EXHIBIT 10.7
ADDENDUM TO WARRANT TO PURCHASE COMMON STOCK
Reference is made to each of those Warrant Agreements, dated as of January
12, 2007, (the "Warrant Agreements") between Towerstream Corporation, a Delaware
corporation (the "Company") and each of the subscribers (the "Subscribers"),
issued to Subscribers for Units (as defined in the Company's Confidential
Private Placement Memorandum (the "PPM") dated December 21, 2006, as
supplemented to date). The Company hereby provides the following Addendum (this
"Addendum") to the Warrant Agreements for the benefit of each Subscriber.
Capitalized terms used herein but not otherwise defined shall have the meanings
ascribed to them in the Warrant Agreements or the PPM.
The Company hereby covenants and agrees that notwithstanding anything to
the contrary contained in the Warrants, each Warrant shall be, without any
further action by the Investors or the Company, amended such that the Investors
shall receive the benefit of any more favorable terms contained in those certain
Common Stock Purchase Warrants, dated January 12, 2007, by and among the Company
and the purchasers of the Company's 8% Convertible Debentures due December 31,
2009, provided the Investors shall also agree to any further terms or conditions
of such more favorable terms as a condition thereof. Notwithstanding anything
herein to the contrary, the amendments provided herein shall not be deemed to
amend the following: (i) the definition of "Warrant Price" in the preamble to
the Warrant (ii) the number of shares of Warrant Stock, or (iii) the "Adjustment
Upon Issuance of Common Stock" set forth in Section 5(a) of the Warrant. For the
absence of doubt, the Warrants issued in connection with the Units shall provide
the following further terms and provisions:
1. The following provisions are hereby incorporated into each Warrant:
Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, at any time or times on or after the fate
hereof and on or before the Expiration Date by delivery to the Company
of a duly executed facsimile copy of the Form of Exercise annexed
hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address
of such Holder appearing on the books of the Company) ; and, within 3
Trading Days of the date said Form of Exercise is delivered to the
Company, the Company shall have received payment of the aggregate
Warrant Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank of immediately available
funds. Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company for
cancellation within 3 Trading Days of the date the final Form of
Exercise is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of
shares of Warrant Stock available hereunder shall
have the effect of lowering the outstanding number of shares of
Warrant Stock purchasable hereunder in an amount equal to the
applicable number of shares of Warrant Stock purchased. The Holder and
the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Form of Notice within 2 Business Days of
receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the provisions
of this paragraph, following the purchase of a portion of the shares
of Warrant Stock hereunder, the number of shares of Warrant Stock
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
If at any time after one year from the date of issuance of this
Warrant there is no effective Registration Statement registering, or
no current prospectus available for, the resale of the Warrant Stock
by the Holder, then this Warrant may also be exercised at such time by
means of a "cashless exercise" in which the Holder shall be entitled
to receive a certificate for the number of shares of Warrant Stock
equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date of
such election;
(B) = the Warrant Price of this Warrant, as adjusted; and
(X) = the number of shares of Warrant Stock issuable upon exercise of
this Warrant in accordance with the terms of this Warrant by means of
a cash exercise rather than a cashless exercise.
Notwithstanding anything herein to the contrary, on the Expiration
Date, this Warrant shall be automatically exercised via cashless
exercise.
Certificates for shares purchased hereunder shall be transmitted by
the transfer agent of the Company to the Holder by crediting the
account of the Holder's prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission system if the Company
is a participant in such system, and otherwise by physical delivery to
the address specified by the Holder in the Form of Exercise within 3
Trading Days from the delivery to the Company of the Form of Exercise,
surrender of this Warrant (if required) and payment of the aggregate
Warrant Price as set forth above ("Warrant Share Delivery Date"). This
Warrant
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shall be deemed to have been exercised on the date the Warrant Price
is received by the Company. The Warrant Stock shall be deemed to have
been issued, and the Holder or any other person so designated to be
named therein shall be deemed to have become a holder of record of
such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Warrant Price (or by
cashless exercise, if permitted). If the Company fails for any reason
to take all actions within the Company's control required to cause
there to be delivered to the Holder certificates evidencing the
Warrant Stock subject to a Form of Exercise by the Warrant Share
Delivery Date, the Company shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant
Stock subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Form of Exercise), $5 per Trading Day
for each Trading Day after the fourth Trading Day following such
Warrant Share Delivery Date until such certificates are delivered.
If the Company fails to cause its transfer agent to transmit to the
Holder a certificate or certificates representing the Warrant Shares
by the Warrant Share Delivery Date, then the Holder will have the
right to rescind such exercise.
2. In addition to the terms defined elsewhere in this Addendum, the following
terms shall have the meanings set forth herein:
(a) "Business Day" means any day except Saturday, Sunday, any day
which shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.
(b) "Trading Day" means a day on which the Common Stock is traded on
the following markets or exchanges on which the Common Stock is listed or quoted
for trading: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq
Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or
the OTC Bulletin Board.
(c) "Trading Market" means the following markets or exchanges on which
the Common Stock is listed or quoted for trading: the American Stock Exchange,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or the OTC Bulletin Board.
(d) "VWAP" means, for any date, the price determined by the first of
the following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by Bloomberg L.P.
(based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York
City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding
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date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or
quoted on the OTC Bulletin Board and if prices for the Common Stock are then
reported in the "Pink Sheets" published by Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Investors and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.
IN WITNESS WHEREOF, the Company has executed this Addendum as of the ___
day of January, 2007.
TOWERSTREAM CORPORATION
By:
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Name: Jeffrey M. Thompson
Title: Chief Executive Officer
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