EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT made as of this ___ day of ___________, 2006,
between Towerstream Corporation, a Delaware corporation (the "COMPANY"), with
offices at 00 Xxxxxxxxxx Xxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000, and the
undersigned (the "SUBSCRIBER"). The term "Company," as used herein, is defined
as set forth in the PPM (as defined below).
WHEREAS, pursuant to a Confidential Offering Memorandum dated December
21, 2006 (the "PPM"), the Company is offering in a private placement (the
"OFFERING") to accredited investors up to 100 Units at a purchase price of
$112,500 per Unit for a maximum aggregate purchase price of $11,250,000 (the
"MAXIMUM OFFERING"). Each Unit consists of 50,000 shares of the Company's common
stock, par value $0.001 per share (the "COMMON STOCK") and a five-year warrant
to purchase 25,000 shares of Common Stock at $4.50 per share (the "WARRANTS") As
used herein, the term "Units" means such Units, and all Common Stock and
Warrants underlying the Units). and
WHEREAS, the Subscriber desires to subscribe for the number of Units
set forth on the signature page hereof, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter set forth, the parties hereto do hereby agree as
follows:
I. SUBSCRIPTION FOR AND REPRESENTATIONS AND COVENANTS OF SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Subscriber hereby subscribes for and agrees to purchase from the Company such
number of Units set forth upon the signature page hereof, at a price equal to
$112,500 per Unit, and the Company agrees to sell such to the Subscriber for
said purchase price, subject to the Company's right to sell to the Subscriber
such lesser number of (or no) Units as the Company may, in its sole discretion,
deem necessary or desirable. The purchase price is payable by wire transfer of
immediately available funds, pursuant to the wire instructions attached as
Exhibit D to the PPM or by check payable to Signature Bank, as Escrow Agent to
Towerstream Corporation.
1.2 The Subscriber recognizes that the purchase of Units involves a
high degree of risk in that (i) an investment in the Company is highly
speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Units; (ii) the
Units are not registered under the Securities Act of 1933, as amended (the
"ACT"), or any state securities law; (iii) there is no trading market for the
Units, none is likely ever to develop, and the Subscriber may not be able to
liquidate his, her or its investment; (iv) transferability of the Units is
extremely limited; and (v) an investor could suffer the loss of his, her or its
entire investment.
1.3 The Subscriber is an "accredited investor," as such term in
defined in Rule 501 of Regulation D promulgated under the Act, and the
Subscriber is able to bear the economic risk of an investment in the Units.
1.4 The Subscriber has prior investment experience (including
investment in non-listed and non-registered securities), and has read and
evaluated, or has employed the services of an investment advisor, attorney or
accountant to read and evaluate, all of the documents furnished or made
available by the Company to the Subscriber and to all other prospective
investors in the Units, including the PPM, as well as the merits and risks of
such an investment by the Subscriber. The Subscriber's overall commitment to
investments which are not readily marketable is not disproportionate to the
Subscriber's net worth, and the Subscriber's investment in the will not cause
such overall commitment to become excessive. The Subscriber, if an individual,
has adequate means of providing for his or her current needs and personal and
family contingencies and has no need for liquidity in his or her investment in
the Common Stock. The Subscriber is financially able to bear the economic risk
of this investment, including the ability to afford holding the for an
indefinite period or a complete loss of this investment.
1.5 The Subscriber acknowledges receipt and careful review of the PPM,
all supplements to the PPM, and all other documents furnished in connection with
this transaction by the Company (collectively, the "OFFERING DOCUMENTS") and has
been furnished by the Company during the course of this transaction with all
information regarding the Company which the Subscriber has requested or desires
to know; and the Subscriber has been afforded the opportunity to ask questions
of and receive answers from duly authorized officers or other representatives of
the Company concerning the terms and conditions of the Offering, and any
additional information which the Subscriber has requested.
1.6 The Subscriber acknowledges that the purchase of the Units may
involve tax consequences to the Subscriber and that the contents of the Offering
Documents do not contain tax advice. The Subscriber acknowledges that the
Subscriber must retain his, her or its own professional advisors to evaluate the
tax and other consequences to the Subscriber of an investment in the Units. The
Subscriber acknowledges that it is the responsibility of the Subscriber to
determine the appropriateness and the merits of a corporate entity to own the
Subscribers Units and the corporate structure of such entity.
1.7 The Subscriber acknowledges that this Offering has not been
reviewed by the Securities and Exchange Commission (the "SEC") or any state
securities commission, and that no federal or state agency has made any finding
or determination regarding the fairness or merits of the Offering. The
Subscriber represents that the Units are being purchased for his, her or its own
account, for investment only, and not with a view toward distribution or resale
to others. The Subscriber agrees that he, she or it will not sell or otherwise
transfer the Units unless they are registered under the Act or unless an
exemption from such registration is available.
