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EXHIBIT 10.91
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July 18, 2000
STRICTLY PRIVATE
AND CONFIDENTIAL
Xx. Xxxxx X. Xxxxxx
President and Chief Executive Officer
USURF America, Inc.
0000 Xxxxxxxx Xxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000-0000
Dear Xxxxx:
This is to acknowledge and confirm the terms of our corporate finance
representation agreement (the "Agreement") as follows:
1. USURF America, Inc. (the "Company") hereby engages Gruntal & Co., LLC
("Gruntal"), and Gruntal hereby agrees to render services to the Company,
as its exclusive corporate finance advisor and investment banker on the
terms and for the services specified herein.
Gruntal agrees to provide advice to the Company and evaluate relevant
transaction(s) the Company may consider during the term of this Agreement,
including but not limited to public or private offerings of debt or equity
securities, acquisitions, mergers or the partial or complete sale of the
stock or assets of the Company or any of its divisions or subsidiaries,
joint ventures, strategic alliances or any other financing transaction(s)
and the preparation of any fairness opinions required with respect to the
Company in connection with any transaction(s) or other matter. Gruntal
shall be the Company's exclusive agent with respect to any and all of the
Company's corporate finance or similar transaction(s), including the
aforementioned transaction(s), and the fee schedules cited in paragraph 4
below shall apply.
2. The term of this engagement (the "Engagement Period") shall be for a
period of twelve months commencing with the execution of this Agreement by
the Company and will be automatically extended for an additional twelve
month period unless cancelled by the Company upon thirty days written
notice by certified mail at any time subsequent to the initial Engagement
Period.
3. The Company agrees to issue to Gruntal at the time this Agreement is
executed two hundred fifty thousand (250,000) shares of the Company's
common stock. Gruntal will be issued additional shares of Common Stock to
maintain the same percentage ownership position in the Company two hundred
fifty thousand (250,000) shares of Common Stock provides as of the date of
the execution of this Agreement if any other shares of Common Stock or
Common Stock Equivalents are issued or granted during the term of this
Agreement, excluding shares issued pursuant to a transaction(s) consummated
under this Agreement.
4. The Company agrees that should it consummate any transaction(s)
pursuant to this Agreement from the date hereof through a period lasting
until one year from cancellation of this Agreement with: a) a party or
parties with whom Gruntal has been in contact, has been obtained through
the efforts of Gruntal, directly or indirectly or, b) a party or parties
obtained by theCompany before or during the term of this Agreement, in
addition to the compensation set forth in paragraph 3, the Company shall
pay to Gruntal, or cause Gruntal to be paid, at the closing of such
transaction(s), a fee equal to the following:
In the event of a public offering of debt or equity securities, the fee
will be an amount to be negotiated but no less than what is customary in
the industry for a transaction of that type. In the event of a private
offering of debt or equity securities, the fee will be 2% of the gross
proceeds raised and/or commitments provided from the sale or placement of
senior bank debt, 4.0% of the gross proceeds raised and/or commitments
provided from the sale or placement of non-convertible subordinated debt
and 8% of the gross proceeds raised and/or commitments provided from the
sale or placement of private equity or securities convertible into equity.
In the event of an equity line transaction, the fee will be 25% of any
commitment fee due to the investor (the "Commitment Fee") and 8% of the
gross proceeds of each cash drawdown (the "Drawdown Fee").
In the event of the acquisition of another company or business by the
Company, or a merger or the partial or complete sale of the stock or assets
of the Company or any of its divisions or subsidiaries, excluding the sale
of all or a portion of the Company's "Dial-Up" or Cyberhighway assets or
business to Cambridge Telephone Company or Neo Nobo, the fee will be 3% of
the consideration received or paid. The preceding exclusion expires on
September 30, 2000. For the purposes of the this Agreement,
"consideration" shall mean any and all cash, securities, notes, consulting
agreements, agreements not to compete, the total value of liabilities
assumed, contingent payments, payments made in installments and all other
forms of payment, compensation and purchase or sale consideration. In the
event the Company chooses to enter into any other transaction(s) not
specified above, Gruntal shall be so notified by the Company and shall
receive for its services or otherwise by virtue of its being the Company's
exclusive corporate finance advisor and investment banker hereunder such
fees as are customary in the banking or financial industry for a
transaction of that type, unless otherwise agreed to between the Company
and Gruntal.
5. In addition to the foregoing, in the event of the consummation by the
Company of a transaction(s) in which debt or equity capital is raised and
such transaction(s) is covered under this Agreement, Gruntal will receive a
warrant (the "Agent's Warrants") allowing it to purchase, at its option,
such number of shares or principal amount of a security with terms and
pricing identical to the security or securities purchased by and/or issued
or granted to an investor(s) in such a transaction(s), in an amount that is
equal in value to 10% of the gross proceeds received by the Company
pursuant to any such transaction(s). The Agent's Warrant will be
exercisable at any time before the fifth anniversary of the closing of a
transaction(s) pursuant to this Agreement. The Agent's Warrant shall,
among other things: (i) be transferable to officers and directors of
Gruntal, (ii) permit exercise on a cashless basis, (iii) grant Gruntal at
least two demand registrations and unlimited piggyback registration rights
(will all related costs to be the responsibility of the Company), and (iv)
contain such other terms as are customarily included in warrants of this
type. We expressly agree that this paragraph is intended to grant to
Gruntal the right, through the terms of its Agent's Warrant, to acquire or
receive, on a pari passu basis, each and every type of security or
instrument issued, sold or granted to such Investor(s) up to the amount
described herein.
6. For the one (1) year period following the expiration of this Agreement,
commencing on the closing of any transaction(s) pursuant to this Agreement,
in addition to Gruntal's rights under this Agreement, Gruntal will have the
right of first refusal (on terms at least as favorable as can be obtained
from other sources) to act as no less than co-manager in the event of any
proposed underwritten public offering of the Company's securities and as
lead manager of any proposed private placement of the Company's securities.
The Company will notify Gruntal in writing of its intention to pursue a
public or private offering of its securities. The Company will notify
Gruntal in writing of its intention to pursue a public or private offering
of its securities, and Gruntal will advise the Company promptly of
Gruntal's election to exercise its right (but in no event no later than
fifteen (15) business days following the submission to Gruntal). If any
such proposal is not accepted by Gruntal, but later modified, the Company
will re-submit such proposal in writing to Gruntal and Gruntal will be
subject to the same fifteen (15) business day notice provision. Gruntal's
election not to exercise its right with respect to a particular proposed
transaction will not adversely affect its rights hereunder with respect to
any other proposed transaction of the Company during the period referred to
above.
7. Transaction fees described herein are payable in full, without discount
or reduction, in cash on closing of any transaction(s) pursuant to this
Agreement, except fees related to contingent payments which shall be
payable when and at any time such payments are remitted. In an equity line
transaction, the Commitment Fee is payable at the time of closing of such
transaction and the Drawdown Fee is payable at the time of each drawdown.
For fees not paid when due, the Company will be responsible for all legal
fees incurred by Gruntal in collecting such fees.
8. The Company will reimburse Gruntal for out-of-pocket expenses incurred
in connection with its representation and services hereunder.
Reimbursement for out-of-pocket expenses shall be paid by the Company
within ten days of receipt of invoice from Gruntal. The Company's
obligation to Gruntal for reimbursement of out-of-pocket expenses will
survive any cancellation of this Agreement. Notwithstanding the foregoing,
the Company's reimbursements shall be limited to a maximum of twenty five
thousand dollars ($25,000) in the aggregate, unless the Company approves
any expenses above such amount in writing.
9. At any time after the consummation or other public announcement of a
transaction(s) completed pursuant to this Agreement, and with the approval
of the Company (which approval shall not be unreasonably withheld or
delayed), Gruntal may place an announcement in such newspapers and
publications as it may choose, stating that Gruntal has acted as exclusive
financial advisor and placement agent to the Company in connection with the
transaction(s). The cost of such announcement shall be borne by the
Company, upon its prior written approval, such approval not to be
unreasonably withheld.
