MADISON & WALL WORLDWIDE MARKET ACCESS PROGRAM MARKETING AGREEMENT THIS AGREEMENT (the "Agreement") made and entered into this 27th day of July, 2001, by and between MADISON & WALL WORLDWIDE, INC. located at 195 Wekiva Springs Road, Suite 200, Longwood, Florida 32779 (hereinafter referred to as "M&W") and BRIGHTCUBE, INC., located at 240 Center Street, El Segundo California 90245, (hereinafter referred to as the "Company"). WITNESSETH: For and consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows: 1. EMPLOYMENT Company hereby hires and employees M&W as an independent contractor; and M&W does hereby accept its position as an independent contractor to the Company upon the terms and conditions hereinafter set forth. 2. TERM The term of this Agreement shall be for six (6) months. 3. DUTIES AND OBLIGATIONS OF M&W M&W shall have the following duties and obligations under this Agreement. 3.1 M&W will review and analyze various aspects of the Company's goals and make recommendations on feasibility and achievement of desired goals. 3.2 Through its financial relations telemarketing division, M&W will provide exposure to its network of firms and brokers that may be interested in participating with the Company, schedule and conduct the necessary due diligence, and obtain the required approvals necessary for those firms to participate. M&W will also interview and make determinations on any firms or brokers referred by the Company with regard to their participation. 3.3 At the Company's request, M&W will be available to the Company to field any calls from firms, individual investors/shareholders and brokers inquiring about the Company- In addition, M&W will assist the Company in preparing quarterly financial results and coordinating corresponding conference calls and simulcasts on the Internet in accordance with Regulation FD. 3.4 M&W will feature the Company on the Worldwide Internet via M&W's home web site (www.insidewallstreet.com), Specifically, M&W will feature the Company's Fast Fact Sheet prepared and maintained by M&W on its web site. 3.5 M&W shall, write, produce and assist the Company in releasing all news announcements. The Company shall be solely responsible for paying all fees associated with the actual release(s) through BusincsssWire, P.R. Newswire, or any other comparable news dissemination source. M&W will create, build and continually enhance a fax database of all brokers, investors, analysts and media contacts who have expressed an interest in receiving m-going information on the Company. M&W will assist the Company in setting up an account with a fax broadcasting agency to manage the actual broadcasting in the event Company does not have this capability inhouse. Further, M&W will, at its discretion, mass-fax broadcast select releases to its network of U.S, stockbrokers, analysts and institutional investors. 3.6 M&W will serve as the Company's publicist and will strive to obtain coverage in both national and industry publications, in financial newsletters, on financial radio and television programming and via traditional press mediums. Specifically, M&W will facilitate an on-going outreach program to an intelligently targeted universe of media professionals stemming from our list of nearly 380,000 media contacts. Further, M&W will track published articles and, in association with Burrelle's, provide monthly clippings of those articles/mentions' Featuring the Company, 3.7 At the Company's request, strive to obtain the Company analyst coverage and/or investment banking sponsorship. 3.8 Arrange for a series of due diligence meetings with select broker/dealers, institutional investors and analysts at predetermined dates throughout the campaign term, while remaining compliant with the rules and regulations associated with Regulation FD. 3.9 ALL OF THE FOREGOING M&W PREPARED DOCUMENTATION CONCERNING THE
COMPANY, INCLUDING, BUT NOT LIMITED TO, FAST FACT SHEETS, NEWS ANNOUNCEMENTS, SHAREHOLDER LETTERS, SHALL BE PREPARED BY M&W FROM MATERIALS SUPPLIED TO IT BY THE COMPANY AND SHALL BE APPROVED BY THE COMPANY PRIOR TO DISSEMINATION BY M&W. 195 Wekiva Springs Road. Suite 200, Longwood, Florida 32779 * 407-682-2001 Fax-407-682-2544 www.insidewallstreet.com Page 1 of 5
4. M&W'S COMPENSATION Upon the execution of this Agreement, Company hereby covenants and agrees to pay M&W as follows: 4.1. $18,000, payable in monthly cash installments of $6,000 in cash with the first three payments aggregating $18,000 due upon execution of this Agreement and the second three cash payments aggregating $18,000 due on the 9lst day following execution of this Agreement. M&W will agree to deposit the first check for $6,000 immediately upon receipt and all subsequent $6,000 checks on the 15th of every month thereafter for the term of the agreement. 4.2 173,333 shares of the Company's common stock, restricted pursuant to Rule 144, and due within five (5) days following execution of this Agreement. These 173,333 shares shall carry piggyback registration rights for resale by M&W on the Registration Statement to be filed with the Company with the U.S. Securities & Exchange Commission within 45 days following execution of this Agreement. In the event that the Company fails to file a Registration Statement within 45 days following execution of this Agreement, then the Company shall agree to issue M&W an additional 30,000 shares for every 30 day period thereafter until such time as the Registration Statement has been filed with the U.S. Securities & Exchange Commission 4.2 M&W shall also be entitled to receive an option or warrant to purchase up to 200,000 common shares of the Company's stock, exercisable as follows: - 100,000 common shares exercisable at $0.50 per share; and - 100,000 common shares exercisable at $0.75 per share. 4.3 The Company shall agree to issue M&W piggyback registration rights for the common shares underlying the option/warrants listed above, whereby these shares will be registered for resale by M&W on the first applicable Registration Statement filed by the Company with the U.S. Securities & Exchange Commission, which is expected to occur within 45 days following execution of this Agreement; said underlying common shares shall be held by the Company until such time as M&W elects to exercise its option or warrant to purchase the common shares. In the event that the Company's stock price is such that the option/warrants are "in the money" in excess of 100% of the exercise price of the first 100,000 common shares, or $1.00 per share, then M&W shall be entitled to receive demand registration rights on the underlying shares, and the Company shall agree to file the applicable Registration Statement with the U.S. Securities & Exchange Commission within ten (10) days of M&W's formal demand to register. The term of the option/warrant shall expire 24 months from the date the Registration Statement registering the underlying the option/warrant is deemed effective. 5. M&W'S EXPENSES AND COSTS Company shall pay all reasonable costs and expenses incurred by M&W, its directors, officers, employees and agents, in carrying out its duties and obligations pursuant to the provisions of this Agreement, excluding M&W's general and administrative expenses and costs, but including and not limited to the following costs and expenses; provided all costs and expense items in excess of $500.00 (Five Hundred U.S. Dollars) must be approved by the Company in writing prior to M&W's incurrence of the same: 5.1 Travel expenses, including but not limited to transportation, lodging and food expenses, when such travel is conducted on behalf of the Company, 5.2 Seminars, expositions, money and investment shows. 5.3 Radio and television time and print media advertising costs, when applicable. 5.4 Subcontract fees and costs incurred in preparation of research reports, when applicable. 5.5 Cost of on-site due diligence meetings, if applicable. 5.6 Printing and publication costs of brochures and marketing materials which are not supplied by the Company. 5.7 Corporate web site development costs. 5.8 Printing and publication costs of Company annual reports, quarterly reports, and/or other shareholder communication collateral, material which are not supplied by Company. 6. COMPANY'S DUTIES AND OBLIGATIONS Company shall have the following duties and obligations under this Agreement: 6.1 Cooperate fully and timely with M&W so as to enable M&W to perform its obligations under this Agreement. 6.2 Within ten (10) days of the date of execution of this Agreement to deliver to M&W a complete due diligence package on the Company including all the Company's filings with the Securities and Exchange Commission within the last twelve months, the last six months of press releases on the Company and all other relevant materials with respect to such filings, including but not limited to corporate reports, brochures, and the like; a list of the names and addresses of all the Company's shareholders known to the Company; a list of the brokers and market makers in the Company's securities and a list of analysts or fund mangers which have been following the Company.
