, and expressly contingent
upon Investor’s receipt of the New Warrant, Investor, on behalf of itself and
each of its agents, brokers, legatees, devisees, executors, trustees,
beneficiaries, affiliates, administrators, successors in interest, predecessors
in interest, assigns, corporations, partners, entities, attorneys, directors,
officers, employees, insurers, and representatives (collectively, the
“Investor
Releasors”),
hereby releases and forever discharges the Company, and each of its agents,
brokers, affiliates, successors in interest, predecessors in interest, assigns,
attorneys, directors, officers, employees, insurers, and representatives,
(collectively, the “Company
Releasees”),
and
each of them, separately and collectively, from any and all claims, losses,
liens, demands, causes of action, obligations, damages and liabilities of
any
kind or nature (collectively, the “Claims”),
that
relate to any time up to and including the Effective Date, whether known
or
unknown, that the Investor Releasors have, had in the past, or may have in
the
future, against the Company Releasees, or any of them, of any type whatsoever,
including but not limited to Claims arising out of, in connection with, or
relating to, the Offering or the Potential Dispute.
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3.
California
Civil Code Section 1542.
Except
for such obligations, rights or claims as may be created by, contingent upon
or
arise from the terms and conditions of this Agreement, Investor hereby agrees
that this Agreement is a full and final accord and satisfaction and release
as
to all Claims for any injuries and damages that Investor may ever assert
against
the Company in connection with any time up to and including the Effective
Date,
relating to the Offering or the Potential Dispute, and/or any other Claims
relating thereto, whether now known or unknown, contingent or accrued, and
whether now existing or resulting in the future. In furtherance of this
intention, and as further consideration for the Agreement, Investor hereby
waives and relinquishes all rights under Section 1542 of the California Civil
Code, which provides:
"A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH
THE DEBTOR.”
Accordingly,
the releases given herein shall remain in effect notwithstanding the discovery
or existence of any additional facts or Claims in existence at the time this
Agreement was executed.
4.
Representations
and Warranties.
The
Parties hereto, and each of them, represent and warrant to each other as
follows:
(a)
Each
of
the Parties hereto has been advised to seek independent legal advice from
attorneys
of its own choice with respect to the advisability of making the settlement
and
releases provided for herein, and with respect to the advisability of executing
this Agreement;
(b)
Each
of
the Parties has had an attorney review this Agreement prior to the execution
of
this Agreement;
(c)
In
negotiating this Agreement, each of the Parties has made various statements
and
representations to the other Party. Nevertheless, each of the Parties
specifically does not rely upon any statement, representation, legal opinion,
or
promise of the other Party in executing this Agreement or in making the
settlement provided for herein, except as expressly stated in this
Agreement;
(d)
Each
of
the Parties has made such investigation of the law pertaining to this settlement
and this Agreement, and of all the matters pertaining thereto, as it deems
necessary;
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(e)
The
terms
of this Agreement are contractual and not a mere recital. This Agreement
is the
result of negotiations between the Parties, each of whom has participated
in the
drafting hereof;
(f)
This
Agreement has been carefully read by, the contents hereof are known and
understood by, and it is signed freely by, each of the Parties;
(g)
Each
of
the Parties agrees that it will not take any action which would interfere
with
the performance of this Agreement by the other Party hereto, or which would
adversely affect any of the rights provided for herein; and
(h)
The
Parties each represent and warrant that (i) it is duly authorized to execute,
deliver, and perform this Agreement, (ii) it has duly executed this Agreement,
and (iii) this Agreement is a valid and binding agreement as to it and is
fully
enforceable against it according to the terms of the Agreement.
5.
Investor
Representations.
Investor
hereby further represents and warrants to the Company as follows:
(a)
Investor
owns all right, title and interest in and to its Claims and has not sold,
assigned or otherwise transferred to any third party any interest it may
have in
any of its Claims;
(b)
The
New
Warrant and the shares of the Company’s common stock issuable upon exercise of
the New Warrant (the “Warrant
Shares”
and,
collectively with the New Warrant, the “Securities”)
are
being acquired for investment for Investor’s own account, not as a nominee or
agent and not with a view to the resale or distribution of any part
thereof;
(c)
Investor has
had
an opportunity to ask questions and receive answers and other information
from
the Company regarding the terms and conditions of the Securities and the
business, properties, prospects, financial condition, and results of operations
of the Company, and Investor has received sufficient information on which
to
make an investment decision;
(d)
Investor
understands that the purchase of the Securities involves substantial risk.