1.8 The Subscriber understands that the provisions of Rule 144 under
the Act are not available for at least one (1) year to permit resales of the
Units or the Common Stock and Warrants comprising the Units and there can be no
assurance that the conditions necessary to permit such sales under Rule 144 will
ever be satisfied. The Subscriber understands that the Company is under no
obligation to comply with the conditions of Rule 144 or take any other
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action necessary in order to make available any exemption from registration for
the sale of the Units or the Common Stock and Warrants comprising the Units.
1.9 The Subscriber understands that the Units have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon his, her or its investment intention. In this
connection, the Subscriber understands that it is the position of the SEC that
the statutory basis for such exemption would not be present if his, her or its
representation merely meant that his, her or its present intention was to hold
such securities for a short period, such as the capital gains period of tax
statutes, for a deferred sale, for a market rise, assuming that a market
develops, or for any other fixed period. The Subscriber realizes that, in the
view of the SEC, a purchase now with an intent to resell would represent a
purchase with an intent inconsistent with his, her or its representation to the
Company and the SEC might regard such a sale or disposition as a deferred sale,
for which such exemption is not available.
1.10 The Subscriber agrees to indemnify and hold the Company, its
directors, officers and controlling persons and their respective heirs,
representatives, successors and assigns harmless against all liabilities, costs
and expenses incurred by them as a result of any misrepresentation made by the
Subscriber contained herein or any sale or distribution by the Subscriber in
violation of the Act (including, without limitation, the rules promulgated
thereunder), any state securities laws, or the Company's Certificate of
Incorporation or By-laws, as amended from time to time.
1.11 The Subscriber consents to the placement of a legend on any
certificate or other document evidencing the Units stating that such securities
have not been registered under the Act and setting forth or referring to the
restrictions on transferability and sale thereof.
1.12 The Subscriber understands that the Company will review and rely
on this Subscription Agreement without making any independent investigation; and
it is agreed that the Company reserves the unrestricted right to reject or limit
any subscription and to withdraw the Offering at any time.
1.13 The Subscriber hereby represents that the address of the
Subscriber furnished at the end of this Subscription Agreement is the
undersigned's principal residence, if the Subscriber is an individual, or its
principal business address if it is a corporation or other entity.
1.14 The Subscriber acknowledges that if the Subscriber is a
Registered Representative of a National Association of Securities Dealers, Inc.
("NASD") member firm, the Subscriber must give such firm the notice required by
the NASD's Conduct Rules, receipt of which must be acknowledged by such firm on
the signature page hereof.
1.15 The Subscriber hereby acknowledges that neither the Company nor
any persons associated with the Company who may provide assistance or advice in
connection with the Offering (other than the placement agent, if one is engaged
by the Company) are or are expected to be members or associated persons of
members of the NASD or registered broker-dealers under any federal or state
securities laws.
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1.16 The Subscriber understands that, pursuant to the terms of the
Offering as set forth in the PPM, the Company must receive subscriptions for 60
Units for an aggregate purchase price of $6,750,000 (the "MINIMUM OFFERING") in
order to close on the sale of any Units and that persons affiliated with the
Company or its consultants, advisors, or placement agents may subscribe for
Common Stock, in which case the Company may accept subscriptions from such
affiliated parties in order to reach the Minimum Offering; and that,
accordingly, no investor should conclude that achieving the Minimum Offering is
the result of any independent assessment of the merits or advantages of the
Offering or the Company made by Subscribers in the Minimum Offering.
1.17 The Subscriber hereby represents that, except as expressly set
forth in the Offering Documents, no representations or warranties have been made
to the Subscriber by the Company or any agent, employee or affiliate of the
Company and, in entering into this transaction, the Subscriber is not relying on
any information other than that contained in the Offering Documents and the
results of independent investigation by the Subscriber.
1.18 All information provided by the Subscriber in the Investor
Questionnaire attached as Exhibit B to the PPM is true and accurate in all
respects, and the Subscriber acknowledges that the Company will be relying on
such information to its possible detriment in deciding whether the Company can
sell these securities to the Subscriber without giving rise to the loss of the
exemption from registration under applicable securities laws.
II. REPRESENTATIONS BY THE COMPANY
The Company represents and warrants to the Subscriber that as of the
date of the closing of this Offering (the "CLOSING DATE"):
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to conduct the business which it conducts and proposes to
conduct.
(b) The execution, delivery and performance of this Subscription
Agreement by the Company have been duly authorized by the Company and all other
corporate action required to authorize and consummate the offer and sale of the
Units has been duly taken and approved.
(c) The Units and the underlying Common Stock have been duly and
validly authorized and issued.