INITIAL Company X INITIAL M&W dbh Page 2 of 5
6.3 The Company will act diligently and promptly in reviewing materials submitted to it from time to time by M&W and inform M&W of any inaccuracies contained therein prior to the dissemination of such materials. 6.4 Immediately give written notice to M&W of any change in Company's financial condition or in the nature of its business or operations which had or might have an adverse material effect on its operations, assets, properties or prospects of its business. 6.5 Immediately pay all costs and expenses incurred by M&W under the provisions of this Agreement when presented with invoices for the same by M&W. 6.6 Give full disclosure of all material facts concerning the Company to M&W and update such information on a timely basis. 6.7 Promptly pay the compensation due M& W under the provisions of this Agreement as defined in Section 4 herein. 7. NONDISCLOSURE Except as may be required by law, Company, its officers, directors, employees, agents and affiliates shall not disclose the contents and provisions of this Agreement to any individual or entity without M&W's expressed written consent subject to disclosing same further to Company counsel, accountants and other persons performing investment banking, financial, or related 'Functions for Company. 8. COMPANY'S DEFAULT In the event of any default in the payment of M&W's compensation to be paid to it pursuant to this Agreement, or any other charges or expenses on the Company's part to be paid or met, or any part or installment thereof, at the time and in the manner herein prescribed for the payment thereof and as when the same becomes due and payable, and such default shall continue for twenty five (25) days after M&W's notice thereof is received by Company; in the event of any default in the performance of any of the other covenants, conditions, restrictions, agreements, or other provisions herein contained on the part of the Company to be performed, kept, complied with or abided by, and such default shall continue for twenty five (25) days after M&W has given Company written notice thereof, or if a petition in bankruptcy is filed by the Company, or if the Company is adjudicated bankrupt, or if the Company shall compromise all its debts or assign over all its assets for the payment thereof, or if a receiver shall be appointed for the Company's property, then upon the happening of any of such events, M&W shall have the right, at its option, forthwith or thereafter to accelerate all compensation, costs and expenses due or coming due hereunder and to recover the same from the Company by suit or otherwise and further, to terminate this Agreement. The Company covenants and agrees to pay all reasonable attorney fees, paralegal fees, costs and expenses of M&W, including court costs, (including such attorney fees, paralegal fees, costs and expenses incurred on appeal) if M&W employs an attorney to collect the aforesaid amounts or to enforce other rights of M&W provided for in this Agreement in the event of any default as set forth above and M&W prevails in such litigation. Further, until M&W has received the cash or stock as described above in Section 4, M&W shall not be required to commence performing hereunder. 9. COMPANY'S REPRESENTATIONS AND WARRANTIES Company represents and warrants to M&W for the purpose of inducing M&W to enter into and consummate this Agreement as follows: 9.1 Company has the power and authority to execute, deliver and perform this Agreement. 9.2 The execution and delivery by the Company of this Agreement have been duly and validly authorized by all requisite action by the Company. No license, consent or approval of any person is required for the Company's execution and delivery of this Agreement. I 9.3 No representation or warranty by the Company in this Agreement and no information in any statement, certificate, exhibit, schedule or other document furnished, or to be furnished by the Company to M&W pursuant hereto. or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. There is no fact which the Company has not disclosed to M&W, in writing, or in SEC filings or press releases, which materially adversely affects, nor, so far as the Company can now reasonably foresee, may adversely affect the business, operations, prospects, properties, assets, profits or condition (financial or otherwise) of the Company. 10. LIMITATION OF M&W LIABILITY If M&W fails to perform its services hereunder, its entire liability to the Company shall not exceed the lessor of (a) the amount of cash compensation M&W has received from the Company under Section 4 of this Agreement or (b) the actual damage to the Company as a result of such nonperformance. IN NO EVENT WILL M&W BE LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES NOR FOR ANY CLAIM AGAINST THE COMPANY BY ANY PERSON OR ENTITY
INITIAL Company X INITIAL M&W dbh Page 3 of 5
ARISING FROM OR IN ANY WAY RELATED TO THIS AGREEMENT, UNLESS SUCH DAMAGES RESULT FROM THE USE, BY M& W, OF INFORMATION NOT AUTHORIZED BY THE COMPANY. 11. MISCELLANEOUS 11.1 Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing, and shall be deemed to have been duly given when delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the parties hereto at their addresses indicated hereinafter. Either party may change his or its address for the purpose of this paragraph by written notice similarly given. 11.2 Entire Agreement. This Agreement represents the entire agreement between the Parties in relation to its subject matter and supersedes and voids all prior agreements between such Parties relating to such subject matter. 11.3 Amendment of Agreement. This Agreement may be altered or amended, in whole or in part, only in a writing signed by both Parties. 11.4 Waiver. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other subsequent breach or condition, whether of a like or different nature, unless such shall he signed by the person making such waiver and/or which so provides by its terms. 11.5 Captions. The captions appearing in this Agreement are inserted as a. matter of convenience and for reference and in no way affect this Agreement, define, limit or describe its scope or any of its provisions. 11.6 Situs. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida. Venue shall he located in Seminole County, Florida. 11.7 Benefits. This Agreement shall inure to the benefit of and be binding upon the Parties hereto, their heirs, personal representatives, successors and assigns. 11.8 Severability. If any provision of this Agreement shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if such invalid or unenforceable provision were not contained herein. 11.9 Arbitration. Except as to a monetary default by Company hereunder, any controversy, dispute or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration. Arbitration proceedings shall be conducted in accordance with the rules then prevailing of the American Arbitration Association or any successor. The award of the Arbitration shall be binding on the Parties. Judgment may he entered upon an arbitration award of in a court of competent jurisdiction and confirmed by such court. Venue for Arbitration proceedings shall be Seminole County, Florida. The costs of arbitration, reasonable attorneys' fees of the Parties, together with all other expenses, shall be paid as provided in the Arbitration award. 11.10 Currency. In all instances, references to monies used in this Agreement shall be deemed to be United States dollars. 11.11 Multiple Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of such counterparts shall constitute one (1) instrument. 12. This Agreement may he executed in counterparts and by fax transmission, each counterpart being deemed an original. IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written. CONFIRMED AND AGREED ON THIS 13th DAY OF September 2001.