Investor is an investor in securities of companies in the developmental stage
and acknowledges that it can bear the economic risk of its investment
and has
such
knowledge and experience in financial or business matters that it is capable
of
evaluating the merits and risks of its investment in the Securities. It has
not
been organized for the purpose of acquiring the Securities;
(e)
Investor
is an “accredited investor” within the meaning of Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission (the “SEC”)
under
the Securities Act of 1933, as amended (the “Securities
Act”);
(f)
Investor
understands that the Securities are characterized as “restricted securities”
under the federal securities laws inasmuch as they are being acquired in
a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration
under
the Securities Act only in certain limited circumstances. In this connection,
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby;
and
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(g)
Investor
understands that the certificates evidencing the Securities will bear a legend
substantially similar to the following, as well as any other legends required
by
applicable law:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.”
6.
Registration Rights; Market Stand-Off Agreement
(a)
In
the
event that Investor exercises the New Warrant, the Company shall prepare
and
file a registration statement (the “Registration
Statement”)
with
the SEC covering the resale of the Warrant Shares by no later than forty-five
(45) days following the completion of the Company’s audit for the year ended
December 31, 2007 and the filing of the Company’s Annual Report on Form 10-KSB
for the year then ended. The Company shall use its commercially reasonable
efforts to have the Registration Statement declared effective by the SEC
as soon
as possible after the initial filing and agrees to use its commercially
reasonable efforts to respond promptly to any SEC comments or questions
regarding the Registration Statement. Subject to the other provisions contained
herein, including but not limited to the Suspension Right below, the Company
will maintain the effectiveness of the Registration Statement from the date
of
the effectiveness of the Registration Statement until 24 months after that
date
or until the Warrant Shares may be sold without registration pursuant to
Rule
144, whichever is first to occur.
(b)
Notwithstanding
any other provision of this Agreement or any related agreement to the contrary,
the Company shall have the right (the “Suspension
Right”),
at
any time, to suspend the effectiveness of the Registration Statement and
offers
and sales of the Warrant Shares pursuant thereto whenever, in the good faith
judgment of the Company, (i) continuing such effectiveness or permitting
such
offers and sales could reasonably be expected to have an adverse effect upon
a
proposed sale of all or substantially all of the assets of the Company or
a
merger, acquisition, reorganization, recapitalization or similar current
transaction materially affecting the capital, structure, or equity ownership
of
the Company, (ii) there exists a material development or a potential material
development with respect to or involving the Company that the Company would
be
obligated to disclose in the prospectus used in connection with the Registration
Statement, which disclosure, in the good faith judgment of the Company, after
considering the advice of counsel, would be premature or otherwise inadvisable
at such time, or (iii) the Registration Statement or related prospectus or
any
document incorporated or deemed to be incorporated therein by reference contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances, not misleading (a “Suspension
Event”).
In
the event that the Company shall determine to so suspend the effectiveness
of
the Registration Statement and offers and sales of the Warrant Shares pursuant
thereto, the Company shall, in addition to performing those acts required
to be
performed under the Securities Act and/or the Exchange Act of 1934, as amended,
or deemed advisable by the Company, deliver to Investor written notice thereof,
signed by the Chief Financial Officer or Chief Executive Officer of the Company.
Upon receipt of such notice, Investor shall discontinue disposition of the
Warrant Shares until Investor (x) is advised in writing by the Company that
the
use of the Registration Statement and prospectus (and offers and sales
thereunder) may be resumed, (y) has received copies of a supplemental or
amended
prospectus, if applicable, and (z) has received copies of any additional
or
supplemental filings which are incorporated or deemed to be incorporated
by
reference into such prospectus. The Company will exercise reasonable commercial
efforts to ensure that the use of the Registration Statement and prospectus
may
be resumed as quickly as practicable.
