[CIBC WOOD GUNDY LOGO] CIBC Wood Gundy
Securities Corp.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel. (000) 000-0000
Fax (000) 000-0000
November 5, 1996
Xx. Xxxxxx X. Xxxxx
Executive Vice President & Chief Financial Officer
Advanced Radio Telecom Corp.
000 000xx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
This agreement (the "Agreement") will confirm that Advanced Radio Telecom
Corp. (the "Company") has retained CIBC Wood Gundy Securities Corp. ("CIBC") as
(i) the Company's exclusive placement agent in connection with the proposed
private placement of approximately $50 million principal amount of the Company's
Senior Secured Notes due 1998 (the "Notes"), or other similar financing as the
Company and CIBC shall mutually agree, in one transaction or a series of
transactions (the "Financing"), and (ii) once CIBC has delivered reasonably
acceptable commitments to the Company on a timely basis, a co-lead manager of
the Company's future public or private offerings of non-investment grade debt
securities (or preferred stock, convertible debt or convertible preferred
stock), excluding private equity issues, bank financings and vendor financings
initiated and negotiated directly between the Company (including its officers
and directors) and such investors (the "Future Financings") (together with the
Financing, the "Engagement").
1. RETENTION. (a) Subject to the provisions set forth below in this
Agreement, the Company hereby retains CIBC as (i) its exclusive placement agent
in connection with the proposed sale by the Company of the Notes, and (ii) once
CIBC has delivered reasonably acceptable commitments to the Company on a timely
basis, a co-lead manager of the Company's Future Financings. The Company agrees
that during the term of this Agreement it will not directly, or indirectly, (i)
offer any of the Notes for sale to, or solicit any offer to purchase any of the
same from, or otherwise contact, approach or negotiate in respect thereof with,
any person or persons, other than through CIBC as the Company's exclusive
placement agent; or (ii) offer any of the Future Financings for sale to, or
solicit any offer to purchase any of the same from, or otherwise contact,
approach or negotiate in respect thereof with, any person or persons, other than
through CIBC (if CIBC exercises its rights hereunder to act as a co-lead
manager) and the Company's other managers of the Future Financings. The Company
represents that (i) no such offers, solicitations or other actions have been
Advanced Radio Telecom Corp.
November 5, 1996
Page 2
made or taken prior to the date hereof, except as previously disclosed to you,
and (ii) on and after the date hereof, it is not in discussions or obligated
under any agreement with any other agent, initial purchaser or underwriter with
respect to a private or public offering of the Notes or any other debt or
preferred stock financings, excluding private equity issues, bank financings and
vendor financings initiated and negotiated directly between the Company
(including its officers and directors) and such investors, and financings
contemplated by that certain engagement letter entered into between the Company
and Xxxxxxx Xxxxx & Co. on or about the date of this agreement.
(b) CIBC agrees to act as (i) the exclusive placement agent for the
Financing, and (ii) a co-lead manager of the Company's Future Financings,
subject to satisfactory completion of its due diligence investigation.
2. COMPENSATION. In consideration for services rendered hereunder by
CIBC, the Company agrees to pay CIBC as follows:
(a) The Company agrees to pay to CIBC a cash placement fee equal to 5.0%
of the total committed purchase price of the Notes (the "Placement Fee"). An
amount equal to 50% of the Placement Fee shall be payable upon the closing date
of the Company's initial public offering (the "IPO"), with the remaining
Placement Fee payable on the earlier of (i) the date the Notes are originally
issued (the "Closing Date") and (ii) March 31, 1997. The Placement Fee shall be
paid directly out of the proceeds from the Notes or the IPO, as the case may be,
by wire transfer or by delivery to CIBC of a certified or official bank check or
checks payable to its order in immediately available funds. If the Company
first consummates the Financing within one year following the expiration or
termination of this Agreement with any investors introduced to the Company by
CIBC during the term of this Agreement, the CIBC shall be entitled to receive
all amounts under Sections 2(a), (b) and (c).