MADISON & WALL WORLDWIDE, INC.
By: /s/ Loren Brown -------------------M&W Representative Loren Brown ----------------Print Name CONFIRMED AND AGREED ON THIS /s/ Dodi B. Handy -------------------M&W Officer Dodi B. Handy -------------------Print Name 13th ---DAY OF SEPT. ----2001
INC. /s/ Eric Howard -------------------Witness
By: /s/ Albert Marco -------------------Duly Authorized
INITIAL Company X INITIAL M&W dbh Page 4 of 5
Albert Marco ----------------Print Name
Eric Howard -------------------Print Name
INITIAL Company X INITIAL M&W dbh Page 5 of 5
EXHIBIT 99.17 [ICG LETTERHEAD] As of August 17, 2001 BrightCube, Inc. 240 Center Street El Segundo, CA 90245 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 company (the "Lender") (such agreement, as amended, modified, supplemented and restated from time to time, the "Loan Agreement"; capitalized terms used herein 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 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. 1
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/ Terren S. Peizer Name: Terren S. Peizer -----------------Title: Chairman & CEO ----------------
ACCEPTED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE BRIGHTCUBE, INC.
By: Al Marco --------Name: Al Marco --------Title: Chief Executive Officer ------------------------/s/
EXHIBIT A 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 of August, 2001, by and between BRIGHTCUBE, INC., a Nevada corporation ("BrightCube") and INTELLECT CAPITAL GROUP, LLC, a Delaware limited liability company ("Holder"). 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 hereinafter set forth, hereby issues to Holder warrants (the "Warrants") to 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 shall be $0.30 per share (the "Exercise Price") subject to adjustment in accordance with Section 6 of this Agreement. 2. Term. The Warrants may be exercised at any time after the 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. 3.1 Cash Exercise. Holder shall exercise the Warrants 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 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 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 BrightCube shall issue to Holder a number of Shares computed using the following formula: X = Y(A-B) A
Where: X Y = = the the (at number of Shares to be issued to Holder.
number of Shares purchasable under this Warrant the date of such exercise).
the fair market value of one share of the Warrant Stock (at the date of such calculation). the Warrant exercise). Price (as adjusted to the date of such
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 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. 4
5. Representations and Warranties of Holder. Holder hereby represents and warrants to BrightCube as follows: 5.1 Sophistication. Holder has (a) a preexisting personal or 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" as such term is defined under Regulation D of the Securities Act of 1933, as amended (the "Securities Act"). 5.3 Investment Intent. Holder is purchasing the Warrants, 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 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 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 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 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 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. 5
6.3 Adjustment Certificate. When any adjustment is required 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 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 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 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 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, 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 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. 13.1 Amendment. This Agreement may be amended by written agreement between BrightCube and Holder. 13.2 Notice. Any notice, demand or request required or 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. 6
13.3 Further Assurances. Both parties agree to execute any 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 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 enforced in accordance with California law. 13.6 Survival. The representations and warranties of the 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 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 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 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 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] 7
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"). BRIGHTCUBE, INC. By: Its:
HOLDER: INTELLECT CAPITAL GROUP, LLC
EXHIBIT A WARRANT NOTICE OF EXERCISE 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") hereby elects to effect the net issuance provision of Section 0 of this Warrant Agreement dated August ____, 2001 ("Warrant") and receive ______________ shares of Common Stock of BrightCube, Inc. ("BrightCube") 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, a Delaware limited liability company By: Its: 9
Vfinance Investments, Inc. Access Success. This Investment Banking Agreement (the "Agreement") is made and entered into as of August 17, 2001, by and among BrightCube, Inc. having a principal place of business at 240 Center Street, El Segundo, CA 90245 (the "Company"), vFinance Investments, Inc. ('"VFIN") and vFinance Capital L.C. (the "Investment Bank"), affiliated NASD member broker dealers, having a place of business at 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300. ENGAGEMENT OF SERVICES The Company hereby retains (i) VFIN, for the purpose of providing to the Company financial consulting services and (ii) the Investment Bank for the purpose of providing investment banking and management consulting services. VFIN and the Investment Bank severally but not jointly agree to be retained to provide such services pursuant to the terms and conditions set forth herein. SECTION ONE STATEMENT OF WORK VFIN will, on behalf of the Company, perform the following financial advisory services: Financial Advisory Services. VFIN will provide capital market advice and will work with the Company's management in creating market awareness of the Company and its stock, and in the organization and sponsorship of investor presentations. VFIN will make a market in the Company's stock and will seek to establish other market makers in the Company's stock. VFIN will seek to increase liquidity and maintain an orderly market in the Company's stock, including assisting the buy-side and in cross-block trades of the Company's stock. VFIN will provide advice to the Company pertaining to stock buyback plans, stock splits or dividends and other related plans as they pertain to the Company's stock price and liquidity. At the request of the management ("Management") of the Company, VFIN will attend shareholder and Board meetings to make presentations. Investment Bank will, on behalf of the Company, perform the following investment banking and management consulting services: Assessment. If requested, the Investment Bank will prepare an assessment ("Assessment") of the Company's current business, operations, strategies and target markets. The Assessment will highlight market conditions and other contributing factors that would likely influence the Company's ability to successfully pursue the current course of business. Fairness Opinion. Investment Bank will render a Fairness Opinion with respect to any potential transaction that the Company might contemplate. Said Fairness Opinion will be organized and will contain language standard to such documents. Information Memorandum. Investment Bank will work with Management to become educated in the Company's intended business, operations, strategies and target markets. Investment Bank will then, in coordination with Management, assist in the preparation of an Informational Memorandum ("Memorandum") that will articulate the business opportunity, the business model and an investment opportunity. 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 - 561.477.7197
The Memorandum will reflect the future business of the Company, detail the Company's strategic position, and define requirements and terms for funding. The Memorandum shall describe potential distribution channels, market potential, marketing strategies, a description of key technologies, organizational structure and financial projections. Mergers/Acquisitions and Investments-- Investment Bank will research market opportunities, identify potential mergers, acquisitions and investors, model the transactions, structure the deals, and work with Management to close said transactions. For the duration of this Agreement, the Investment Bank will have the ability to engage in substantive discussions with potential investors, acquirers or joint venture partners on behalf of the Company. Investment Bank will provide the names of parties to whom it Intends to disclose proprietary information and they will be identified and included as an "Investment Bank Party' under the Agreement. In the event the Company, Management or its stockholders receive an inquiry from, or are otherwise in contact with, a party concerning the availability of the Company regarding a Covered Transaction, as defined herein below in Section Five, Company will promptly notify the investment Bank of such discussions. In the event Company withholds its written approval authorizing Investment Bank to approach an Investment Banking Party, the Company agrees that neither it nor its agents, will discuss or enter into a Covered Transaction with that party during the term of this Agreement, as defined in Section Four, and for a period of twenty-four (24) months after the termination or expiration of this Agreement. Each prospect will be qualified and meetings will be set to present the Company to potential investors. Investment Bank will work with Management to negotiate and close a Covered Transaction. IN PERFORMING ITS SERVICES HEREIN, VFIN AND INVESTMENT BANK SHALL BE ENTITLED TO RELY WITHOUT INVESTIGATION UPON ALL INFORMATION THAT IS PROVIDED BY THE COMPANY, WHICH INFORMATION THE COMPANY HEREBY WARRANTS SHALL BE COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS, AND NOT MISLEADING. VFIN AND INVESTMENT BANK IN NO WAY GUARANTEE THAT THE COMPANY WILL SUCCESSFULLY RAISE CAPITAL. SECTION TWO PLACE OF WORK It is understood that VFIN and Investment Bank's services will be rendered both on and off-site of the Company. The Company agrees to provide appropriate support to VFIN and Investment Bank while on-site performing the services described in Section One. SECTION THREE TIME DEVOTED TO WORK In the performance of the services covered by this Agreement, the services and the hours VFIN and Investment Bank are to work will be entirely within VFIN and Investment Bank's control and the Company will rely upon VFIN and Investment Bank to put in such number of hours as is reasonably necessary to fulfill the spirit and the purpose of this Agreement. SECTION FOUR DURATION The duration of this Agreement (the 'Term") shall be from August 17, 2001 to August 17, 2002, provided however, that this Agreement may be terminated at any time by either Company or VFIN or Investment Bank, with or without cause, upon sixty (60) days written notice to the other. Page 2 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 -
SECTION FIVE PAYMENT Upon execution of this Agreement, the Company will issue to VFIN warrants to purchase common shares of the Company's stock for services provided in the performance of Financial Advisory Services articulated in Section One above. The Company will issue 200,000 warrants at an exercise price of $0.27 per share. The warrants will have a term of 5 years, piggy- back registration rights, and have a provision for cashless exercise. Upon completion of a private placement of at least $1 million on the Company's behalf, the Company will issue to VFIN warrants to purchase common shares of the Company's stock at a rate of 130,000 per $100,000 funded at an exercise price of $0.27 per share up to maximum of 1,300,000 shares. The warrants will have a term of five (5) years, piggyback registration rights and have a provision for cashless exercise. The Company will pay Investment Bank a consulting fee of Six Thousand Dollars ($6,000) per calendar month in consideration of investment banking and management consulting services performed in the Statement of Work, of which three (3) months shall be due upon signing of this Agreement, with the remainder payable at the beginning of each calendar month thereafter. For purposes of this Agreement, the term "Covered Transaction(s)" shall mean any private placement, capital infusion, equity investment or financing, "Investment Bank Initiated Purchase or Sale Transaction", "Debt Financing" or "Subordinated Debt Financing" as defined below. For purposes of this Agreement, an "Investment Bank Initiated Purchase or Sale Transaction" is any acquisition, sale, merger, consolidation, joint venture, exchange offer, sale or license (or any variation thereof) of any part of or all of the business or property of the Company, or other transaction, including, but not limited to: the purchase or sale of stock or other transaction resulting in any change of control of the Company, the acquisition of any shares of its stock, or the disposition outside of the ordinary course of business of any of its assets. For the purpose of this Agreement, Subordinated Debt Financing shall mean debt financing junior to other debt, i.e., repayable in the case of liquidation only after senior debt with a higher claim has been satisfied. This type of debt may be but not necessarily characterized by such features as interest only payments for a specified period of time, equity participation through warrants and other instruments, and convertible features. Senior and working capital lines are defined as borrowings normally undertaken by businesses in the course of operations. It includes notes, bonds, equipment leasing, or debentures not expressly defined as junior or subordinated. For the purposes of this Agreement, Total Consideration shall mean and be computed as the total sale proceeds and other consideration received by Company, its stockholders, directed beneficiaries, or any newly formed entity owned or affiliated with or participated in by Company or any of its shareholders ("New Company") upon consummation of the Covered Transaction including, but not limited to: cash, securities, notes, debentures, purchase options, royalties, management, consulting and employment agreement; marketing, licensing and revenue contracts; agreements not-to-compete, including contingent and installment payments; consideration for assets owned by affiliates of Company or entities in any business relationship which are used in or are potentially useful in Company's business; the total value of liabilities avoided by the Company or assumed by the acquirer; the total value of all liabilities on the Company's balance sheet that are transferred to, or assumed by, the acquirer of the stock of Company in a stock transaction and any other tangible net benefit to the Company, its shareholders or directed beneficiaries. If a Covered Transaction is consummated between the Company and an Investment Bank Party during the term of this Agreement, or a period of twenty four (24) months thereafter, Company shall pay Investment Bank, or cause Investment Bank to be paid, at the closing of such transaction a fee computed by taking the Total Consideration multiplied by ten percent (10%). In addition, the Company shall pay the Investment Bank an additional 2% non-accountable expense to cover due diligence and legal expenses. If an Investment Bank Initiated Purchase or Sale Transaction is consummated between the Company and an Investment Bank Party during the term of this Agreement, or a period of twenty four (24) months thereafter, Company shall pay Investment Bank, or cause Investment Bank to be paid, at the closing of such transaction a fee computed by taking the Total Consideration Page 3 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 -
received at each respective closing involved in such Investment Bank Initiated Purchase or Sale Transaction multiplied by a percentage determined pursuant to the following schedule:
TOTAL CONSIDERATION ------------------------$ 0 to $1,999,999 ------------------------$ 2,000,000 to $3,999,999 ------------------------$ 4,000,000 to $5.999,999 ------------------------$ 6,000,000 to 7,999,999__ ------------------------$ 8,000,000 or greater ------------------------Fee ---6.0% ---5.0% ---4.0% ---3.0% ---2.0% ----