10. The benefits of this Agreement shall inure to the parties hereto and
their respective successors and assigns, and the obligations and
liabilities assumed in this Agreement shall be binding upon the parties
hereto and their respective successors and assigns. Notwithstanding
anything contained herein to the contrary, the Company or Gruntal shall not
assign to an unaffiliated third party any of its rights or obligations
hereunder without the express written consent of the other party.
11. Any dispute between the parties to this Agreement shall be settled by
arbitration before the facilities of the New York Stock Exchange, Inc. or
the National Association of Securities Dealers, Inc. in the City of New
York and will be conducted pursuant to applicable federal laws, the laws of
the State of New York, without regard to conflicts of laws, and the rules
of the selected arbitral facility. The parties understand that the award
of the arbitrators, or of a majority of them, will be final and that a
judgment upon any award rendered may be entered in any court having
jurisdiction.
12. All notices provided hereunder shall be given in writing and either
delivered personally or by overnight courier service or sent by certified
mail, return receipt requested, if to Gruntal, to Xxx Xxxxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Xx. Xxxxxxx X. XxXxxxxxx;
and if to the Company, to 0000 Xxxxxxxx Xxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxx
00000, Attn: Xxxxx X. Xxxxxx.
13. The Company represents and warrants to Gruntal that Xxxxx X. Xxxxxx is
the President of the Company and is authorized on behalf of the Company to
execute the Agreement and to consummate the potential transaction(s)
described herein, and the execution of this Agreement will not conflict
with or breach the certificate or articles of incorporation or by-laws of
the Company or any agreement to which the Company is a party.
14. Indemnification is incorporated by reference to Addendum I.
15. The Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes and cancels any prior
communications, understandings and agreements between the parties. This
Agreement cannot be modified, or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties.
Please confirm that the foregoing is in accordance with your understanding
by signing and returning this letter to Gruntal and keeping a duplicate for
your files. This Agreement shall be effective after your acceptance below
and its receipt by Gruntal at its address set forth on this letter.
Very truly yours,
Gruntal & Co., LLC
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Managing Director
Agreed and accepted on the
18th day of July, 2000.
USURF America, Inc.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Addendum I -
Indemnification
The Company shall:
a. Indemnify Gruntal, its parents, affiliates and/or subsidiaries and each
of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") and hold them harmless against
any losses, claims, damages, expenses or liabilities to which the
Indemnified Parties may become subject arising in any manner out of or in
connection with the rendering of services by Gruntal hereunder unless it is
finally judicially determined, without any further right to appeal, that
such losses, claims, damages, expenses or liabilities resulted primarily
from the gross negligence, bad faith or willful misconduct of Gruntal; and
b. Reimburse the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating, preparing to
defend or defending lawsuits, claims or other proceedings arising in any
manner out of or in connection with the rendering of services by Gruntal
hereunder; provided, however, that in the event of a final judicial
determination is made to the effect specified in subparagraph (a) above,
the Indemnified Parties will remit to the Company any amount reimbursed
under this paragraph (b).
The Company agrees that the indemnification and reimbursement commitments
set forth in this paragraph shall apply whether or not the Indemnified
Parties are a formal party of any such lawsuits, claims or other
proceedings, that the Indemnified Parties are entitled to retain separate
counsel of their choice in connection with any of the matters to which such
commitments relate and that such commitments shall extend upon the terms
set forth in this paragraph to any Indemnified Party.
Further, the Company and Gruntal agree that if any indemnification or
reimbursement sought by Gruntal of the Company is finally judicially
determined to be unavailable then, whether or not Gruntal is entitled to
indemnification or reimbursement, the Company and Gruntal shall contribute
to the losses, claims, damages, liabilities and expenses for which such
indemnification is held unavailable in such proportion as is appropriate to
reflect the relative benefits to the Company on the one hand, and Gruntal
on the other, in connection with the transaction(s) to which such
indemnification or reimbursement related, and other equitable
considerations; provided, however, that in no event shall the amount to be
contributed by the Indemnified Parties exceed the amount of the fee
actually received by Gruntal hereunder. The provisions hereof shall
survive any termination of this Agreement.