(b) The Company agrees to pay to CIBC (i) not less than 45% of all fees
and compensation payable to all managers in respect of the Future Financings
(based on customary market terms) if two managers are engaged, or (ii) not less
than 30% of all fees and compensation payable to all managers in respect of the
Future Financings (based on customary market terms) if three or more managers
are engaged ,provided however, that CIBC shall be paid not less than 45% of the
total gross economic benefits of the top two managers in such Future Financing.
Such fees shall be paid directly out of the gross proceeds from the Future
Financings by wire transfer or by delivery to CIBC of a certified or official
bank check or checks payable to its order in immediately available funds.
(c) Whether or not any portion of the Engagement is consummated, the
Company hereby agrees to reimburse CIBC promptly upon request (on a monthly
Advanced Radio Telecom Corp.
November 5, 1996
Page 3
basis) and upon presentation of appropriate documentation thereof in reasonable
detail for all reasonable out-of-pocket expenses (including word processing
charges, messenger and duplicating services, research document expenses, travel
expenses, legal fees and expenses and other customary expenditures) incurred by
it in connection with the Engagement, plus the reasonable fees and expenses of
all special counsel (except as may be superseded by future underwriting
agreements with respect to the Future Financings). The Company agrees to pay to
CIBC, upon execution of this Agreement an advance of $25,000 to cover initial
out-of-pocket expenses.
(d) No fee paid or payable to CIBC or any of its affiliates shall be
credited against any other fee paid or payable to CIBC or any of its
affiliates. Nothing contained in this Agreement shall require CIBC or any of
its affiliates to lend any amounts, purchase any securities or make any
investment in the Company or any of its affiliates for its own account,
directly or indirectly.
3. OFFERING MATERIALS. (a) The Company represents and warrants to CIBC
that this Agreement has been duly authorized, executed and delivered by the
Company and, assuming the due execution by CIBC, constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.
(b) The Company will furnish CIBC with offering documentation with respect
to the Financing and the Future Financings (collectively, together with
amendments and supplements thereto, the "Offering Materials").
(c) CIBC will perform due diligence; however, the Company recognizes and
confirms that CIBC (A) will use and rely primarily on the Offering Materials and
on information available from generally recognized public sources in performing
the services contemplated by this Agreement without having independently
verified the same; (B) is authorized as the Company's exclusive placement agent
with respect to the Financing and a co-lead manager with respect to the Future
Financings to transmit to any prospective purchaser of the Notes or the
securities offered in the Future Financings, a copy or copies of the Offering
Materials and any other legal documentation supplied to CIBC expressly for
transmission to any prospective purchaser by or on behalf of the Company or by
any of the Company's officers, representatives or agents, in connection with the
performance of CIBC's services hereunder or any transaction contemplated hereby;
(C) does not assume responsibility for the accuracy or completeness of the
Offering Materials and such other information; (D) will not make an appraisal of
any assets of the Company; and (E) reserves the right to continue to perform due
diligence during the course of the Engagement until the Engagement is
consummated. CIBC agrees to and to cause its representatives to,
Advanced Radio Telecom Corp.
November 5, 1996
Page 4
keep the Offering Materials and any confidential information about the Company
confidential so long as it is and remains non-public, unless disclosure is
required by law or requested by any government or regulatory agency or body (and
then only after giving the Company notice and an opportunity to contest such
disclosure to the extent practicable), and CIBC will not make use thereof,
except in connection with its services hereunder for the Company.
(d) Each of the parties hereto agrees that any reference to the other
party or any release, communication, or material distributed to prospective
purchasers of the Notes or the securities offered in the Future Financings is
subject to the other party's prior written approval. If any party hereto
terminates this engagement prior to the dissemination of any such release,
communication or material, no reference shall be made therein to such party.
(e) Without CIBC's prior written consent, no advice rendered by CIBC in
connection with the services performed by CIBC's pursuant to this Agreement will
be quoted by the Company, its affiliates or representatives nor will any such
advice be referred to in any report, document, release or other communication,
whether written or oral, prepared, issued or transmitted by such person, except
to the extent required by law (in which case the appropriate party shall so
advise the other in writing prior to such use and shall consult with the other
with respect to the form and timing of disclosure).
(f) The Company represents that the Offering Materials do not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they are made, not misleading, except
that the Company makes no representation with respect to any of the projections
contained therein. The Company agrees to advise CIBC immediately of the
occurrence of any event or any other change known to it which results in the
Offering Materials containing any untrue statement of a material fact or
omitting to state any material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
(g) CIBC will solicit offers for purchase of the Notes in compliance with
advice rendered by its own counsel with regard to applicable federal and state
securities laws. CIBC is duly registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended, and is a member in good standing of
the National Association of Securities Dealers, Inc.
4. INDEMNITY. In consideration of CIBC's agreement to act on behalf of
the Company, notwithstanding any limitations set forth herein, the Company
agrees to
Advanced Radio Telecom Corp.
November 5, 1996
Page 5
indemnify and hold harmless CIBC, its agents, employees, officers and directors,
and any person who controls CIBC within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "Act") or Section 20 of the Securities
Exchange Act of 1934, as amended (each, an "Indemnified Party" and collectively,
the "Indemnified Parties"), from the against any and all losses, claims,
damages, liabilities and expenses (including, but not limited to, all reasonable
legal expenses, any and all other reasonable expenses incurred in investigating,
preparing or defending against any actin or proceeding, commenced or threatened,
(whether or not any Indemnified Party is a named party)) to which, jointly or
severally, an Indemnified Party may become subject, which are related to (i) any
transaction contemplated by this Agreement the retention of the CIBC under this
Agreement, the performance of services by CIBC hereunder or any involvement or
alleged involvement of CIBC in the Financing or the Future Financings, or (ii)
any untrue statement or alleged untrue statement of fact contained in any
information (oral or written) or document furnished or made available by the
Company (including, without limitation, the Offering Materials), directly by the
Company or through CIBC or otherwise, or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, no Indemnified Party
shall be entitled to indemnification under this Section 4 with respect to any
action, suit or proceeding in which a final judgment (after all appeals or the
expiration of time to appeal) is entered against such Indemnified Party based
primarily upon his gross negligence or willful misconduct ("Disabling Conduct")
and any payment or reimbursement made to such Indemnified Party by the Company
in connection with any such action or proceeding will be repaid by such
Indemnified Party to the Company.
If any action or proceeding (including any governmental proceeding) is
brought or asserted against an Indemnified Party in respect of which indemnity
may be sought against to Company, such Indemnified Party in respect of which
indemnity may be sought against the Company, such Indemnified Party shall
promptly notify the Company in writing of the institution of such action or
proceeding; failure to provide such notice will not, however, relieve the
Company from any obligation or liability it has hereunder or otherwise, except
to the extent such failure results in a material disadvantage to the Company.
CIBC and each such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of CIBC or such
Indemnified Party unless (a) the Company has agreed to pay such fees and
expenses, or (b) the Company shall have failed to assume the defense of such
actio nor proceeding. The Company, at its option, may assume the defense of any
such claim with counsel reasonably satisfactory to CIBC, except if such
Indemnified Party has been advised by counsel that, due to a conflict of
interests or because there may
Advanced Radio Telecom Corp.
November 5, 1996
Page 6
be legal defenses available to such Indemnified Party that are different from or
additional to defenses available to the Company, separate counsel for the
Company and such Indemnified Party is advisable in which case, the reasonable
fees and expenses of CIBC's counsel, who must be reasonably satisfactory to the
Company, shall be at the expense of the Company, provided, that, upon invoking
such option the Company shall unconditionally and irrevocably commit in writing
to bear all risk with respect to such claim and to keep such Indemnified Party
informed of the progress of any such claim.