(d) The Company has obtained, or is in the process of obtaining,
all licenses, permits and other governmental authorizations necessary for the
conduct of its business, except where the failure to so obtain such licenses,
permits and authorizations would not have a material adverse effect on the
Company. Such licenses, permits and other governmental authorizations which have
been obtained are in full force and effect, except where the failure to be so
would not have a material adverse effect on the Company, and the Company is in
all material respects complying therewith.
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(e) The Company knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which would materially
adversely affect the business, financial condition or operations of the Company.
(f) The Company is not in violation of or default under, nor will
the execution and delivery of this Subscription Agreement or the issuance of the
Common Stock, or the consummation of the transactions herein contemplated,
result in a violation of, or constitute a default under, the Company's
Certificate of Incorporation or By-laws, any material obligations, agreements,
covenants or conditions contained in any bond, debenture, note or other evidence
of indebtedness or in any material contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to which the
Company is a party or by which it or any of its properties may be bound or any
material order, rule, regulation, writ, injunction, or decree of any government,
governmental instrumentality or court, domestic or foreign.
III. COVENANTS BY THE COMPANY
The Company agrees that the Subscriber shall have certain registration
rights with respect to the shares of Common Stock underlying the Units issued to
Subscribers pursuant to the terms of the Registration Rights Agreement attached
as Exhibit C to the PPM.
IV. TERMS OF SUBSCRIPTION
4.1 Subject to Section 4.2 hereof, the subscription period will begin
as of the date of the PPM and will terminate at 11:59 PM Eastern Time, on the
earlier of the date on which the Maximum Offering is sold or the Offering is
terminated by the Company (the "TERMINATION DATE"). The minimum subscription
amount is $112,500, although the Company may, in its discretion, accept
subscriptions for less than $112,500.
4.2 The Subscriber has effected a wire transfer in the full amount of
the purchase price for the Units to the Company's escrow account in accordance
with the wire instructions attached as Exhibit D to the PPM or has delivered a
check in payment of the purchase price for the Units.
4.3 Pending the sale of the Units, all funds paid hereunder shall be
deposited by the Company in escrow with the Company's escrow agent. If the
Company shall not have obtained subscriptions (including this subscription) for
purchases of 60 Units for an aggregate purchase price of $6,750,000 on or before
the Termination Date (as such date may be extended by the Company), then this
subscription shall be void and all funds paid hereunder by the Subscriber shall
be promptly returned without interest to the Subscriber, to the same account
from which the funds were drawn. If subscriptions are received and accepted and
payment tendered for the Minimum Offering on or prior to the Termination Date,
then all subscription proceeds (less fees and expenses) shall be paid over to
the Company within ten (10) days thereafter or such earlier date that is one
business day after the amount of good funds in escrow equals or exceeds
$6,750,000. In such event, sales of the Units may continue thereafter until the
earlier of the date on which the Maximum Offering is sold and the Termination
Date, with subsequent releases of funds from time to time at the discretion of
the Company.
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4.4 The Subscriber hereby authorizes and directs the Company and its
escrow agent to deliver any certificates or other written instruments
representing the Units to be issued to such Subscriber pursuant to this
Subscription Agreement to the address indicated on the signature page hereof.
4.5 The Subscriber hereby authorizes and directs the Company and its
escrow agent to return any funds, without interest, for unaccepted subscriptions
to the same account from which the funds were drawn.
4.6 The Subscriber hereby authorizes and directs the Company and its
escrow agent to return any funds, without interest, for unaccepted subscriptions
to the same account from which the funds were drawn. 4.6 If the Subscriber is
not a United States person, such Subscriber shall immediately notify the Company
and the Subscriber hereby represents that the Subscriber is satisfied as to the
full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Units or any use of this Subscription Agreement,
including (i) the legal requirements within its jurisdiction for the purchase of
the Units, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained, and (iv)
the income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale or transfer of the Units. Such Subscriber's
subscription and payment for, and continued beneficial ownership of, the Units
will not violate any applicable securities or other laws of the Subscriber's
jurisdiction.
V. MISCELLANEOUS
5.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by reputable overnight courier, facsimile
(with receipt of confirmation) or registered or certified mail, return receipt
requested, addressed to the Company, at the address set forth in the first
paragraph hereof, Attention: Chief Executive Officer, facsimile: (000) 000-0000,
and to the Subscriber at the address or facsimile number indicated on the
signature page hereof. Notices shall be deemed to have been given on the date
when mailed or sent by facsimile transmission or overnight courier, except
notices of change of address, which shall be deemed to have been given when
received.
