EXHIBIT 10.14
PALLADIUM CAPITAL ADVISORS, LLC
000 XXXX XXXXXX, XXXXX 000
XXX XXXX, XXX XXXX 00000
Tel (000) 000-0000 Fax (000) 000-0000
Email xx@xxxxxxxxxxxxxxxx.xxx
January 4, 2007
Xxxx Xxxxxxxx
President and CEO
Towerstream Corporation
00 Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Re: Placement Agent Agreement
Dear Xxxx:
This letter agreement (the "Agreement") confirms our understanding with respect
to the engagement by Towerstream Corporation (the "Company") of Palladium
Capital Advisors, LLC ("PCA") as placement agent in connection with the sale of
up to $20 million of equity or equity-linked securities on a best efforts basis
through a private placement or similar unregistered transaction on terms that
have been or will be determined by Company and its advisors as set forth in the
Company's Confidential Private Placement memorandum dated December 21, 2006, as
may be revised by the Company from time to time (the "Transaction") to investors
(the "Investors"). For purposes hereof, the term "Transaction" also includes a
convertible loan or other type of investment convertible into or exchangeable
for or otherwise linked to the equity of the Company. The term of the Agreement
(the "Term") shall be for a period of twelve (12) months from the date hereof or
until earlier terminated by either party as described below (see Section 7
(Termination)).
1. Scope. The Company hereby engages PCA to act as placement agent ("Placement
Agent") during the Term in connection with the Transaction(s). The goal of
the engagement is to raise up to $20 million in capital for the Company to
be used for growth opportunities and general working capital purposes. PCA
shall assist the Company and shall, on behalf of the Company, contact such
potential investors as PCA and the Company agree in advance. PCA shall
assist the Company in effecting the Transaction(s), and shall use its best
efforts to offer and sell the securities in accordance with this Agreement.
PCA will market to those, and only those, investors as included in Addendum
A, as may be amended by mutual agreement of the parties from time to time,
and the Company shall retain the right, in its sole discretion, to accept
or reject investors identified by PCA. PCA's engagement by the Company
shall be exclusive solely as to the potential investors included in
Addendum A. PCA shall receive written approval from the Company prior to
marketing to any other investors who have not been included on Addendum A.
It is anticipated that the Company shall also engage its own legal counsel
and may require the services of an accounting firm.
2. Company Information. The Company shall cooperate with PCA in connection
with its financial review and analysis of the Company and shall provide PCA
with such information concerning the
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January __, 2007
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Company as PCA deems necessary or appropriate for such review and analysis
(collectively, the "Information").
PCA shall keep in confidence and shall use only for the purposes of
performing its obligations pursuant to this Agreement, and shall not,
without the Company's consent, disclose to any person any non-public
Information furnished by the Company to PCA except (a) its own counsel and
other advisors on a confidential basis, (b) to the Investors approved by
the Company in accordance with the terms hereof and (c) to such other
persons as such counsel has advised is required by applicable law, and then
only after informing the Company of such legal requirement and providing
the Company sufficient time to seek a protective order or otherwise prevent
or restrict such disclosure.
All Information provided by the Company shall be accurate and complete in
all material respects and shall not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not false or misleading. PCA does not assume responsibility for the
accuracy or completeness of the Information, including but not limited to
any disclosure materials related to the Transaction(s) except for such
information that is provided in writing by PCA to the Company that is
independently produced by PCA and not based on Information provided by the
Company or information available from generally recognized public sources.
The Company acknowledges and agrees that PCA will rely primarily on the
Information and on information available from generally recognized public
sources in performing its services hereunder, without having any obligation
to independently verify the same and that PCA has no obligation to
undertake an independent evaluation, appraisal or physical inspection of
any assets or liabilities of the Company. If at any time prior to the
completion of a Transaction an event occurs which would cause the
Information (as supplemented or amended) to contain an untrue statement of
a material fact or to omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading, the Company will notify PCA immediately of such
event.
3. Fees. The Company shall pay PCA the following amounts:
a. Private Placement Fee. PCA shall be paid upon consummation of the
Transaction(s) a transaction fee, payable in cash, of 7.0% of the
Gross Proceeds (as defined below) from the capital received, directly
or indirectly, by the Company solely from investors identified on
Addendum A, as may be amended by mutual agreement of the parties from
time to time, with respect to a Transaction (the "Transaction Fee"),
provided that in the event that any portion of such Transaction(s)
consists of debt (or similar) financing, then the foregoing
Transaction Fee with respect to such debt financing shall be adjusted
to 4.0% of the Gross Proceeds. For purposes hereof, "Gross Proceeds"
shall mean the fair market value of all of the consideration
(including, without limitation, cash, securities, other assets and
contingent payment amounts actually paid, plus debt and liabilities
assumed (including, without limitation, indebtedness for borrowed
money, pension liabilities and guarantees), license fees, royalty
fees, joint venture interests or other property, obligations or
services, but excluding payments made to exercise any convertible
securities) received by the Company or any of its security holders in
connection with any Transaction, directly or indirectly, from the sale
or exchange of the Company's equity securities issued in a Transaction
before the deduction of expenses related to such Transaction,
including the fee payable to PCA.
b. Placement Warrants. Upon consummation of a Transaction, the Company
will issue to PCA five-year stock purchase warrants (the "Placement
Agent Warrants"), equivalent to 5% of the shares issued in the
Transaction to investors included in Addendum A, taking into
Towerstream Corporation
January __, 2007
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consideration any increase in shares under a ratchet or similar
provision pursuant to which the number of shares initially purchased
is subsequently increased, with an "exercise price" equal to 100% of
the purchase price of the shares issued in the Transaction. The
exercise price is defined as the price at which PCA may convert the
Placement Agent Warrants into common shares of the Company. In
addition to the exercise price, PCA shall pay a "warrant cost" of
$0.001 per share (one-tenth of a cent) to the Company upon issuance of
the Placement Agent Warrants.
A separate Placement Agent Warrant Agreement shall be prepared after
consummation of the Transaction, and shall take the form of PCA's
standard warrant agreement, but shall be acceptable to the Company,
which contains the following terms, among others: the Placement Agent
Warrants are not transferable by the warrantholder other than to a
limited number of employees and affiliates of PCA subject to
compliance with all applicable securities laws; the Placement Agent
Warrants may be exercised as to all or any lesser number of shares of
equity securities commencing immediately after the date of the
consummation of the Transaction; the Placement Agent Warrants may be
exercised on a cash-less basis if not registered within 1 year of the
closing of the Transaction and be redeemable on the same terms as the
Transaction warrants; and the warrant agreement will contain
provisions for change of control, weighted average based anti-dilution
and customary piggy-back registration rights.
c. In the event consideration is to be paid in whole or in part by
installment payments, the portion of PCA's fee relating thereto shall
be calculated and paid when and as such installment payments are made.
d. Consideration received by the Company paid in whole or in part in the
form of securities or other noncash consideration will be valued at
its fair market value, as reasonably determined by an independent
third party to be mutually agreed upon by the Company and PCA, as of
the day prior to the closing of the Transaction (or later date on
which a contingent payment is made), provided, however, that if such
consideration consists of securities with an existing trading market,
such securities will be valued at the average of the last sales price
for such securities on the five trading days prior to the date of the
closing (or later date on which a contingent payment is made).
e. The foregoing fees (including the Placement Agent Warrants) are
payable for any Transaction that occurs during the Term or within 12
months thereafter with respect to investors included in Addendum A.
4. Expenses. In addition to the Transaction Fee and the Warrants, the Company
agrees to reimburse PCA, for its reasonable expenses incurred in connection
with this engagement approved in advance in writing by Company. These
expenses generally include travel costs and other customary expenses for
this type of transaction. Such expenses shall not exceed $25,000 in the
aggregate without the prior written consent of the Company. Legal fees
incurred by PCA to prepare, review and finalize this letter agreement will
not be reimbursable by the Company.
5. Advertisements. Upon a closing of a Transaction, the Company agrees that
PCA has the right to place advertisements in financial and other newspapers
and journals (whether in print or on the internet) at its own expense
describing its services to the Company hereunder, provided that the Company
has the right to review, comment on and approve all such advertisements
prior to publication.
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January __, 2007
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6. Indemnification. The Company shall indemnify PCA, its agents and affiliates
in accordance with Annex A.
7. Termination. This Agreement may be terminated at any time by either party
upon 5 days written notice to the other party, effective upon receipt of
written notice to that effect by the other party, or automatically upon
consummation of the Transaction. Upon termination, the Company shall have
no further obligation to PCA other than with respect to fees payable to PCA
as provided herein, provided that the provisions of Sections 3 through 9,
inclusive, and PCA's obligation to preserve the confidential information
provided to it by Company for an indefinite period, shall survive any such
termination.
8. Venue. The Company and PCA agree that any legal suit, action, or proceeding
arising out of or relating to this Agreement and/or the transactions
contemplated by this Agreement shall be instituted exclusively in the state
or federal courts located in New York County, New York. The parties further
irrevocably consent to the service of any complaint, summons, notice or
other process relating to any such action or proceeding by delivery thereof
to such party by hand or by registered or certified mail in the manner
prescribed in Section 9(f) hereof. The parties further irrevocably consent
that any judgment rendered by such court in the State of New York may be
entered in other courts having competent jurisdiction thereof. Without in
any way limiting the indemnification provisions in Annex A below, the
prevailing party shall have the right to recover any costs, including
attorneys' fees, in the event of any action brought to enforce any of the
terms or provisions of this Agreement. The parties agree that service may
be made by overnight mail at its address set forth herein in any action to
enforce any of the provisions herein. Without in any way limiting the
indemnification provisions in Annex A below, any action arising under or
related to this Agreement for compensation must be brought prior to 6
months following the later of (i) the closing of the Transaction, (ii)
notice of the claim giving rise to such action, or (iii) termination of
this Agreement, or such action shall be barred as untimely.
9. Miscellaneous.
a. Successors and Assigns. This Agreement shall be binding on and inure
to the benefit of each party's agents, affiliates, successors and
assigns, but may not be assigned without the prior written consent of
the other party.
b. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
regard to conflicts of laws or principles thereof.
c. Amendment. This Agreement may not be modified or amended except in
writing signed by the parties hereto.
d. PCA's Obligations. The obligations of PCA and the Company hereunder
are solely corporate obligations, and no officer, director, employee,
agent, member, shareholder, or controlling person shall be subject to
any personal liability whatsoever to any person, nor will any such
claim be asserted by or on behalf of PCA or the Company or any of
their respective affiliates. The Company acknowledges and agrees that
PCA is acting as an independent contractor under this Agreement and
that the engagement of PCA is not intended to confer rights on any
person or entity other than the Company and PCA. Nothing contained in
this Agreement shall limit or restrict the
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January __, 2007
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right of PCA or of any member, employee, agent or representative of
PCA, to be a member, shareholder, partner, director, officer,
employee, agent or representative of, or to engage in, any other
business, whether of a similar nature or not, nor to limit or restrict
the right of PCA to render services of any kind to any other
corporation, company, firm, individual or association. PCA is a
registered broker-dealer in good standing with the SEC under the
Securities Act of 1934 and in all jurisdictions in which the nature of
its activities or the substance of its actions would require such
registration or qualification pursuant to the blue-sky laws of such
jurisdiction. PCA will comply with all laws, rules and regulations
related to its activities on behalf of Company pursuant to this
Agreement. All consents, authorizations, and approvals necessary or
appropriate for PCA to undertake its obligations set forth in this
Agreement have been obtained by PCA prior to execution of this
Agreement and PCA shall immediately use its best efforts to secure
investors for the Company as set forth herein upon the expectation for
a closing on or prior to January 30, 2007.
e. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto with respect to the subject matter
hereof and supersedes any and all prior agreements, arrangements and
understandings whether written or oral, relating to matters provided
herein. This Agreement is entered into by each of the parties hereto
without reliance on any statement, representation, promise, inducement
or agreement not expressly contained within this Agreement. Except as
set forth in Annex A hereof, nothing in this Agreement is intended to
confer upon any other person (including the stockholders, employees or
creditors of the Company) any rights or remedies hereunder or by
reason hereof. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not
in any way be affected or impaired thereby.
f. Notices. All notices or communications hereunder shall be in writing
and mailed, delivered or telegraphed as follows:
If to the Company: Xxxx Xxxxxxxx
Tower Stream Corp
00 Xxxxx Xxx.
Xxx Xxxx, XX 00000
with a copy to: Xxxxxx Xxxxxx, Esq.
Xxxxxx and Xxxxx LLP
000 Xxxx 00 Xxxxxx
Xxx Xxxx, XX 00000
If to PCA: Palladium Capital Advisors, LLC
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Chief Executive Officer
g. Opinions and Advice. PCA is acting as financial advisor and is not an
expert on, and cannot render opinions regarding, legal, accounting,
regulatory or tax matters. The Company should
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January __, 2007
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consult with its other professional advisors concerning these matters
before undertaking the proposed Transaction. PCA will not have any
rights or obligations in connection with the sale and purchase of the
securities contemplated by this Agreement except as expressly provided
in this Agreement. In no event will PCA be obligated to purchase the
securities for its own account or for the accounts of its customers.
[signature page follows]
Towerstream Corporation
January __, 2007
Page 7 of 6
If the foregoing correctly sets forth your understanding and intentions, please
so indicate by signing and returning to us the enclosed copy of this letter.
Sincerely,
Palladium Capital Advisors, LLC
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx,
Chief Executive Officer
APPROVED AND ACCEPTED
ON ________________, 2007:
Towerstream Corporation
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Print name: Xxxx Xxxxxxxx
Title: President
[Addendum A and Annex A follow]
Towerstream Corporation
January __, 2007
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ADDENDUM A -
ADAR
Alexandra
Alpha Capital
Axiom
BA Ventures
Xxxx Capital
Xxxxx Brothers
Citadel
Citigroup
CMS Capital
Xxxxxx Xxxxxxxxx
CrossLink
Crosslink
CS Asset Management
DKR Capital
Empire Capital
Harborview
Highbridge Capital
Insight Capital
J Goldman
Xxxxx Xxxxxxxx
Xxxxxxx
XxxxxXxxxxxx
Och-Xxxx
Xxxxx Capital
RH Capital
Xxxxxxx
SC Fundamental
SDS
SF Capital
Tracer Capital
Trafalette
Xxxxxx XX
Xxxxxx Xxxxx
Westmont Capital
Xerion Capital
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January __, 2007
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ANNEX A
The Company agrees that it will indemnify and hold harmless PCA, its affiliates,
and their respective directors, members, officers, employees, agents,
representatives and controlling persons (collectively "PCA" and each such entity
or person being an "INDEMNIFIED PARTY") from and against any and all losses,
claims, damages and liabilities, joint or several, as incurred, to which such
Indemnified Party may become subject, and related to or arising out of the
engagement of PCA hereunder, the activities performed or omitted by or on behalf
of an Indemnified Party pursuant to this Agreement, the Transactions
contemplated thereby or PCA's role in connection therewith; provided that the
Company will not be liable to the extent that any loss, claim, damage or
liability is found in a final judgment (not subject to further appeal) by a
court to have resulted primarily from actions taken or omitted to be taken by
PCA in bad faith or from PCA's gross negligence or willful misconduct in
performing the services described above. The Company also agrees to reimburse
any Indemnified Party for all expenses (including reasonable counsel fees and
disbursements) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim, or any action,
investigation, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party, whether or not liability resulted and whether or
not such claim, action or proceeding is initiated or brought by or on behalf of
the Company. The Company also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or its security holders or creditors related to or arising out of the
engagement of PCA pursuant to, or the performance by PCA of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final judgment (not subject to further appeal)
by a court to have resulted primarily from actions taken or omitted to be taken
by PCA in bad faith or from PCA's gross negligence or willful misconduct.