The Company agrees that, without the prior written consent of each of the
relevant Indemnified Parties 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 hereunder (whether or not
such Indemnified Parties are actual or potential parties to such claim, actio or
proceeding), (i) that involves any equitable relief that binds or purports to
bind such Indemnified Parties and (ii) unless such settlement, compromise or
consent includes an unconditional release for such Indemnified Parties from all
liability arising out of such claim, actin or proceeding. Unless the Company
fails to assume the defense of an action or proceeding, the Company shall not be
liable for any settlement of any such action or proceeding effected without its
written consent (which shall not be unreasonably withheld or delayed), but if
the Company has failed to assume such defense, and if such claim is settled with
the Company's written consent, or if there by a final judgment for the plaintiff
in any such action or proceeding, the Company agrees to indemnify and hold
harmless CIBC and any such Indemnified Party from and against any loss,
liability damage or expense by reason of such settlement or judgment.
If the indemnification provided for in this Section 4 unavailable to an
Indemnified Party in respect of any losses, claims, damages, liabilities and
expenses referred to herein or insufficient to hold an Indemnified Party
harmless (other than by reason of such Person's Disabling Conduct), then the
Company agrees that in lieu of indemnifying such Indemnified Party, it shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by them on the one
hand and the Indemnified Party on the other from the sale of the Notes or the
securities offered in the Future Financings or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Indemnified Party on the other in connection with the untrue statements or
omissions or other actions (or alleged untrue statements, omissions or other
actions) which resulted in such losses, claims, damages, liabilities and
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on
Advanced Radio Telecom Corp.
November 5, 1996
Page 7
the one hand and the Indemnified Party on the other shall be deemed to be in the
same proportion as the total committed purchase price of the Notes or the
securities offered in the Future Financings, less the value of the compensation
which would be received by such Indemnified Party pursuant to the first sentence
of Section 2(a) or Section 2(b) hereof with respect to a sale of such Notes or
securities offered in the Future Financings, respectively, bears to such
compensation. The relative fault of the Company on the one hand and of the
Indemnified Party on the other shall be determined by reference to, among other
things, whether such untrue statements or omissions or other actions (or alleged
untrue statements, omissions or other actions) relate to information supplied or
action taken by the Company on the one hand or by the Indemnified Party on the
other and the relevant persons' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statements,
omissions or actions. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The Company and CIBC agree that it would not be just and equitable if
contribution pursuant to this Section 4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above.
The aforesaid indemnity and contribution agreements shall apply to any
related activities engaged in by any Indemnified Party prior to this date and to
any modification of CIBC's engagement hereunder, and shall remain in full force
and effect regardless of any investigation made by or on behalf of CIBC or any
of its agents, employees, officers, directors or controlling persons and shall
survive the delivery and sale of the Notes or the securities offered in the
Future Financings. The Company agrees promptly to notify CIBC of the
commencement of any litigation or proceeding against it or any of its directors,
officers, agents or employees in connection with the transactions contemplated
hereby. The agreements contained in this Section 4 shall remain in full force
and effect following the completion or termination of CIBC's engagement
hereunder and shall be in addition to any liability that the Company may
otherwise have to CIBC and its agents, employees, officers, directors or
controlling persons.
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,
its owners, creditors or security holders for or in connection with advice or
services rendered or to be rendered by CIBC pursuant to this Agreement, the
transactions contemplated hereby or any Indemnified Party's actions or inactions
in connection with any such advice, services or transactions except to the
extent liabilities (and related expenses) of the Company are determined by a
final judgment of a court of
Advanced Radio Telecom Corp.
November 5, 1996
Page 8
competent jurisdiction to have resulted primarily from such Indemnified Party's
Disabling Conduct in connection with any such advice, actions, inactions or
services.
5. SURVIVAL OF CERTAIN PROVISIONS. The representations, warranties,
covenants and confidentiality provisions contained in Section 3, the provisions
contained in Section 4 of this Agreement and the Company's obligation to pay
CIBC may compensation earned pursuant hereto or reimburse any expenses (pursuant
to Section 2 hereof) as provided for herein shall remain operative and in full
force and effort regardless of (a) any completion of the Engagement (b) any
termination of this Agreement, or (c) any investigation reads by or on behalf of
CIBC or any affiliates of CIBC, and shall be binding upon, and shall insure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company, CIBC, the Indemnified Parties and any such person.