5.2 This Subscription Agreement shall not be changed, modified or
amended except by a writing signed by the parties against whom such modification
or amendment is to be charged, and this Subscription Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
5.3 This Subscription Agreement shall be binding upon and inure to the
benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Subscription Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 Notwithstanding the place where this Subscription Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of Delaware. The parties hereby agree that any dispute
which may arise between them arising out of or in connection with this
Subscription Agreement shall be adjudicated only before a Federal court
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located in the State of Delaware and they hereby submit to the exclusive
jurisdiction of the federal courts of the State of Delaware with respect to any
action or legal proceeding commenced by any party, and irrevocably waive any
objection they now or hereafter may have respecting the venue of any such action
or proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum, relating to or arising out of this Subscription Agreement
or any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of the
address set forth below or such other address as the undersigned shall furnish
in writing to the other. The parties further agree that in the event of any
dispute, action, suit or other proceeding arising out of or in connection with
this Subscription Agreement, the PPM, the Registration Rights Agreement or other
matters related to this subscription brought by a Subscriber (or transferee),
the Company (and each other defendant) shall recover all of such party's
attorneys' fees and costs incurred in each and every action, suit or other
proceeding, including any and all appeals or petitions therefrom. As used
herein, attorney's fees shall be deemed to mean the full and actual costs of any
investigation and of legal services actually performed in connection with the
matters involved, calculated on the basis of the usual fee charged by the
attorneys performing such services.
5.5 This Subscription Agreement may be executed in counterparts. Upon
the execution and delivery of this Subscription Agreement by the Subscriber,
this Subscription Agreement shall become a binding obligation of the Subscriber
with respect to the purchase of Units as herein provided; subject, however, to
the right hereby reserved by the Company to (i) enter into the same agreements
with other subscribers, (ii) add and/or delete other persons as subscribers and
(iii) reduce the amount of or reject any subscription.
5.6 The holding of any provision of this Subscription Agreement to be
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Subscription Agreement, which shall remain in full
force and effect.
5.7 It is agreed that a waiver by either party of a breach of any
provision of this Subscription Agreement shall not operate or be construed as a
waiver of any subsequent breach by that same party.
5.8 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further actions as
may be necessary or appropriate to carry out the purposes and intent of this
Subscription Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Subscription
Agreement as of the day and year first written above.
______________________________ X $112,500 for each Unit = $____________________.
Number of Units subscribed for Aggregate Purchase Price
MANNER IN WHICH TITLE IS TO BE HELD (PLEASE CHECK ONE):
1. ___ Individual
2. ___ Joint Tenants with Right of Survivorship
3. ___ Community Property
4. ___ Tenants in Common
5. ___ Corporation/Partnership/ Limited Liability Company
6. ___ XXX
7. ___ Trust/Estate/Pension or Profit Sharing Plan
Date Opened:______________
8. ___ As a Custodian for
_______________________________________________________________________
Under the Uniform Gift to Minors Act of the State of
_______________________________________________________________________
9. ___ Married with Separate Property
10. ___ Xxxxx
11. ___ Tenants by the Entirety
12. ___ Foundation described in Section 501(c)(3) of the Internal Revenue Code
of 1986, as amended.
IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE PAGE 9
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 10.
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EXECUTION BY NATURAL PERSONS
________________________________________________________________________________
Exact Name in Which Title is to be Held
______________________________________ _______________________________________
Name (Please Print) Name of Additional Subscriber
______________________________________ _______________________________________
Residence: Number and Street Address of Additional Subscriber
______________________________________ _______________________________________
City, State and Zip Code City, State and Zip Code
______________________________________ _______________________________________
Social Security Number Social Security Number
______________________________________ _______________________________________
Telephone Number Telephone Number
______________________________________ _______________________________________
Fax Number (if available) Fax Number (if available)
______________________________________ _______________________________________
E-Mail (if available) E-Mail (if available)
-------------------------------------- ---------------------------------------
(Signature) (Signature of Additional Subscriber)
ACCEPTED this ___ day of _________
20__, on behalf of Towerstream
Corporation
By:
-----------------------------------
Name:
Title:
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EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
(Corporation, Partnership, Trust, Etc.)
________________________________________________________________________________
Name of Entity (Please Print)
Date of Incorporation or Organization:
State of Principal Office:
Federal Taxpayer Identification Number: ________________________________________
______________________________________
Office Address
______________________________________
City, State and Zip Code
______________________________________
Telephone Number
______________________________________
Fax Number (if available)
______________________________________
E-Mail (if available)
[seal] By:
-----------------------------------
Name:
Attest: ______________________________ Title:
(If Entity is a Corporation)
*IF SUBSCRIBER IS A REGISTERED REPRESENTATIVE WITH AN NASD MEMBER FIRM, HAVE THE
FOLLOWING ACKNOWLEDGEMENT SIGNED BY THE APPROPRIATE PARTY:
The undersigned NASD member firm acknowledges receipt of the notice required by
Rule 3050 of the NASD Conduct Rules
ACCEPTED this ____ day of __________
-------------------------------------- 20__, on behalf of Towerstream
Name of NASD Firm Corporation
By: By:
---------------------------------- -----------------------------------
Name: Name:
Title: Title:
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