HORNBLOWER & WEEKS, INC.
November 24, 1998
Xx. Xxxxx Xxxxxx
PTN Media, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
RE: Engagement to Represent PTN Media, Inc. (the
"Company") as the Placement Agent for Public
Offering of $2,000,000.
Dear Xx. Xxxxxx:
This letter sets forth the terms upon which Hornblower & Weeks, Incorporated
(the "Placement Agent") will be engaged as the non-exclusive placement agent in
connection with the Public Offering of securities by PTN Media, Inc. (the
"Company").
1. The Company hereby engages the Placement Agent as its non-exclusive placement
agent in connection with the sale by the Company of its securities as set forth
in Exhibit B (the "Financing" or the "Offering").
2. We agree to use our best efforts to introduce the offering to investors who
may be interested in participating in the Financing. We further agree that the
Financing shall be made through the Placement Agent and any additional National
Association of Securities Dealers ("NASD") member firm or firms we may invite to
participate in the sale of the Financing including firms already engaged.
3. In connection with our activities on your behalf, you will furnish us with
all information which we may request and will provide us access to your
officers, directors, accountants and counsel. When the terms of the proposed
Offering have been structured and agreed upon, a Public Offering prospectus (the
"Prospectus") will be prepared with respect to the Company and the Offering by
your counsel and at your expense. You acknowledge that in rendering our services
hereunder, we will be using and relying on the information contained in the
Prospectus. You represent and warrant that the Prospectus will be true, accurate
and
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HORNBLOWER & WEEKS, INC. INVESTMENT BANKING
000 XXXX XXXXXX, 00XX XXXXX, XXX XXXX, XX 00000 *
TEL: 000-000-0000. FAX: 000-000-0000
MEMBER NASD/SIPC/MSRB
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complete in all material respects and will 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 therein not misleading. You will sign
additional documentation including indemnification agreements, selling
agreements and other documents in forms acceptable to the Placement Agent when
required by the Placement Agent. All projections which have been or shall be
furnished to us in connection with this Agreement, will represent Company
managemen's best judgment of future performance, based upon historical
information and reasonable assumptions of management (it being understood that
actual results may vary from such projections). We will not make any offer
regarding the Offering on the basis of any communications relating to the
Company except the Prospectus, the exhibits thereto, and any other information
approved by you in writing for use in connection with offers regarding the
Offering.
4. For due diligence, placement and other services which will be provided to the
Company from time to time over the course of our engagement, we mutually agree
that the Placement Agent may invite to participate in a syndicate of selling
firms, are entitled to compensation, payable at the first break of escrow and,
where applicable each subsequent close or closing, and other consideration
mutually understood, as set forth below:
a. A sales commission (the "Commissio") equal to 10% of the gross
proceeds to the Company from the Offering.
b. It is also agreed that the Company will pay all expenses incurred in
connection with the preparation and printing of the Prospectus, and
all amendments thereto. The Company will pay all expenses and those of
the Placement Agent and its agents relating to travel, legal,
accounting and other costs involved with the Financing. The
accountable expenses for the Placement Agent shall be exclusive of the
legal expenses and Blue Sky counsel fees, which the Company agrees to
pay directly. The Company agrees to pay the Blue Sky counsel and
filing fees for those jurisdictions designated by the Placement Agent
plus states already filed. The Company agrees to pay all reasonable
expenses. The expenses described in this paragraph shall be reimbursed
by the Company independent of any fees described in paragraph 4B
above, and shall be payable upon each close of escrow of the Offering.
Such payments shall be invoiced to and may be deducted from the
Offering Escrow Account (the "Escrow Account") with an escrow agent
suitable to the Placement Agent (the"Escrow Agent"). (See Paragraph 4e
below.)
c. The Company hereby agrees to enter into an escrow agreement with an
escrow agent suitable to the Company and the Placement Agent and
Company (the "Escrow Agent"), and agrees to abide with the terms of an
escrow agreement to be entered into with the Escrow Agent and the
Placement Agent. The Company also agrees to enter into such additional
certifications and documentation as may be requested from time to time
by the Placement Agent or the Escrow Agent.
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d. If at any time during the term of this Agreement and for any period of
five years following the termination of this Agreement, the Company
merges with, acquires assets or any other property, or obtain any
other financing from any of the entities, affiliations or persons of
the Placement Agent, its employees or former employees, agents,
representatives, advisors or consultants introduces to the Company,
the Company will pay a finder's fee in cash equal to 5% of the total
gross proceedings of such transaction. If required by applicable law,
or at election of the Placement Agent, the finde's fee will be deemed
to have been earned by and be paid to a placement agent selected
exclusively by the Placement Agent.
e. The Company hereby irrevocably agrees not to circumvent, avoid, bypass
or obviate directly or indirectly, the intent of this Agreement, to
avoid payment of fees, in any transaction with any corporation,
partnership or individual, introduced by the Placement Agent to the
Company in connection with any project, and any loans or collateral or
fundings, or any other transaction involving any products, transfers
or services, or addition, renewal, extension, rollover, amendment,
renegotiation, new contracts, parallel contracts, or third party
assignments thereof.
5. The Placement Agent is hereby granted an exclusive right of first refusal to
act as, underwriter and/or placement agent in connection with any Public
Offering or public offering of the Company's securities during the Term of this
Agreement. The Company will provide the Placement Agent with notice of any
proposed Public Offering or public offering (such notice to include the proposed
material terms and conditions thereof, together with copies of any written
proposals relating thereto) and the Placement Agent shall have fifteen (15)
business days from its receipt of such notice to exercise such right by notice
to the Company. Any material change in any such proposal shall constitute a
separate and distinct proposal requiring a further notice to the Placement
Agent.
6. Neither the Placement Agent nor its affiliates, or their respective officers,
directors, employees, agents, attorneys, consultants or controlling persons
shall be liable, responsible or accountable in damages or otherwise to the
Company or its affiliates, or their respective officers, directors, employees,
agents or controlling persons for any act or omission performed or omitted by
the Placement Agent with respect to the services provided by it pursuant or
otherwise relating to or arising out of this Agreement.
7. The Company agrees to indemnify and hold harmless the Placement Agent, each
other firm participating in this offering, their affiliates, and their
respective officers, directors, employees, agents and controlling persons (The
Placement Agent and each such other person and entity being an "Indemnified
Party" for purposes of this section) from and against any and all losses,
claims, damages and liabilities, jointly or severally, to which such Indemnified
Party may
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become subject under any applicable federal or state law, or otherwise related
to or arising out any transaction contemplated by this Agreement, and the
performance by the Placement Agent of the services contemplated by this
Agreement, and shall reimburse each Indemnified Party for all reasonable
expenses (including reasonable counsel fees and expenses) as they are incurred
in connection with the investigation of, preparation for or defense of any
pending or threatened claim or any action or proceeding arising therefrom,
whether or not such Indemnified Party is a party thereto provided that the
Company shall not be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Indemnified Party and
further provide that such Indemnified Party agrees to refund such reimbursed
expenses if and to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification. In the event that the
foregoing indemnity is unavailable or insufficient to hold any Indemnified Party
harmless, than the Company shall contribute to amounts paid or payable by such
Indemnified Party in respect of such losses, claims, damages and liabilities in
such proportions as approximately reflects the relative benefits received by, in
fault of, the Company and such Indemnified Party in connection with the matters
as to which such losses, claims, damages and liabilities relate and other
equitable considerations, provided however that nothing in this sentence shall
be construed as altering or limiting in any way the effect of the provision
contained in the immediately preceding sentence.
8. Neither termination nor completion of this financing shall affect the
provisions of this Agreement, and the Indemnification provisions which are
incorporated herein, which shall remain operative and in full force and effect.
9. The validity and interpretation of this Agreement shall be governed by the
laws of the State of New York without regard to the conflicts of laws principles
thereof or the actual domiciles of the parties hereto. Any dispute between the
Company and the Placement Agent or otherwise related to this Agreement shall be
resolved in the courts of New York State in New York City and the Company and
its executive officers hereby irrevocably consent to the jurisdiction of the
courts of New York City, New York.
10. The Company agrees that, upon each closing of the placement, it will provide
the Placement Agent & all investors with appropriate representations and
warranties and legal opinions relating to, among other things, its corporate
existence, its business, and the accuracy and adequacy of the information
provided by the Company to the Placement Agent and the investors in connection
with this Offering.
11. The Company agrees to issue all stock certificates, promissory notes and
warrants within 10 days of each closing of this offering.
12. The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto and of the indemnified parties hereunder and their
successors and assigns and representatives, and the obligations and liabilities
assumed in this Agreement by the parties
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hereto shall be binding upon their respective successors and assigns.
13. This Agreement may be executed in any number of counterparts, each of which
will be deemed to be an original, but all of which together will constitute one
and the same instrument.
14. This Agreement contains the entire and complete understanding among the
parties concerning its subject matter and all representations, agreements,
arrangements and understandings between the parties, whether oral or written,
have been fully merged herein and are superseded hereby.
If you are in agreement with the foregoing, please execute and return one copy
of this letter to the undersigned. Thank you.
We look forward to working with you.
Very Truly Yours, APPROVED AND AGREED
Hornblower & Weeks Incorporated PTN Media, Inc.
/s/ Xxxx Xxxxxxxxx /s/ Xxxxx Xxxxxx
-------------------- --------------------
Xxxx Xxxxxxxxx Xxxxx Xxxxxx
CEO Chairman
Attachments: Exhibit A: Capital Structure
Exhibit B: Proposed Terms
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EXHIBIT A
CAPITAL STRUCTURE FOR
PTN Media, Inc.
November 24, 1998
Shares outstanding 3,041,680
CURRENT STRUCTURE
Principle Stockholders:
Xxxxx Xxxxxx 2,113,674 69.49%
Xxxxx X. Xxxxxxxx 540,340 17.76%
Xxxxxxx Xxxxxxxx 300,000 2.89%
Miscellaneous/Less than 5% 87,666 2.89%
Total -------------------------
3,041,680 100%
AFTER PROPOSED OFFERING
Principle Stockholders 2,954,014 85.8%
Miscellaneous/Less than 5% 87,666 2.50%
Float 400,000 11.7%
Total -------------------------
3,441,680 100%
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EXHIBIT B
PTN MEDIA, INC.
PROPOSED PUBLIC OFFERING
November 24, 1998
Amount: $2,000,000 (400,000 shares)
Price Per Share: $5.00
To Be Paid Form All
Escrows: Attorney's and Financial ConsultanT's fees
as well as the other Accountable Expenses.
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