An example of the fee due to Investment Bank based on the above fee schedule would be as follows on an Investment Bank Initiated Purchase or Sale Transaction of $11,000,000 in Total Consideration: Fee = ($2,000,000 X 6%) + ($2,000,000 x 5%) + ($2,000,000 X 4%) + ($2,000,000 X 3%) + ($3,000,000 X 2%) = $420,000 In the case of a "Debt Financing" where the source of debt financing, excluding subordinated debt financing, is originated by Investment Bank or is from an Investment Bank Party and the transaction closes during the Term of this Agreement, or within eighteen (18) months of any termination thereof, Investment Bank shall receive upon closing of the transaction, a lump-sum consulting fee computed by taking the total commitment multiplied by four (4%) percent. If such Debt Financing is coupled with equity securities such as warrants, the value of the equity securities (to the extent same are options, warrants, or similar securities) shall be determined under the BlackScholes methodology. In the case of a "Subordinated Debt Financing" where the source of subordinated debt financing is originated by Investment Bank or is from an Investment Bank Party and the transaction closes during the Term of this Agreement, or within eighteen (18) months of any termination thereof, Investment Bank shall receive upon closing of the transaction, a lump-sum consulting fee computed by taking the total commitment multiplied by six (6%) percent. If such Subordinated Debt Financing is coupled with equity securities such as warrants, the value of the equity securities (to the extent same are options, warrants, or similar securities) shall be determined under the Black-Scholes methodology. At the time of execution of this Agreement, the Company will identify all parties with which the Company is engaged in active discussions concerning the availability of the Company regarding a Purchase or Sale Transaction. All fees due to Investment Bank pursuant to this Agreement are payable in cash. All fees are payable to Investment Bank at the closing date of the subject transaction. To the extent amounts are payable to Company after the closing date of a transaction, Company shall pay Investment Bank the applicable fee associated with such amounts at the time such amounts are actually received by Company. For example, if $7,000,000 is payable on the closing of the Covered Transaction and $3,000,000 is payable six (6) months thereafter, Company shall pay Investment Bank ($7,000,000 X 10.0%) on the day of the closing of the Covered Transaction and ($3,000,000 X 10.0%) upon its receipt of the final $3,000,000. Any fees due and not paid when due will accrue interest at the rate of twelve percent (12.0%) annually and the Company will be responsible for legal expenses, including without limitation appellate expenses (at both the trial and appellate level) incurred by Investment Bank in collecting such fees. Warrant and registration rights as well as the Company's obligations to compensate the Investment Bank as described in this Section Five shall remain in full force and effect following the termination of this Agreement. Page 4 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 -
In addition, upon closing of a Investment Bank Initiated Purchase or Sale Transaction(s), or Debt Financing(s) or Subordinated Debt Financing(s) (hereinafter each of which is referred to as a "Financing Transaction") with respect to which Investment Bank is entitled to a fee as described hereinabove, the Company or any successor entity will grant to Investment Bank a warrant to purchase the common stock of Company, at a purchase price per share ("the "Purchase Price") equal to the lower of a) the closing bid price of the Company's stock the day prior to the closing date of a Covered Transaction(s), or b) the price per share paid by investors in the Covered Transaction(s); and in an amount of shares to be calculated by taking the success fee paid to Investment Bank and dividing it by the Purchase Price. Warrants shall be issued at the closing of the Covered Transaction, and can be exercised at any time by Investment Bank in whole or part over five (5) years. Company or its successor entity agrees to reserve sufficient amount of common shares to cover the exercise of the warrant. Company shall grant VFIN and Investment Bank piggyback registration rights for the common stock and the common stock underlying the warrants paid, granted or otherwise issued pursuant to this Section 5 in accordance with Addendum "A" to this Agreement. These warrants shall be subject to a weighted average adjustment in the common stock underlying such warrants and the per share exercise price in the event of any (a) stock splits, stock dividends, recapitalizations or similar events, or (b) issuances of common stack or options, warrants or other capital stock with the exercise or conversion price at a per share price less than the per share warrant exercise price. The Company will reimburse VFIN and Investment Bank for all approved business expenses ("Expenses") incurred by VFIN and Investment Bank in the performance of the work defined herein. Expenses will be billed and paid on a monthly basis, beginning on Sept. 1, 2001 and on the first of each subsequent month. SECTION SIX STATUS OF VFIN AND INVESTMENT BANK; INDEMNIFICATION VFIN and Investment Bank are and shall be independent contractors and are not and shall not be deemed or construed to be employees of the Company by virtue of this Agreement. Neither VFIN, Investment Bank nor the Company shall hold VFIN and Investment Bank out as an agent, partner, officer, director, or other employee of the Company in connection with this Agreement or the performance of any of the duties, obligations or performances contemplated hereby and VFIN and Investment Bank further specifically disclaim any and all rights to an equity interest in or a partnership with the Company by virtue of this Agreement or any of the transactions contemplated hereby, except as specifically provided herein. VFIN and Investment Bank specifically acknowledge and agree that they shall have no authority to execute any contracts or agreements on behalf of the Company or any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Company (an "Affiliate") and it shall have no authority to bind the Company or its Affiliates to any obligation (contractual or otherwise). For purposes of this Agreement, (a) the term "control" shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting interests, by contract or otherwise and (b) the term "person" shall mean an individual, partnership, corporation, limited liability company, limited liability partnership, trust, joint venture or other entity. It is hereby acknowledged and agreed that the Company has not, is not and shall not be obligated to make, and that it is the sole responsibility of VFIN and Investment Bank to make, in connection with any income earned by VFIN and Investment Bank from the Company, all periodic withholding taxes, FICA taxes, SECA payments, Federal unemployment taxes (FUTA) and any other Federal or state taxes, payments or filings required to be paid, made or maintained. Page 5 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 561.477.7197
In the event that VFIN and Investment Bank, or their officers, shareholders, directors, employees or agents (collectively "Indemnitee") become involved in any capacity in any action, proceeding or investigation in connection with any matter referred to in this Agreement not resulting from or relating to Indemnitee's recklessness, negligence, or bad faith, the Company will reimburse Indemnitee for legal and other expenses as such expenses are incurred in connection therewith. The Company will also indemnify and hold harmless Indemnitee against losses, claims, damages or liabilities to which Indemnitee may become subject in connection with any matter referred to in this Agreement, except to the extent that any such loss, claim, damage or liability results from the recklessness, negligence, or bad faith of Indemnitee performing the services that are the subject of this Agreement. The provisions of this Section 6 shall survive any termination or expiration of this Agreement. SECTION SEVEN SERVICES FOR OTHERS VFIN and Investment Bank may, during or subsequent to the Term, perform services for any other person or firm without the Company's prior approval. SECTION EIGHT OWNERSHIP VFIN and Investment Bank acknowledge that the Company will be free to use all work developed under this Agreement for future and continued usage without any obligation to remit any payment to VFIN and Investment Bank other than that which is defined in this Agreement. SECTION NINE GOVERNING LAW The laws of the State of Florida shall govern this Agreement. Any controversy or claim arising out of, or relating to, this Agreement, to the making, performance, or interpretation of it, shall be settled by arbitration in Fort Lauderdale, Florida unless otherwise mutually agreed upon by the parties, under the commercial arbitration rules of the American Arbitration Association then existing, and any judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter of the controversy. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorney's fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. The Governing Law provisions shall survive any termination of this Agreement. Page 6 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 561.477.7197
SECTION TEN INTEGRATION This Agreement contains the entire Agreement among the parties and supersedes all prior oral and written agreements, understandings, and representations among the parties. No amendments to this Agreement shall be binding unless executed in writing by all the parties. IN WITNESS WHEREOF, The parties to this Agreement have duly executed it on the day and year first above written. COMPANY BRIGHTCUBE, INC.
By: /S/Eric Howard 08/17/01 ---------------------------------------Authorized Representative Date
vFinance Investments, Inc.
By: /S/ [Illegible] 08/22/01 ---------------------------------------Authorized Representative Date
INVESTMENT BANK vFinance Capital L.C.
By: /S/ [Illegible] 08/22/01 ---------------------------------------Authorized Representative Date
Page 7 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 561.477.7197
ADDENDUM "A" REGISTRATION RIGHTS (a) Piggy-Back Registration Rights. If at any time five (5) years from the date of this Agreement (the "Registration Period"), the Company proposes to register any securities under the Securities Act of 1933, as amended (the "1933 Act") (other than on a registration form relating to a registration of a stock option, stock purchase or compensation or incentive plan or of stock issued or issuable pursuant to any such plan, or dividend investment plan, a registration of stock proposed to be issued in exchange for securities or assets of, or in connection with the merger or consolidation with, another corporation, or a registration of stock proposed to be issued in exchange for other securities of the Company), the Company shall give prompt written notice thereof ("Registration Notice") to VFIN and Investment Bank and, upon the written request made within ten (10) days after VFIN and Investment Bank received such Registration Notice, the Company shall use its best efforts to effect as part of such registration the registration under the 1933 Act of that number of the shares which VFIN and Investment Bank requests the Company to register, provided that the managing underwriter of the Company's public offering, if any, shall be of the opinion that the inclusion in such registration of such number of shares will not interfere with the successful marketing of all of the Company's securities being registered. If the managing underwriter requests VFIN and Investment Bank to reduce in whole or in part the number of shares sought or be registered by VFIN and Investment Bank, VFIN and Investment Bank shall comply with the request of the managing underwriter. VFIN and Investment Bank agree to execute any document required to be executed by the managing underwriter in order to effectuate such offering. In any underwritten offering, VFIN and Investment Bank shall sell the shares registered as part of such underwritten offering to the underwriters of such offering on the same terms and conditions as apply to the Company. In connection with any registration pursuant to this Section (a), VFIN and Investment Bank shall provide the Company with such information regarding VFIN and Investment Bank and the distribution of the shares as the Company and the managing underwriter shall reasonably request. The Company shall pay all costs and expenses of VFIN and Investment Bank. The Company shall not be obliged to effect registration under the 1933 Act of common stock held by VFIN and Investment Bank pursuant to this Section (a) on more than one occasion. However, if all of the shares sought to be registered by VFIN and the Investment Bank are not registered by the Company for any reason, the piggyback registration rights set forth in this Section (a) shall remain in effect until all of the shares of VFIN and the Investment Bank have been registered hereunder or the five-year period referred to in this Section (a) have expired, whichever event occurs first. (b) General Conditions. In connection with each registration affected pursuant to Section (a), the Company and VFIN and Investment Bank agree as follows: (I) Indemnification of VFIN and Investment Bank, The Company shall indemnify and hold harmless VFIN, Investment Bank and their respective officers, directors, shareholders, employees and agents (collectively, "Investment Bank Indemnitees") from and against any and all losses, claims, damages, or liabilities to which any of the Investment Bank Indemnitees may become subject under the 1933 Act, or any other statute or common law, including any amount paid in settlement of any litigation, commenced or threatened, if such settlement is effected with the written consent of the Company, and to reimburse any of the Investment Bank Indemnitees for any legal or other expenses incurred by any of the Investment Bank Indemnitees in connection with investigating any claims and defending any action insofar as any such losses, claim, damages, liabilities or actions arise out of or are based upon 1) any untrue statement or alleged untrue statement of a material fact, contained in the registration statement relating to the sale of the shares of VFIN and the Investment Bank, or any post-effective amendment thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, 2) any untrue statement or alleged untrue statement of a material fact, contained in a preliminary prospectus, if used prior to the effective date of such registration statement, or contained in the prospectus (as amended or supplemented, if the Company shall have filed with the SEC any amendment thereof or supplement thereto), if used within the period during which the Company is required to keep the registration statement to which the prospectus relates current and effective pursuant to the terms hereof, or the omission or alleged omission to state therein (if so used) a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Page 8 3010 North Military Trail, Suite 300, Boca Raton, Florida, 33431-6300 561.477.7197
The indemnification agreement contained in this Agreement, however, shall not: 1) apply to such losses, claims, damages, liabilities, or actions arising out of, or based upon, any such untrue statement or alleged omission, if such statement or omission was in reliance upon and in conformity with the information furnished in writing to the Company by VFIN and Investment Bank in connection with the preparation of the registration statement or any preliminary prospectus or prospectus contained in the registration statement or any amendment thereof or supplement thereto, or 2) inure to the benefit of any underwriter from whom the person asserting any such losses, claims, damages, expenses or liabilities purchased the securities which are the subject thereof (or to the benefit of any person controlling such underwriter), if such underwriter failed to send or give a copy of the prospectus to such person at or prior to the written confirmation of the sale of such securities to such person. (ii) Indemnification of the Company. VFIN and Investment Bank severally and not jointly agree, in the same manner and to the same extent as set forth in the preceding paragraph, to indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act, its directors and those officers of the Company who shall have signed such registration statement, with respect to any statement in or omission from such registration statement or any post-effective amendment thereof or any preliminary prospectus (as amended or supplemented, if amended or supplemented as aforesaid) contained in such registration statement, if such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by VFIN and the Investment Bank for use in connection with the preparation of such registration statement or any preliminary prospectus or prospectus contained in such registration statement or any amendment thereof or supplement thereto. (iii) Notice of Indemnifiable Action. Promptly after the receipt of notice or the commencement of any action against such indemnified party in respect of which indemnity may be sought from a party hereto on account of the provisions contained in this Addendum A, each indemnified party will notify the indemnifying party in writing of the commencement thereof. The omission of any indemnified party to so notify an indemnifying party of any such action shall not relieve the indemnifying party from any liability hereunder, unless such failure to promptly notify the indemnifying party shall prejudice the indemnifying party in any material respect in connection with such action. Page 9 3010 North Military Trail, Suite 200, Boca Raton, Florida, 33431-6300 561.477.7197
Exhibit 99.19 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 5th day of November, 2001, by and between BrightCube, Inc., a Nevada corporation, doing business in California ("Employer"), and Eric Howard, an individual ("Employee"). RECITALS A. WHEREAS, Employee has experience and expertise applicable to employment with Employer, Employer has agreed to employ Employee and Employee has agreed to enter into such employment on the terms set forth in this Agreement. B. WHEREAS, Employee acknowledges that this Agreement is necessary for the protection of Employer's investment in its business, good will, products, methods of operation, information, and relationships with its customers and other employees. C. WHEREAS, Employer acknowledges that Employee desires definition of her compensation and benefits, and other terms of her employment. NOW, THEREFORE, in consideration thereof and of the covenants and conditions contained herein, the parties agree as follows: AGREEMENT 1. TERM OF AGREEMENT 1.1 Initial Term. The initial term of this Agreement shall begin on November 5, 2001 ("Commencement Date") and shall continue until the earlier of: (a) the date on which it is terminated pursuant to Section 5; or (b) three (3) years following the Commencement Date ("Initial Term"). After the expiration of the Initial Term, Employee shall be employed on an at-will basis, with either party able to terminate the employment, with or without cause and with or without notice. 2. EMPLOYMENT 2.1 Employment of Employee. Employer agrees to employ Employee to render services on the terms set forth herein. Employee hereby accepts such employment on the terms and conditions of this Agreement. 2.2 Position and Duties. Employee shall serve as the Chief Financial Officer and shall have the general powers and duties of management usually vested in such office in a corporation and such other powers and duties as may be prescribed from time to time by Employer's Chief Executive Officer or the Board of Directors. 2.3 Standard of Performance. Employee agrees that she will at all times faithfully and industriously and to the best of her ability, experience and talents perform all of the duties that may be required of and from her pursuant to the terms of this Agreement. Such duties shall be performed at such place or places as the interests, needs, business and opportunities of Employer shall require or render advisable.