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(c)
The
Company's right to suspend the effectiveness of the Registration Statement
and
the offers and sales of the Warrant Shares pursuant thereto, as described
in
clause (b) above, shall be for a period of time (the “Suspension
Period”)
beginning on the date of the occurrence of the Suspension Event and expiring
on
the earlier to occur of (i) the date on which the Suspension Event ceases,
or
(ii) sixty (60) days after the occurrence of the Suspension Event; provided,
however,
that
there shall not be more than two Suspension Periods in any twelve (12) month
period.
(d)
The
Company shall notify Investor at any time when a prospectus relating thereto
is
required to be delivered under the Securities Act, upon discovery that, or
upon
the happening of any event as a result of which, the prospectus included
in such
registration statement, as then in effect, includes an untrue statement of
a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing. At the request of Investor, the Company shall
also
prepare, file and furnish to Investor a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as
thereafter delivered to the purchasers of such Shares, such prospectus shall
not
include an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein
not
misleading in light of the circumstances then existing. Investor agrees not
to
offer or sell any Warrant Shares covered by the Registration Statement after
receipt of such notification until the receipt of such supplement or
amendment.
(e)
The
Company may request Investor to furnish the Company such information with
respect to Investor and Investor's proposed distribution of the Warrant Shares
pursuant to the Registration Statement as the Company may from time to time
reasonably request in writing or as shall be required by law or by the SEC
in
connection therewith, and Investor agrees to promptly furnish the Company
with
such information.
(f)
Each
of
the Company and Investor shall indemnify the other party hereto and their
respective officers, directors, employees, affiliates and agents against
all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) by
the
indemnifying party of a material fact contained in any prospectus or other
document (including any related registration statement, notification or the
like) incident to any registration of the type described in this Section
6, or
any omission (or alleged omission) by the indemnifying party to state in
any
such document a material fact required to be stated therein or necessary
to make
the statements therein not misleading, and shall reimburse such indemnified
party for any legal and any other expenses reasonably incurred in connection
with investigating and defending any such claim, loss, damage, liability
or
action; provided,
that no
party will be eligible for indemnification hereunder to the extent that any
such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished or
required to be furnished by such party for use in connection with such
registration.
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(g)
Investor
hereby agrees that it will not, without the prior written consent of the
managing underwriter, during the period commencing on the date of the final
prospectus relating to the Company's initial underwritten public offering
and
ending on the date specified by the Company and the managing underwriter
(such
period not to exceed one hundred eighty (180) calendar days) (i) lend, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
securities of the Company, including (without limitation) the Warrant Shares
(whether now owned or hereafter acquired) or (ii) enter into any swap or
other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any securities of the Company, including (without
limitation) the Warrant Shares (whether now owned or hereafter acquired),
whether any such transaction described in clause (i) or (ii) above is to
be
settled by delivery of securities, in cash or otherwise. The foregoing covenants
shall apply only to the Company's initial underwritten public offering of
securities after the date hereof, shall not apply to the sale of any shares
by
Investor to an underwriter pursuant to an underwriting agreement and shall
only
be applicable to Investor if all the Company's executive officers, directors
and
greater than ten percent (10%) stockholders enter into similar agreements.
Investor agrees to execute an agreement(s) reflecting (i) and (ii) above
as may
be requested by the managing underwriters at the time of the initial
underwritten public offering, and further agrees that the Company may impose
stop transfer instructions with its transfer agent in order to enforce the
covenants in (i) and (ii) above. The underwriters in connection with the
Company's initial underwritten public offering are intended third party
beneficiaries of the covenants in this Section 6(g) and
shall
have the right, power and authority to enforce such covenants as though they
were a party hereto.
7.
Miscellaneous.
(a)
Severability.
In
the
event that any provision of this Agreement should be held to be void, voidable,
or unenforceable, the remaining portions hereof shall remain in full force
and
effect.
| (b) |
Modification.
|
This
Agreement may not be modified in any respect except by an instrument in writing
signed by all Parties.
| (c) |
Transfer.
|
6
Neither
Party shall assign or transfer this Agreement or any rights or obligations
hereunder without the prior written consent of the other Party, and any attempt
of assignment or transfer without such consent shall be void.
