EXHIBIT 10.14
PALLADIUM CAPITAL ADVISORS, LLC
230 PARK AVENUE, SUITE 539
NEW YORK, NEW YORK 10169
Tel (646) 485-7297 Fax (646) 390-6328
Email jp@palladiumcapital.com
January 4, 2007
Jeff Thompson
President and CEO
Towerstream Corporation
55 Hammerlund Way
Middletown, Rhode Island 02842
Re: Placement Agent Agreement
Dear Jeff:
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
Towerstream Corporation
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