2.4 Exclusive Service and Duty of Loyalty. Employee shall devote all of her business energies and abilities and all of her productive time to the performance of her duties under this Agreement (reasonable absences during holidays and vacations excepted), and shall not, without the prior written consent of Employer, render to others any service of any kind (whether or not for compensation) that, in the opinion of Employer, would interfere with the performance of her duties under this Agreement. The foregoing notwithstanding, the expenditure of reasonable amounts of time for personal business, charitable, community or professional activities will not be deemed a breach of this Agreement, provided that such activities, individually or in the aggregate, in the opinion of Employer do not interfere materially with the performance of Employee's duties hereunder, and further provided that in engaging in such activities she complies with the confidentiality and duty of loyalty provisions of this Agreement. Additionally, during the term of this Agreement, Employee shall not, without the prior written consent of Employer, directly or indirectly render services of a business, professional, or commercial nature to any person or firm, whether for compensation or otherwise, or engage in any activity directly or indirectly competitive with or adverse to the business or welfare of Employer, whether alone, as a partner, or as an officer, director, employee, consultant, or holder of more than 1 % of the capital stock of any other corporation. Otherwise, Employee may make personal investments in any other business so long as these investments do not require her to participate in the operation of the companies in which she invests. 3. COMPENSATION 3.1 Compensation. During the term of this Agreement, Employer shall pay the amounts and provide the benefits described in this Section 3, and Employee agrees to accept such amounts and benefits in full payment for Employee's services under this Agreement. 3.2 Base Salary. Employer shall pay to Employee a base salary of $100,000 annually in equal bi-weekly installments, less applicable taxes. At Employer's sole discretion, Employee's base salary may be increased annually. 3.3 Discretionary Bonus. If Employer's revenue for 2001 is at least $17 million and EBITDA is at least $3 million, Employee shall receive, at Employee's option, either (i) a bonus of 100% of Base Salary in cash or (ii) a stock option grant for the number of shares of Employer's common stock (the "Common Stock") equal to 120% of Base Salary divided by the average closing stock price. The determination of revenue and EBITDA for purposes of this calculation shall be such amounts from or derived from Employer's audited 2001 financial statements. Such bonus shall be paid within 3 months of December 31, 2001. For purposes of this section only, "average closing stock price" shall mean the average of the closing prices of the Common Stock for the 10 trading days prior to the date the bonus is paid. All stock options granted under this Section 3.3 shall be granted at fair market value on the date of grant and shall vest in accordance with the terms of Employer's policies then in effect for similarly situated employees. Employee is eligible to receive bonuses as determined by the Board of Directors in its sole discretion. Such discretionary bonus will be based on performance criteria and milestones. Both the performance criteria and milestones are to be established by the Board of Directors within four (4) months after each Employer year end. -2-
3.4 Equity Incentive Plan. (a) Employee shall be granted an option to purchase 500,000 shares of Common Stock, at an exercise price equal to the closing market price of the Common Stock on the day of the grant, which will be the March 1, 2001. Vesting of the options will occur over a three (3) year period as follows: 1/12th each 3 months from March 1, 2001. The other terms and conditions of Employee's option shall be as set forth in the option documents evidencing the same, and such options shall be subject to the terms and conditions of the option plan of Employer. (b) Except as otherwise set forth herein, vesting of options will cease upon the termination of Employee's employment with Employer. 3.5 Fringe Benefits. Subject to Section 3.7, and upon satisfaction of the applicable eligibility requirements, Employee shall be entitled to all fringe benefits which Employer may make generally available from time to time for similar employees. Such benefits shall include without limitation those available, if any, under any group insurance, profit sharing, pension or retirement plans or sick leave policy. 3.6 Vacations. Employee shall accrue, on a daily basis, eighteen (18) days of Paid Time Off (PTO) per year; provided, however, that Employee's accrued but unused PTO shall not exceed a total of twenty-seven (27) days. Any accrued but unused PTO will be paid to Employee at the time that his employment is terminated. 3.7 Deduction from Compensation. Employer shall deduct and withhold from all compensation payable to Employee all amounts required to be deducted or withheld pursuant to any present or future law, ordinance, regulation, order, writ, judgment, or decree requiring such deduction and withholding. 4. REIMBURSEMENT OF EXPENSES 4.1 Travel and Other Expenses. Employer shall pay to or reimburse Employee for those travel, promotional and similar expenditures incurred by Employee which Employer determines are reasonably necessary for the proper discharge of Employee's duties under this Agreement and for which Employee submits appropriate receipts and indicates the amount, date, location and business character. 4.2 Liability Insurance. If Employee shall be an officer of Employer of the level or type for whom Employer, in its usual and customary practice, provides officers and directors' insurance, Employer shall provide Employee with such insurance, or other liability insurance, consistent with its usual business practices, to cover Employee against all insurable events related to her employment with Employer. -3-
5. TERMINATION 5.1 Termination by Employer With Good Cause. Employer may terminate Employee's employment at any time, without notice, for Good Cause (as defined below). If Employer should terminate Employee's employment with Good Cause, Employer shall pay Employee only her salary prorated through the date of termination, at the rate in effect at the time notice of termination is given, together with any benefits accrued through the date of termination. Employer shall have no further obligations to pay any compensation or any other benefits to Employee under this Agreement or any other agreement, and all unvested options will terminate. 5.2 Good Cause. For purposes of this Agreement, a termination shall be for "Good Cause" if Employee, in the subjective, good faith opinion of Employer, shall: (a) be convicted of (1) any felony; or (2) a misdemeanor that, in the sole, but good faith, opinion of Employer involves moral turpitude; (b) commit an act, or fail to commit an act, that amounts to willful misconduct, insubordination, wanton misconduct or gross negligence; (c) engage in any activity that is in conflict with Employee's employment, provided that, for the purpose of this subsection only, with respect to the first such act only, and only if such act is curable, Employee shall have 3 days within which to cure the violation, after receiving written notice from Employer specifying in reasonable detail the basis for any such violation; (d) commit an act of fraud, misappropriation of funds or embezzlement in connection with her duties; (e) breach Employee's fiduciary duty to Employer, including, but not limited to, acts of self-dealing (whether or not for personal profit); (f) materially breach this Agreement, provided that, for purposes of this subsection only, and with respect to the first such breach only, Employee shall have 15 days within which to cure the breach, if curable, after receiving written notice from Employer specifying in reasonable detail the basis for any breach; or (g) fail to substantially perform the responsibilities and duties specified herein (other than any such failure resulting from Employee's incapacity due to physical or mental illness), provided that, for the purpose of this subsection only, and with respect to the first failure on particular grounds, and three such failures in total during the course of this Agreement, only, Employee shall have 15 days within which to cure the failure, after receiving written notice from Employer specifying in reasonable detail the basis for any failure. (h) Termination by Employer Without Good Cause. If Employer terminates Employee's employment without Good Cause, then Employer shall: (1) immediately pay Employee all accrued but unpaid base salary and vacation, in a lump sum; and (2) pay an amount equal to the lesser of: (i) the remaining base salary under the Initial Term (at the rate in effect at the time of termination); or (ii) six (6) months of base compensation (at the rate in -4-
