EXHIBIT 10.2
WARRANT AGREEMENT
TO PURCHASE COMMON STOCK OF
BRIGHTCUBE, INC.
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.
This Warrant Agreement (the "Agreement") is by and between BRIGHTCUBE,
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INC., a Nevada corporation ("BrightCube") and INTELLECT CAPITAL GROUP, LLC
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("Holder"). This Warrant Agreement is being issued in connection with an
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Amendment dated February 18, 2002 to the Promissory Note and Loan and Security
Agreements, originally dated July 16, 2001 by and between Brightcube and Holder
and under the terms set forth therein. This Warrant Agreement replaces in full
an earlier warrant by and between BrightCube and the Holder dated August 14,
2001 to purchase 1,875,000 shares of Common Stock (the "Prior Warrant") and the
Prior Warrant is hereby cancelled. For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Issuance of Warrants. BrightCube, subject to the terms and conditions
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hereinafter set forth, hereby issues to Holder warrants (the "Warrants") to
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purchase one million eight hundred and seventy five thousand (1,875,000) shares
of BrightCube common stock (the "Shares"). The exercise price of the Shares
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shall be $0.09 per share (the "Exercise Price") subject to adjustment in
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accordance with Section 6 of this Agreement.
2. Term. The Warrants may be exercised at any time after the Effective Date
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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 granted hereunder,
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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
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incorporated herein by reference and a certified check or wire 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 this Warrant pursuant to
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Section 3.1, Holder may elect to receive a number of shares equal to the value
(as determined below) of this Warrant (or any portion thereof remaining
unexercised) by surrender of this Warrant 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
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and incorporated herein by reference, in which event 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).
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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).
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 and in no case more
than five (5) business days, 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 this
Warrant, this Warrant 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 this
Warrant 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 this Warrant or in such name or names as may be directed by the
registered holder of this Warrant; 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 this Warrant, this Warrant, 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 Section 3.1 above,
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 this
warrant, but rather the number of Shares issued upon exercise of this Warrant
shall be rounded up or down to the nearest whole number.
4. Representations and Warranties of BrightCube. BrightCube hereby
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covenants and agrees as follows:
4.1 This Warrant is, and any Warrants issued in substitution for or in
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.
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4.2 All Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and non-assessable and free from all taxes, liens and charges with respect to
the issue thereof.
5. Representations and Warranties of Holder. Holder hereby represents and
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warrants to BrightCube as follows:
5.1 Sophistication. Holder has (a) a preexisting personal or business
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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" as such term
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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, and will
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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 business
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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 Warrants and
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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 the
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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 BrightCube
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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, in case there occurs
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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
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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.
6.3 Adjustment Certificate. When any adjustment is required to be made
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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 this
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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 is lost,
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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 reserved a
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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 all Shares
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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, reorganization,
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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 construed as
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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 agreement
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between BrightCube and Holder.
13.2 Notice. Any notice, demand or request required or permitted to be
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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.
13.3 Further Assurances. Both parties agree to execute any additional
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documents and take any further actions necessary to carry out the purposes of
this Agreement.
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13.4 Severability. If any provision of this Agreement is held by any
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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 enforced in
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accordance with Nevada law.
13.6 Survival. The representations and warranties of the parties
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hereto set forth in this Agreement shall survive the closing and consummation of
the transactions contemplated hereby for a period of six (6) years from the date
hereof.
13.7 Entire Agreement; Successors and Assigns. This Agreement and the
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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 more
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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 Agreement are for
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convenience and shall not by themselves determine the interpretation of this
Agreement.
13.10 Attorney Fees. If any action is brought to interpret or enforce
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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.
IN WITNESS WHEREOF, BrightCube has caused this Agreement to be signed and
delivered by their duly authorized officers as of February 18, 2002 (the
"Effective Date").
BRIGHTCUBE, INC.
By: Xxxx Xxxxxx
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Its: Chief Financial Officer
INTELLECT CAPITAL GROUP, LLC
By: /s/ Xxxxxx X. Xxxxxx
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Its: Chairman & CEO
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5
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 ("Holder") hereby elects to effect the net issuance provision
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of Section 3.2 of this Warrant Agreement dated February 18, 2002 ("Warrant") and
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receive ______________ shares of Common Stock of BrightCube, Inc. ("BrightCube")
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pursuant to the terms of the 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
By:
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Its:
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