EXHIBIT 99.17
[ICG LETTERHEAD]
As of August 17, 2001
BrightCube, Inc.
000 Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to that certain Loan and Security Agreement, dated as of
July 16, 2001 by and between BRIGHTCUBE, INC., a Nevada corporation (the
"Borrower") and INTELLECT CAPITAL GROUP, LLC, a Delaware limited liability
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company (the "Lender") (such agreement, as amended, modified, supplemented and
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restated from time to time, the "Loan Agreement"; capitalized terms used herein
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without definition shall have the meanings ascribed to them in the Loan
Agreement).
This letter and the agreements set forth herein are limited strictly to the
express terms thereof, and shall not be construed to otherwise amend or alter in
any respect the terms of the Loan Agreement or any other Loan Document, each of
which is hereby ratified the Borrower and the Lender in all respects. Without
limiting the foregoing, the Lender shall not be deemed to have notice of, or to
have waived, any default under the Loan Agreement or any other Loan Document by
virtue of entering into this letter, nor does this letter in any way waive or
limit any of the rights of the Lender in connection with the occurrence of any
Material Adverse Effect. It is further expressly understood that no forbearance
or waiver in connection with the Loan Agreement on any occasion shall be deemed
to constitute a forbearance or waiver of compliance with such provision on any
other occasion.
As a material inducement to the Lender to enter into this letter, (i) the
Borrower hereby affirms that its representations and warranties set forth in the
Loan Documents are true and correct in all material respects as of the date
hereof; (ii) the Borrower hereby agrees to issue to the Lender a warrant to
purchase One Million Eight Hundred Seventy-Five Thousand (1,875,000) shares of
the Borrower's common stock on the terms and conditions set forth in the Warrant
Agreement to Purchase Common Stock of BrightCube, Inc. attached hereto as
Exhibit A; and (iii) the Borrower agrees to pay the Promissory Note according to
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the terms thereof, as modified by this letter, and agrees to perform all of the
acts required under the terms of Loan Documents.
In consideration of the Borrower's undertakings set forth above, the Lender
agrees to forbear from exercising its demand rights set forth in (i) Article II
of the Loan Agreement and (ii) Section 5 of the Promissory Note, for a period of
thirty (30) calendar days commencing on the date first set forth above (the
"Forbearance"). In the event that the Borrower files for or declares any form
of bankruptcy, the Forbearance immediately will cease to apply. In addition,
should the Borrower receive the sum of at least One Million Dollars ($1,000,000)
during the term of the Forbearance, the Forbearance shall immediately cease to
apply upon receipt of such amount.
This letter shall for all purposes be considered a Loan Document and shall
be subject to the provisions of the Loan Agreement as amended hereby. Without
limiting the foregoing, the parties hereby incorporate the Miscellaneous
Provisions set forth in Article X of the Loan Agreement as if set forth in full
herein. This letter may be executed in counterparts (including, without
limitation, counterparts delivered by telecopier), each of which shall be deemed
an original but all of which shall constitute one and the same instrument.
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Please confirm your acceptance of and agreement with the foregoing by
executing a copy of this letter in the space provided below and returning it to
us.
INTELLECT CAPITAL GROUP, LLC
(Lender)
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
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Title: Chairman & CEO
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ACCEPTED AND AGREED AS OF
THE DATE FIRST WRITTEN ABOVE
BRIGHTCUBE, INC.
By: /s/ Al Marco
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Name: Al Marco
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Title: Chief Executive Officer
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EXHIBIT A
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THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED
AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE SECURITIES ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR AN
EXEMPTION THEREFROM, OR UPON RECEIPT OF AN OPINION BY COUNSEL IN FORM
SATISFACTORY TO BRIGHTCUBE.
WARRANT AGREEMENT
TO PURCHASE COMMON STOCK OF BRIGHTCUBE, INC.
This Warrant Agreement (the "Agreement") is entered into this ____ day
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of August, 2001, by and between BRIGHTCUBE, INC., a Nevada corporation
("BrightCube") and INTELLECT CAPITAL GROUP, LLC, a Delaware limited liability
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company ("Holder"). For good and valuable consideration, the receipt and
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sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Issuance of Warrants. BrightCube, subject to the terms and
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conditions hereinafter set forth, hereby issues to Holder warrants (the
"Warrants") to purchase one million eight hundred and seventy-five thousand
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(1,875,000) shares of BrightCube common stock (the "Shares"). The exercise
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price of the Shares shall be $0.30 per share (the "Exercise Price") subject to
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adjustment in accordance with Section 6 of this Agreement.
