Exhibit 10.12
Maroon Bells Capital Partners, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
[LOGO] Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Tel (000) 000-0000 Fax (000) 000-0000
December 15, 1998
Xx. Xxxxxxx Xxxxxx
NetAmerica Corporation, Inc.
Dear Xx. Xxxxxx:
When executed by the undersigned where indicated below, this letter will form an
Advisory Agreement (the "Agreement") for the 18-month period commencing December
15, 1998 between Maroon Bells Capital Partners, Inc. a Delaware Corporation
("MBCP") and NetAmerica Corporation, a Delaware corporation ("NetAmerica
Corporation"), whereby MBCP will provide certain advisory services to NetAmerica
Corporation, including general corporate advisory and business development
services.
Maroon Bells will devote a portion of its corporate resources to the performance
of this agreement. Certain MBCP principals and professional staff will
participate in rendering the services described in this Agreement, on an as
needed basis. MBCP will also identify and recruit additional board member and
additional employees and consultants to assist NetAmerica Corporation in the
execution of its business plan in the United States and in certain international
markets to be identified. MBCP agrees to provide NetAmerica Corporation with the
following services during the term of this Agreement. It is understood by
NetAmerica Corporation that in all cases, the services to be provided by MBCP
pursuant to this Advisory Agreement will be performed by MBCP on a best efforts
basis and that no financial obligation to NetAmerica Corporation on the part of
MBCP is created or implied by this Advisory Agreement.
A. Advisory Services to Be Performed for NetAmerica Corporation by MBCP.
1. General Corporate Advisory Services. MBCP will assist NetAmerica Corporation
in structuring and implementing its overall corporate finance strategy and in
developing and implementing NetAmerica Corporation's business strategy. MBCP
will also assist NetAmerica Corporation in market positioning with respect to
financial markets, including assistance in the development of strategic plans
and corporate materials for distribution to prospective investors and merger and
acquisition targets. MBCP will also assist NetAmerica Corporation on an
on-going, non-exclusive basis in negotiating with placement agents,
underwriters, institutional investors, lenders and other sources of financing
during the term of this Agreement, as needed.
Compensation: NetAmerica Corporation agrees to pay to MBCP a monthly Consulting
fee of $10,000 (ten thousand dollars) per month payable on the first day of each
month.
2. Financial Advisory Services: MBCP will assist NetAmerica Corporation to
identify contact and negotiate, on a best efforts basis, with underwriters and
investment banking companies to be contacted by MBCP on behalf of NetAmerica
Corporation in order to obtain a commitment for additional debt or equity
financings on terms acceptable to NetAmerica Corporation. NetAmerica Corporation
will provide MBCP with financial statements and projections, capitalization
information, business plan, and other corporate materials for presentation to
prospective business partners, investors, underwriters. NetAmerica Corporation
will make available its key executives, personnel and advisors for discussions
and meetings, as appropriate, with representatives of underwriters. MBCP will
coordinate the execution of any and all confidentiality agreements required by
NetAmerica Corporation of potential underwriters prior to review of NetAmerica
Corporation corporate and financial materials. At NetAmerica Corporation's
request, MBCP will inform NetAmerica Corporation regarding the status of MBCP
contacts. MBCP will assist NetAmerica Corporation, as needed, in structuring,
negotiating, and closing fixture financings during the term of this agreement.
It is understood that NetAmerica is seeking to raise approximately $10 million
to $15 million in capital during late 1998 and early 1999.
Compensation: NetAmerica Corporation agrees to pay to MBCP at Closing in cash or
stock (to be determined in advance by mutual agreement) a Financing Success Fee,
to be negotiated and agreed to in advance by NetAmerica Corporation and MBCP for
financings conducted or provided by underwriters introduced to NetAmerica
Corporations by MBCP. The Success Fee will be due and payable to MBCP at closing
of such a financing (or upon various closings in the case of multiple closings).
In the event that NetAmerica successfully closes at least $5 million in new
capitalization during 1998 or in 1999, NetAmerica will pay to MBCP (a) a Success
Fee of $250,000 and (b) issue to MBCP Five-Year warrants to purchase 250,000
shares of NAMI common stock at an exercise price of $1.00 per share.
3. Merger and Acquisition Services: MBCP will assist NetAmerica Corporation in
identifying potential merger and/or acquisition candidates. MBCP will assist in
contacting target companies and in negotiating, structuring and closing such
transactions.