effect at the time of termination). With the exception of accrued salary and vacation, the above payments shall be made in equal semi-monthly installments and shall cease on the date that Employee accepts alternate employment, provided, however, that if the annual salary for such alternate employment is less than $150,000.00, Employer will continue to make payments to Employee, for the remainder of the relevant term, at an amount that is equal to the difference between Employee's new salary and $150,000.00. With the exception of accrued salary and vacation, in order to receive the above payments, Employee must execute a General Release Agreement ("Release"). 5.3 Death or Disability. To the extent consistent with federal and state law, Employee's employment, salary, and accrual of commissions shall terminate on her death or disability. "Disability" means any health condition, physical or mental, or other cause beyond Employee's control, that prevents her from performing her duties, even after reasonable accommodation is made by Employer, for a period of 180 consecutive days. In the event of termination due to death or Disability, Employer shall pay Employee (or her legal representative) only her salary prorated through the date of termination, at the rate in effect at the time notice of termination is given, together with any benefits accrued through the date of termination. Employer shall have no further obligations to pay any compensation or any other benefits to Employee under this Agreement or any other agreement, and all unvested options will terminate. 5.4 Return of Employer Property. Within five days after the Termination Date, Employee shall return to Employer all products, books, records, forms, specifications, formulae, data processes, designs, papers and writings relating to the business of Employer including without limitation proprietary or licensed computer programs, customer lists and customer data, and/or copies or duplicates thereof in Employee's possession or under Employee's control. Employee shall not retain any copies or duplicates of such property and all licenses granted to her by Employer to use computer programs or software shall be revoked on the Termination Date. 5.5 Vested Options. Upon any termination, any and all options granted to Employee by Employer, which have vested as of the date of termination, shall continue to remain Employee's vested options, subject to the terms of the documents evidencing the applicable option grants and the terms of the applicable option plans of Employer pursuant to which such options were granted. 6. NO SOLICITATION OF CUSTOMERS Employee agrees that during her employment with Employer, and for one (1) year thereafter, she will not, with respect to fields in which Employee knows, or has reason to know, that Employer conducts, or intends to conduct, business at the time Employee's employment is terminated, directly or indirectly call on, or otherwise solicit, business from any actual customer or potential customer known by Employee to be targeted by Employer, nor will she assist others in doing so. -5-
7. NO SOLICITATION OF EMPLOYEES Employee further agrees that during her employment with Employer, and for one (1) year thereafter, she will not encourage or solicit any other employee of Employer to terminate his or her employment for any reason, nor will she assist others to solicit Employer's employees to terminate their employment. 8. OTHER PROVISIONS 8.1 Compliance With Other Agreements. Employee represents and warrants to Employer that the execution, delivery and performance of this Agreement will not conflict with or result in the violation or breach of any term or provision of any order, judgment, injunction, contract, agreement, commitment or other arrangement to which Employee is a party or by which she is bound, including without limitation any agreement restricting the sale of products similar to Employer's products in any geographic location or otherwise. Employee acknowledges that Employer is relying on her representation and warranty in entering into this Agreement, and agrees to indemnify Employer from and against all claims, demands, causes of action, damages, costs or expenses (including attorneys' fees) arising from any breach thereof. 8.2 Inventions Agreement. Employee agrees that she will execute Employer's standard agreement regarding inventions and confidentiality. 8.3 Injunctive Relief. Employee acknowledges that the services to be rendered under this Agreement and the items described in Sections 6 and 7 are of a special, unique and extraordinary character, that it would be difficult or impossible to replace such services or to compensate Employer in money damages for a breach of this Agreement. Accordingly, Employee agrees and consents that if she violates any of the provisions of this Agreement, Employer, in addition to any other rights and remedies available under this Agreement or otherwise, shall be entitled to temporary and permanent injunctive relief, without the necessity of proving actual damages and without the necessity of posting any bond or other undertaking in connection therewith. 8.4 Attorneys' Fees. The prevailing party in any suit or other proceeding brought to enforce, interpret or apply any provisions of this Agreement, shall be entitled to recover all costs and expenses of the proceeding and investigation (not limited to court costs), including all attorneys' fees. 8.5 Counsel. The parties acknowledge and represent that, prior to the execution of this Agreement, they have had an opportunity to consult with their respective counsel concerning the terms and conditions set forth herein. Additionally, Employee represents that she has received independent legal advice concerning the taxability of any consideration received under this Agreement. Employee has not relied upon any advice from Employer and/or its attorneys with respect to the taxability of any consideration received under this Agreement. Employee further acknowledges that Employer has not made any representations to her with respect to tax issues. 8.6 Nondelegable Duties. This is a contract for Employee's personal services. The duties of Employee under this Agreement are personal and may not be delegated or transferred in any manner whatsoever, and shall not be subject to involuntary alienation, assignment or transfer by Employee during her life. -6-
8.7 Entire Agreement. This Agreement is the only agreement and understanding between the parties pertaining to the subject matter of this Agreement, and supersedes all prior agreements, summaries of agreements, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written, between the parties pertaining to such subject matter. 8.8 Governing Law. The validity, construction and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of California. 8.9 Venue. If any dispute arises regarding the application, interpretation or enforcement of any provision of this Agreement, including fraud in the inducement, such dispute shall be resolved either in federal or state court in Los Angeles County, California. 8.10 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or unenforceable provision were omitted. 8.11 Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. 8.12 Binding Effect. The provisions of this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. 8.13 Notice. Any notices or communications required or permitted by this Agreement shall be deemed sufficiently given if in writing and when delivered personally or 48 hours after deposit with the United States Postal Service as registered or certified mail, postage prepaid and addressed as follows: (a) If to Employer, to the principal office of Employer in the State of California, marked "Attention: Chief Executive Officer"; or (b) If to Employee, to the most recent address for Employee appearing in Employer's records. 8.14 Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. -7-
[SIGNATURE PAGE FOLLOWS] -8-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. EMPLOYER BrightCube, Inc.
By: /s/ Al Marco -----------Name: Al Marco --------Title: CEO ----
/s/ Eric C. Howard -----------------Eric C. Howard