2. Term. The Warrants may be exercised at any time after the
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Effective Date set forth on the signature page hereof and before the expiration
of sixty (60) months from the Effective Date.
3. Method of Exercise; Payment.
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3.1 Cash Exercise. Holder shall exercise the Warrants
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granted hereunder, in whole or in part, by delivering to BrightCube at the
office of BrightCube, or at such other address as BrightCube may designate by
notice in writing to the holder hereof, the Notice of Exercise attached hereto
as Exhibit A and incorporated herein by reference and a certified check or wire
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transfer in lawful money of the United States for the Exercise Price for the
entire amount of the number of Warrants being exercised
3.2 Net Issue Exercise. In lieu of exercising the Warrants
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pursuant to Section 0, Holder may elect to receive a number of shares equal to
the value (as determined below) of the Warrants (or any portion thereof
remaining unexercised) by surrender of the Warrants at the principal office of
BrightCube, or at such other address as BrightCube may designate by notice in
writing to the holder hereof, together with the Notice of Exercise attached
hereto as Exhibit A and incorporated herein by reference, in which event
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BrightCube shall issue to Holder a number of Shares computed using the following
formula:
X = Y(A-B)
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A
Where: X = the number of Shares to be issued to Holder.
Y = the number of Shares purchasable under this Warrant
(at the date of such exercise).
A = the fair market value of one share of the Warrant
Stock (at the date of such calculation).
B = the Warrant Price (as adjusted to the date of such
exercise).
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For purposes of this subsection, fair market value of one Share shall mean: (a)
the average of the closing bid and asked prices of the common stock quoted in
the NASDAQ National Market System or the Over-the-Counter market or the closing
price quoted on any exchange on which the common stock is listed, whichever is
applicable, as published in the Western Edition of The Wall Street Journal for
the five (5) trading days prior to the date of determination of the fair market
value; or (b) if the common stock is not publicly traded, the per share fair
market value of the common stock shall be determined in good faith by
BrightCube's Board of Directors. If Holder disagrees with the determination by
the Board of Directors of the fair market value of the common stock then such
fair market value shall be determined by an independent appraiser selected
jointly by BrightCube and Holder. The cost of such appraisal shall be paid
equally by BrightCube and Holder.
3.3 As promptly as practicable on or after such date,
BrightCube shall cause to be issued and delivered to Holder a certificate or
certificates for the number of full Shares issuable upon such exercise.
Notwithstanding the foregoing or any other provision of the Warrants, the
Warrants shall not be exercised for less than 1,000 Shares at any time unless at
such time less than 1,000 such Shares are subject to such exercise.
3.4 Issuance of certificates for the Shares upon the exercise
of the Warrants shall be made without charge to the registered holder hereof for
any issue or transfer tax or other incidental expense with respect to the
issuance of such certificates, all of which taxes and expenses shall be paid by
BrightCube, and such certificates shall be issued in the name of the registered
holder of the Warrants or in such name or names as may be directed by the
registered holder of the Warrants; provided, however, that in the event
certificates for the Shares are to be issued in a name other than the name of
the registered holder of the Warrants, the Warrants, when surrendered for
exercise, shall be accompanied by the Notice of Exercise attached hereto duly
executed by the holder hereof.
3.5 Upon delivery of all of the items set forth in this
Section 3, Holder shall be entitled to receive a certificate or certificates
representing the Shares. Such Shares shall be validly issued, fully paid and
non-assessable.
3.6 Warrants shall be deemed to have been exercised
immediately prior to the close of business on the day of such delivery, and
Holder shall be deemed the holder of record of the Shares issuable upon such
exercise at such time.
3.7 Upon any partial exercise of the Warrants, at the request
of BrightCube, this Agreement shall be surrendered and a new Agreement
evidencing the right to purchase the number of Shares not purchased upon such
exercise shall be issued to Holder.
3.8 No fractional Shares are to be issued upon the exercise
of the Warrants, but rather the number of Shares issued upon exercise of the
Warrants shall be rounded up or down to the nearest whole number.
4. Representations and Warranties of BrightCube. BrightCube
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hereby covenants and agrees as follows:
4.1 This Warrant is, and any Warrants issued in substitution
for or in replacement of this Warrant upon issuance will be, duly authorized and
validly issued.
4.2 All Warrants that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
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5. Representations and Warranties of Holder. Holder hereby
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represents and warrants to BrightCube as follows:
5.1 Sophistication. Holder has (a) a preexisting personal or
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business relationship with BrightCube or one or more of its officers, directors,
or control persons; or (b) by reason of Holder's business or financial
experience, or by reason of the business or financial experience or of Holder's
financial advisor who is unaffiliated with and who is not compensated, directly
or indirectly, by BrightCube or any affiliate or selling agent of BrightCube,
Holder is capable of evaluating the risks and merits of this investment and of
protecting Holder's own interests in connection with this investment.
5.2 Accredited Investor. Holder is an "accredited investor"
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as such term is defined under Regulation D of the Securities Act of 1933, as
amended (the "Securities Act").
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5.3 Investment Intent. Holder is purchasing the Warrants,
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and will purchase the Shares solely for his or her own account for investment.
Holder has no present intention to resell or distribute the Warrants or the
Shares or any portion thereof. The entire legal and beneficial interest of the
Warrants is being purchased, and will be held, for Holder's account only, and
neither in whole or in part for any other person.
5.4 Information Concerning Company. Holder is aware of the
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business affairs and financial condition of BrightCube and has acquired
sufficient information about BrightCube to make an informed and knowledgeable
decision to purchase the Warrants and the Shares.
5.5 Economic Risk. Holder realizes that the purchase of the
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Warrants and the Shares will be a highly speculative investment and involves a
high degree of risk. Holder is able, without impairing its financial condition,
to hold the Warrants and/or the Shares for an indefinite period of time and to
suffer a complete loss of its investment.
6. Anti-dilution Adjustments. The Warrants granted hereunder and
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the Exercise Price thereof shall be subject to adjustment from time to time upon
the happening of certain events as set forth below.
6.1 Stock Splits and Dividends. If outstanding shares of
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BrightCube Common Stock shall be subdivided into a greater number of shares or a
dividend in Common Stock shall be paid in respect of Common Stock, the Exercise
Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend be proportionately reduced.
If outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Exercise Price, the number of Shares purchasable upon the exercise of the
Warrants shall be changed to the number determined by dividing (a) an amount
equal to the number of Shares issuable upon the exercise of the Warrants
immediately prior to such adjustment, multiplied by the Exercise Price in effect
immediately prior to such adjustment, by (b) the Exercise Price in effect
immediately after such adjustment.
6.2 Reclassification, Etc. Subject to Section 11 hereof, in
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case there occurs any reclassification or change of the outstanding securities
of BrightCube or any reorganization of BrightCube (or any other corporation the
stock or securities of which are at the time receivable upon the exercise of the
Warrants) or any similar corporate reorganization on or after the date hereof,
then and in each such case Holder, upon the exercise hereof at any time after
the consummation of such reclassification, change, or reorganization shall be
entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities or property to which Holder would have been entitled upon such
consummation if Holder had exercised the Warrants immediately prior thereto, all
subject to further adjustment pursuant to the provisions of this Section.
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6.3 Adjustment Certificate. When any adjustment is required
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to be made in the Shares or the Exercise Price pursuant to this Section,
BrightCube shall promptly mail to Holder a certificate setting forth (a) a brief
statement of the facts requiring such adjustment, (b) the Exercise Price after
such adjustment and (c) the kind and amount of stock or other securities or
property into which the Warrants shall be exercisable after such adjustment.
7. Notices. BrightCube will give written notice to the holder of
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this Warrant at least twenty (20) days prior to the date on which any
reorganization, consolidation, merger, sale, dissolution, liquidation or other
similar transaction will take place.
8. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
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is lost, stolen, mutilated or destroyed, BrightCube shall, on receipt of
indemnification undertaking and upon a notarized affidavit stating the cause for
a new issuance, issue a new Warrant of like denomination and tenor as the
Warrant so lost, stolen, mutilated or destroyed.
9. Reservation of Shares. BrightCube shall at all times keep
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reserved a sufficient number of authorized shares of Common Stock to provide for
the exercise of the Warrants in full.
10. Transferability. The Warrants issued hereunder and any and
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all Shares issued upon exercise of the Warrants shall be transferable on the
books of BrightCube by the holder hereof in person or by duly authorized
attorney subject to any restrictions imposed by applicable federal or state
securities laws. It shall be a further condition to any transfer of the
Warrants that the transferor (if any portion of the Warrants are retained) and
the transferee shall receive and accept new Warrants, of like tenor and date,
executed by BrightCube, for the portion so transferred and for any portion
retained, and shall surrender this Agreement executed.
11. Mandatory Conversion. Upon any recapitalization,
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reorganization, consolidation, merger, sale of the Company's assets, sale of
substantially all of the Company's assets or other similar transaction which is
effected in such a way that the holders of Shares are entitled to receive stock,
securities or assets, all Warrants than outstanding shall automatically be
converted into Common Stock.
12. Voting. Nothing contained in this Agreement shall be
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construed as conferring upon Holder the right to vote or to receive dividends or
to consent or receive notice as a shareholder in respect to any meeting of
shareholders for the election of directors of BrightCube or for any other
purpose not specified herein.
13. Miscellaneous.
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13.1 Amendment. This Agreement may be amended by written
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agreement between BrightCube and Holder.
13.2 Notice. Any notice, demand or request required or
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permitted to be given under this Agreement will be in writing and will be deemed
sufficient when delivered personally or sent by telegram or forty-eight (48)
hours after being deposited in the U.S. mail, as certified or registered mail,
or with a commercial courier service, with postage prepaid, and addressed, if to
BrightCube, at its principal place of business, attention the President, and if
to Holder, at Holder's address as shown on the stock records of BrightCube.
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13.3 Further Assurances. Both parties agree to execute any
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additional documents and take any further actions necessary to carry out the
purposes of this Agreement.
13.4 Severability. If any provision of this Agreement is
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held by any court of competent jurisdiction to be illegal, unenforceable or
void, such provision will be enforced to the greatest extent possible and all
other provisions of this Agreement will continue in full force and effect.
13.5 Governing Law. This Agreement will be interpreted and
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enforced in accordance with California law.
13.6 Survival. The representations and warranties of the
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parties hereto set forth in this Agreement shall survive the closing and
consummation of the transactions contemplated hereby for a period of three (3)
years from the date hereof.
13.7 Entire Agreement; Successors and Assigns. This
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Agreement and the documents and instruments attached hereto constitute the
entire agreement between Holder and BrightCube relative to the subject matter
hereof. Any previous agreements between the parties are superseded by this
Agreement. Subject to any exceptions specifically set forth in this Agreement,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective executors, administrators, heirs, successors and
assigns of the parties.
13.8 Counterparts. This Agreement may be executed in two or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.9 Headings. The headings of the Sections of this
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Agreement are for convenience and shall not by themselves determine the
interpretation of this Agreement.
13.10 Attorney Fees. If any action is brought to interpret
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or enforce the terms of this Agreement, the prevailing party in such action
shall be entitled to recover its attorneys fees and costs incurred in connection
with such action.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
and delivered by their duly authorized officers as of August ___, 2001 (the
"Effective Date").
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BRIGHTCUBE, INC.
By:
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Its:
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HOLDER: INTELLECT CAPITAL GROUP, LLC
By:
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Its:
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EXHIBIT A
WARRANT
NOTICE OF EXERCISE
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To: BrightCube, Inc.
1. In lieu of exercising the attached Warrant for cash or check,
INTELLECT CAPITAL GROUP, LLC, a Delaware limited liability company ("Holder")
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hereby elects to effect the net issuance provision of Section 0 of this Warrant
Agreement dated August ____, 2001 ("Warrant") and receive ______________ shares
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of Common Stock of BrightCube, Inc. ("BrightCube") pursuant to the terms of the
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Warrant executed by Holder and BrightCube. (Initial here if Holder elects this
alternative)
2. Holder hereby elects to purchase ___________ shares of Common
Stock of BrightCube pursuant to the terms of this Warrant, and tenders herewith
payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said
shares in the name of Holder.
HOLDER: INTELLECT CAPITAL GROUP, LLC,
a Delaware limited liability company
By:
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Its:
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