Compensation: For asset purchases of subscriber bases ("Subscriber
Acquisitions") from other ISPs identified by MBCP, NetAmerica Corporation agrees
to pay to MBCP at Closing in cash (or other like-kind compensation acceptable to
MBCP) a Subscriber Acquisition Fee equal to 5 percent (5%) of the value of the
acquisition. For mergers and acquisitions of ISPs or other telecommunications
companies, whether or not introduced to NetAmerica Corporation by MBCP,
NetAmerica Corporation will pay to MBCP an M&A Success Fee according to a Xxxxxx
Formula based on the value of the transaction as follows: 5% of the first $1
million in value, 4% of the second $1 million in value, 3% of the third $1
million in value, 2% of the fourth $1 million in value and 1% of all value
thereafter. In the event that NetAmerica Corporation closes an M&A transaction
with a value of $3 million or greater, MBCP will receive at closing a cash
performance bonus of $100,000 (one hundred thousand dollars).
4. General Business Development Services. MBCP will assist NetAmerica
Corporation in the identification of new domestic (U.S.) and international
business development opportunities including but not limited to (i) new
marketing and distribution channels, (ii) new strategic marketing agreements,
(iii) new telecommunication access, transmission or termination agreements, or
(iii) new technology partners or equipment. It is understood that as of the date
of this Agreement, MBCP has initiated discussions with one or more
telecommunications providers with operation in the United States, Europe, and
Latin America.
Compensation: MBCP and NetAmerica Corporation agree to negotiate in good faith,
in advance, a compensation schedule for Business Development Services provided
by MBCP on a case-by-case basis. In general Maroon Bells will expect a fee of
approximately 5% (five percent) of the (a) gross revenue or (b) gross value
generated by such development for a period of a least three years, which
compensation shall survive termination of this Advisory Agreement.
5. Equipment Leasing, Lines of Credit and Other Equipment Financing. MBCP may
assist NetAmerica Corporation in securing equipment leases or other equipment
financing structures.
Compensation: MBCP and NetAmerica Corporation agree to negotiate in good faith,
in advance, a compensation schedule for Equipment Financing Services provided by
MBCP on a case-by-case basis, with an understanding that such compensation will
be a minimum of 1.5 percent of total lease, credit facilities utilized by
NetAmerica Corporation.
B. Expenses
NetAmerica Corporation agrees to reimburse MBCP for reasonable pre-approved
out-of-pocket travel expenses related to MBCP's performance of the services
described in this Agreement (i.e. pre-approved travel and lodging for MBCP
professionals to destination where NetAmerica Corporation has requested or
pre-approved the presence of MBCP professionals), in accordance with NetAmerica
Corporation's usual and customary travel and expense reimbursement policies.
Unless otherwise agreed-to-by MBCP, NetAmerica Corporation will reimburse MBCP
within 10 days of submittal.
C. Term of Agreement
The term of this Agreement shall commence on December 15, 1998 and shall be
in effect for eighteen months. This Agreement will automatically renew for an
additional 12 months unless terminated in writing. MBCP's compensation shall
survive termination of this Agreement according to the following terms:
1. MBCP shall be entitled to the compensation described above if (a)
NetAmerica Corporation receives proceeds from a financing conducted by
any Underwriter introduced to NetAmerica Corporation by MBCP within 12
months of the
expiration or termination of this Agreement or (b) completes a merger,
acquisition or asset divestiture with any party identified to
NetAmerica Corporation by MBCP with 12 months of the expiration or
termination of this Agreement.
D. Indemnification
MBCP and NetAmerica Corporation agree to indemnify and hold each other
harmless against claims resulting from actions or omissions in connection
with this engagement or arising out of willful misstatement or material facts
by the other party or its affiliates or representatives.
E. Governing Law
This Agreements shall be governed by the laws of the State of California.
F. Signatures
By their authorized signatures below, MBCP and NetAmerica Corporation do agree
to be bound by the terms of this Agreement. This Agreement may be signed in
counterparts, including fax signatures. Changes in the terms and conditions of
this Agreement may be enacted only with mutual written consent.
ACCEPTED FOR NETAMERICA CORPORATION, INC. BY:
/s/ Xxxxxxx Xxxxxx
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Signature
Name: Xx. Xxxxxxx Xxxxxx
Title: Director
Date:
ACCEPTED FOR MAROON BELLS CAPITAL PARTNERS, INC. BY:
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Signature
By: Xx. Xxxxxxxxx Xxxxxxxxx
Its: Principal
Date:
