CENTEX SECURITIES
INCORPORATED
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1020 Prospect Street, Suite 200, La Jolla, California 92037 [ ](619) 456-8200
[ ] (800) 833-3504 [ ] Fax (619) 456-8211
June 26, 1997
Board of Directors
New Frontier Media, Inc.
1050 Walnut St., Suite 301
Boulder, CO.
Attention: Mr. Mark H. Kreloff,
Chairman and President
Gentlemen:
New Frontier Media, Inc. ("New Frontier Media" or the "Company") hereby
engage, Centex Securities. Inc. ("Centex") to serve as the sole managing
underwriter In the proposed firm commitment underwritten public offering (the
"offering") of approximately $7 million of Securities of the Company (the
"Securities"). The following sets forth the primary terms and conditions under
which the Company and Centex will proceed with Registration Statement covering
the Securities to he underwritten:
Section 1. Pricing.
The Securities will be priced based on indications from "Broker/Dealers",
institutions and individuals such that in the best determination of the
Underwriter, the securities can appreciate approximately 10% in the first week
of trading.
Section 2. Fees.
The Company shall pay total compensation to the Underwriters not to, exceed
the National Association of Securities Dealers Corporation ("NASD") Rules of
Fair Practice. Such compensation shall be comprised the gross underwriting
discounts and commissions, i.e., "gross spread", which will be approximately 10%
of the public offering price. Centex will receive a nonaccountable expense
allowance of up to 3% of the amount of the offering, of which $50,000 is due and
payable upon execution cf this Agreement.* Any unpaid balance will be paid at
closing. Centex will purchase from the Company for total consideration of $100 a
Securities Purchase Warrant ("Warrant") equal to 10% of the number of Securities
purchased by the Underwriters. Such Warrant will be exercisable at 120% of the
Offering Price for a period of four years, commencing one year after the
closing.
Notwithstanding the above, the Company and Centex agree that, at the
election of the Company, the Company and Centrex will select a co-managing
underwriter (the "Co-Manager") for the offering mutually satisfactory to them.
Compensation to such Co-Manager shall be upon terms agreeable to the Company,
Centex and the Co-Manager, but in no event shall the compensation to Centex and
the Co-Manager in the aggregate exceed the compensation set forth in this
section 2.
*and $20,000 one week after receipt of $50,000 [initialed]
Member NASD & SIPC
Section 3. Expenses.
The company is responsible for paying all costs typically borne by the
issuer. These include, but are not limited to, the cost of preparing the
Registration Statement, all printing costs, filing and related expenses (SEC and
NASD), the fees and expenses of its attorneys and accountants, and all Blue Sky
and related costs, whether incurred by Counsel to the Company or the Manager,
all NASDAQ or exchange listing fees, all costs of marketing the issue including
all airfares, hotels, roadshow presentations, the cost of the tombstone
advertisement and ten bound volumes of the closing document.
Roadshows will be handled by Alan Stone & Company.
Section 4. Over-allotment.
The Company will grant to the Manager, as representative of the
underwriters, the option to purchase up to an additional 15% of the aggregate
number of Securities offered in connection with the Offering for a period of 45
days subsequent to the closing of the Offering (the "Closing") solely for the
purpose of covering over-allotments, under the same terms as the other
Securities underwritten in the offering.
Section 5. Indemnification.
The Company hereby indemnifies and holds harmless the Manager from and
against any and all losses, claims, damages or liabilities to which the Manager
may become subject under any federal or state securities law or otherwise
arising out of or based upon the Manager's acting as aforesaid manager which is
a result of any false or misleading statements by the Company or any omission of
fact that would cause the Prospectus to be untrue. The company shall reimburse
the Manager for any legal or other expenses reasonably incurred by the Manager
in connection with investigating or defending or defending any such loss, claim
damage, liability or action. This Paragraph shall survive the termination or
expiration of this Agreement. However, this Paragraph shall be superseded by the
indemnification provisions of the Underwriting Agreement when executed.
Section 6. Exclusivity.
The Company agrees that it will not negotiate with any other underwriter or
other person relating to a possible public offering of the Company's securities
for a period of 90 days after the date of execution and delivery of this
Agreement without [initialed] the manager's consent. The Company represents and
warrants that, except as disclosed to the Manager, it subsidiaries are
wholly-owned by it and that it has not granted any other person any right to
underwrite or register shares thereof or entered into any agreement to pay any
finder's or financial service fee that would be triggered by consummation of
this Offering.
Section 7. Exceptions.
None.
The foregoing is a brief outline of the proposed financing and each of the
terms must be interpreted in the form in which it finally appears in the
Underwriting Agreement and related documents. Our obligation to purchase and
offer the shares shall be conditioned in its entirety upon completion to our
satisfaction of a comprehensive review of your business and prospects as well as
the negotiation, execution, and delivery of a satisfactory Underwriting
Agreement with the Company (this letter is not be construed as such an agreement
nor as a contract to enter into such an agreement). The Underwriting Agreement
will be entered into immediately prior to the time of the public offering. It is
our intention that upon satisfaction of the conditions set forth in this letter
and subject to market conditions at the time, a public offering of the shares
will be made. However, this letter cannot be construed as a commitment by us to
purchase the shares, nor a commitment by the Company to sell the shares.
Please confirm your agreement [initialed] to the foregoing by signing and
returning to us the enclosed copy of this letter along with a check for $50,000
in accordance with Section 2.
We look forward to a successful transaction as a continuation of our
mutually beneficial relationship.
Agreed to and Accepted this 14th day of 7/14/1997 [initialed]
NEW FRONTIER MEDIA, INC. CENTEX SECURITIES, INC.
By: /s/ Mark H. Kreloff By: /s/ Bruce I. Biddick
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Mark H. Kreloff Bruce I. Biddick
Chairman and President President-CEO