If the indemnification provided for in this Agreement is for any reason held
unenforceable, the Company agrees to contribute to the losses, claims, damages
and liabilities, as incurred by any Indemnified Person, for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and PCA, on the
other hand, of the Transaction (whether or not the Transaction is consummated).
The Company agrees that for the purposes of this paragraph the relative benefits
to the Company and PCA of the Transaction shall be deemed to be in the same
proportion that the total value of the Transaction or contemplated Transaction
by the Company as a result of or in connection with the proposed Transaction
bears to the Fee paid or to be paid to PCA under this Agreement; provided that,
to the extent permitted by applicable law, in no event shall the Indemnified
Parties be required to contribute an aggregate amount in excess of the aggregate
fees actually paid to PCA under this Agreement.
Promptly after receipt by an Indemnified Party of notice of any claim or the
commencement of any action, suit or proceeding with respect to which an
Indemnified Party may be entitled to indemnity hereunder, such Indemnified Party
will notify the Company in writing of such claim or of the commencement of such
action or proceeding, and the Company will assume the defense of such action,
suit or proceeding and will employ counsel satisfactory to the Indemnified
Parties and will pay the fees and disbursements of such counsel, as incurred.
Notwithstanding the preceding sentence, any Indemnified Party will be entitled
to employ counsel separate from counsel for the Company and from any other party
in such action if such Indemnified Party reasonably
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January __, 2007
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determines that a conflict of interest exists which makes representation by
counsel chosen by the Company not advisable or if such Indemnified Party
reasonably determines that the Company's assumption of the defense does not
adequately represent its interest. In such event, the fees and disbursements of
such separate counsel will be paid by the Company, but in no event shall the
Company be liable for the fees and disbursements of more than one counsel (in
addition to local counsel) for all Indemnified Parties in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
The Company agrees that, without PCA's prior written consent, it will not
settle, compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding in respect of which indemnification could
be sought under the indemnification provision of this Agreement (whether or not
PCA or any other Indemnified Party is an actual or potential party to such
claim, action or proceeding), unless such settlement, compromise or consent
includes an unconditional release of each Indemnified Party from all liability
arising out of such claim, action or proceeding. PCA agrees that, without the
Company's prior written consent, it will not settle, compromise or consent to
the entry of any judgment in any pending or threatened claim, action or
proceeding in respect of which indemnification could be sought under the
indemnification provision of this Agreement (whether or not the Company is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
In the event any Indemnified Party is requested or required to appear as a
witness in any action, suit or proceeding brought by or on behalf of or against
the Company or any affiliate or any participant in a Transaction covered hereby
in which such Indemnified Party is not named as a defendant, the Company agrees
to reimburse PCA and such Indemnified Party for all reasonable disbursements
incurred by them in connection with such Indemnified Party's appearing and
preparing to appear as a witness, including, without limitation, the reasonable
fees and disbursements of their legal counsel, and to compensate PCA and such
Indemnified Party in an amount to be mutually agreed upon.
In the event that any amounts due under these indemnification provisions
contained in this Annex A are not paid within thirty days after written notice
of such event giving rise to the indemnification obligations, such amounts shall
bear interest at a rate of 1.5% per month or at the highest rate permitted under
the laws of the State of New York, whichever rate is lower.
The provisions of Annex A shall be in addition to any liability which the
Company may otherwise have. These provisions shall be governed by the law of the
State of New York and shall be operative, in full force and in full effect,
regardless of any termination or expiration of this agreement.
PALLADIUM CAPITAL TOWERSTREAM CORP.
ADVISORS, LLC
By: By:
---------------------------------- -------------------------------------
Xxxx Xxxxxxxx, CEO Xxxx Xxxxxxxx, President