(d)
Attorney’s
Fees in the Event of Dispute.
If
any
legal action, dispute, or other proceeding arises or is commenced to interpret,
enforce or recover damages for the breach of any term of this Agreement,
the
prevailing party shall be entitled to recover from the non-prevailing party
all
reasonable attorney’s fees incurred in connection with such proceeding, in
addition to costs of suit.
(e)
Survival
of Representations and Warranties.
The
representations and warranties of this Agreement are deemed to survive the
date
of execution hereof.
(f)
No
Admission of Liability.
It
is
acknowledged, understood and agreed by the Parties that this is a settlement
of
a potential disputed claim, and that this release is not an admission of
liability or wrongful conduct by either Party. Each Party further agrees
that it
will not, and will cause its respective officers, directors, employees, agents,
representatives, and subsidiaries not to, directly or indirectly, whether
orally
or in writing, make any statements or representations to any third party
(i)
that the other Party was liable or admitted any liability in connection with
the
matters covered by this Agreement, and (ii) regarding the subject matter
of this
Agreement, including, but not limited to, any and all discussions preceding
the
negotiation and execution of this Agreement, except that either Party may
disclose the existence of this Agreement and may also disclose the specific
terms set forth herein as may be required pursuant to applicable law, including,
but not limited to, the rules and regulations of the Securities and Exchange
Commission.
(g)
Participation
in Drafting.
Each
Party has participated in, cooperated in, or contributed to the drafting
and
preparation of this Agreement. In any construction of this Agreement, the
same
shall not be construed for, or against, any Party, but shall be construed
fairly
according to its plain meaning.
(h)
Execution
of Further Documents.
Each
Party hereto will execute all further and additional documents and take such
further actions as may be reasonable and necessary to effectuate and carry
out
the provisions of this Agreement.
(i)
Counterparts;
Facsimile Signatures.
7
This
Agreement may be executed in counterparts and by facsimile, and each such
counterpart and/or facsimile signature shall be deemed to be an original,
and
all of which when taken together shall constitute one executed
agreement.
(j)
Entire
Agreement.
This
Agreement contains the entire agreement and understanding concerning the
subject
matter between the Parties and supersedes and replaces all prior negotiations,
proposed agreements and agreements, written or oral, between the Parties.
Each
of the Parties acknowledges that neither the other Party, nor any agent or
attorney of the other Party, has made any promise, representation or warranty
whatever, express or implied, not contained herein concerning the subject
matter
hereof to induce it to execute this instrument, and acknowledges that it
is not
executing this Agreement in reliance on any such promise, representation
or
warranty not contained herein.
(k)
Governing
Law; Jurisdiction; Venue.
This
Agreement shall be governed as to validity, interpretation, construction,
effect, and in all other respects by the laws of the State of Delaware. In
the
event of a dispute arising under or related to this Agreement, the Parties
submit to the sole and exclusive jurisdiction and venue of the courts of
the
Commonwealth of Massachusetts sitting in the city of Boston.
(l)
Notices
All
payments, notices, requests, demands and other communications hereunder shall
be
in writing and shall be deemed to have been duly given if physically delivered,
delivered by a nationally recognized overnight courier, or facsimile, with
written confirmation at the below address and number provided below for the
Party, except that all payments must be made by personal delivery or overnight
courier.
If
to the
Company:
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
Chief Financial Officer
With
a
copy to:
▇▇▇▇▇
▇▇▇▇▇▇ , Esq.
c/▇
▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
If
to
Investor:
8
[ADDRESS]
Facsimile
No.: [(___) ___-____]
[Signature
page follows]
9
BY
THEIR
SIGNATURES BELOW, EACH OF THE UNDERSIGNED REPRESENTS THAT IT HAS READ THE
FOREGOING AND FULLY UNDERSTANDS AND AGREES TO EACH AND ALL OF THE TERMS AND
CONDITIONS SET FORTH HEREIN.
IN
WITNESS WHEREOF, the Parties have each approved and executed this Agreement
on
the date set forth above.
__________________
By:
Its:
[INVESTOR]
__________________
By:
Its:
10
EXHIBIT
A
New
Warrant
[Attached]
11