6. CONDITIONS OF PLACEMENT. It is understood that the obligations of
CIBC are to use reasonable efforts to place the Notes and the securities offered
in the Figure Financing and there is no obligation on the part of CIBC to
purchase, and no obligaion on the part of the Company to offer or sell, the
Notes or the securities offered in the Future Financings (except as may be
superseded by fixture underwriting agreements with respect to the Future
Financings). The obligations of CIBC are subject to satisfactory completion of
a due diligence investigation by CIBC and its counsel, market conditions and the
form and terms of the Notes and the securities offered in the Future Financings,
the Offering Materials, and all related documents being mutually acceptable to
the Company and CIBC.
7. NOTICES. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered (a) if to the
Company, at its offices at 000 000xx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xx. Xxxxxx X. Xxxxx; and (b) if to CIBC, at its
offices at 000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xx.
Xxx X. Xxxxx.
The parties hereto, by written notice to the other parties, may designate
additional or different addresses for subsequent notices or communications.
8. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
9. THIRD PARTY BENEFICIARIES. This Agreement has been and is made solely
for the benefit of the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement.
Advanced Radio Telecom Corp.
November 5, 1996
Page 9
10. CHOICE OF LAW, JURISDICTION, RECOVERY OF ATTORNEY'S FEES. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without regard to its conflict of laws provisions). The
Company hereby irrevocably submits to the jurisdiction of the Federal and New
York State courts located in the City of New York in connection with any suit,
action or proceeding related to this Agreement or any of the matters
contemplated hereby, irrevocably waives any defence of lack of personal
jurisdiction and irrevocably agrees that all claims in respect of any suit,
action or proceeding may be heard and determined in any such court. The Company
irrevocably waives, to the fullest extent it may effectively do so under
applicable law, any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. The Company further agrees to pay or
reimburse CIBC for all reasonable costs and expenses incurred by CIBC in
connection with the enforcement of any of its rights under this Agreement,
including without limitation, all attorneys fees and expenses of its counsel.
11. HEADINGS. The section headings in this Agreement have been inserted
as a matter of convenience of reference and are not a part of this Agreement.
12. PRESS ANNOUNCEMENTS. At any time after the consummation or other
public announcement of any portion of the Engagement and with prior approval of
the Company (which approval shall not be unreasonably withheld or delayed).
CIBC may place an announcement (at its expense) in such newspapers and
publications as it may choose, stating that CIBC has acted as exclusive
placement agent of the Notes or manager of the Future Financing contemplated by
this Agreement.
13. TERM. Except as provided herein, the Agreement shall extend from the
date of this letter until the later of: (i) the last date that any of the Notes
remain outstanding, and (ii) the earlier of (a) two years following the issuance
of the Notes; and (b) the time at which the Company has issued through CIBC at
least $250 million in gross proceeds of securities offered in the Future
Financings. The Agreement may be extended by mutual consent of the parties.
14. AMENDMENT. This Agreement may not be modified or amended except in
writing duly executed by the parties hereto.
15. ASSIGNMENT. The Company consents to the assignment of this Agreement
to any affiliate of, or successor to, CIBC and the assumption of such affiliate
or successor is authorized pursuant to all applicable regulations to perform
CIBC's obligations hereunder.
Advanced Radio Telecom Corp.
November 5, 1996
Page 10
16. ENFORCEABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
Please sign and return the original and one copy of this letter to indicate
your acceptance of the terms set forth herein whereupon this letter and your
acceptance shall constitute a binding agreement between the Company and CIBC.
This letter amends and supersedes the letter agreement dated October 16, 1996
between CIBC and the Company.
Very truly yours,
CIBC Wood Gundy Securities Corp.
By:
-------------------------
Xx. Xxx X. Xxxxx
Managing Director
Accepted and agreed to
as of November 5, 1996
Advanced Radio Telecom Corp.
By:
------------------------------------
Xx. Xxxxxx X. Xxxxx
Executive Vice President & Chief Executive Officer
