[GRAPHIC OMITTED]
March 21, 2002
Brightcube, Inc.
000 Xxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Gentlemen:
This letter will confirm our mutual agreement with respect to our
engagement as exclusive Placement Agent ("Distributors") to act on behalf of
Brightcube, Inc. (the "Company") in connection with the offer and sale on a best
efforts basis of up to 30,000,000 shares of Common Stock (in one or more
tranches), subject to applicable regulations. Sale of the shares will be duly
registered pursuant to the Securities Act of 1933 (the "Securities Act").
1. The engagement hereunder shall be for a term commencing upon the
execution of this letter by the Company and continuing until December 31,2002.
You represent that no other offering is presently in progress by the Company
which has not been disclosed to us.
2. (a) The net proceeds to be received by the Company after
deducting Distributor's Fees shall be 90% of the Purchase Price. Other than the
placement fee payable hereunder and the Warrants, the Distributor shall not be
entitled to any additional compensation from the Company, nor shall Distributor
be reimbursed for its expenses. The Company shall pay a reasonable expense
allowance for legal fees of Distributors' counsel, which shall be capped at
$30,000 plus the expense of Blue Sky filings in relevant states.
(b) Each Purchaser will be an "accredited investor" as said term
is defined in Rule 501 under Regulation D promulgated under the Act.
(c) The Company shall have the right in its sole discretion to
reject any subscription and to disapprove any person or entity which is proposed
by the Distributor to be a purchaser of any Common Stock.
(d) Each Purchaser will, within two business days after acceptance
by the Company of a Securities Purchase Agreement ("Securities Purchase
Agreement") in the form annexed hereto as Exhibit A, pay the purchase price for
the Common Stock in escrow to the Escrow Agent. The Escrow Agent is authorized
to release the funds of each Purchaser after all of:
(i) the Company approves such Purchaser and Securities
Purchase Agreement, which have been submitted and signed
by the Purchaser,
(ii) the Company has caused to be delivered to the Escrow
Agent or his designee, Common Stock purchased by such
Purchaser and the opinion of counsel attached as Annex I
to the Agreement, and
(iii) the Escrow Agent has received good funds representing
the purchase price for the Common Stock, and disbursed
same to the Company.
3. The Company will cause the Common Stock purchased pursuant to such
Agreement to be delivered to Xxxxxxx & Xxxxxx, LLP as escrow agent (the "Escrow
Agent") pursuant to the terms of the Joint Escrow Instructions attached as Annex
II to the Agreement.
4. The Distributor represents, warrants and agrees that each Purchaser
of the Common Stock will be qualified to purchase the Common Stock under the
laws of the jurisdiction in which such person resides and that the offer and
sale of the Common Stock will not violate the securities or other laws of such
jurisdiction. The Company agrees that with respect to any offerees resident in
the United States, the Company will file, at the request of Distributor, such
necessary applications with any applicable securities regulatory authority,
provided, that all U.S. offerees will be accredited investors. The Distributor
is a member of NASD and a licensed broker-dealer.
5. Distributor is an independent contractor, and is not the agent of
the Company. It is not authorized to bind the Company, or to make any
representations or warranties on behalf of the Company.
6. As more fully described in Exhibit B hereto, which is incorporated
herein by reference, each party hereto will indemnify and hold the other
(including its partners, agents, employees, and controlling persons within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) harmless
from and against certain claims, liabilities, losses, damages and expenses
incurred, including fees and disbursements of counsel, related to or arising out
of this engagement. Exhibit B will be executed and delivered simultaneously
with this agreement.
7. The Company agrees to issue to Distributor at each Closing,
transferable divisible warrants (the "Warrants") not to exceed 1,000,000 shares
of Common Stock, issued as pro-rata percentage (3.33%) of the number of shares
of Common Stock purchased. Such Warrants shall bear an exercise price per
share of Common Stock equal to 105% of the Purchase Price of the relevant Common
Stock, and shall be exercisable immediately upon issuance, and for a period of
five (5) years thereafter, with piggy-back registration rights for the
underlying shares in the Registration Statement.
8. Of the net proceeds received by the Escrow Agent on behalf of the
Company hereunder, the Escrow Agent will be authorized to remit such amounts as
mutually agreed-upon by both the Company & Distributor (but not exceeding
$1,325,000) in repayment of that series of promissory notes issued by the
Company in 2002 with the assistance of the Distributor
9. The Company represents, warrants, and agrees that, in addition to
the warranties to be made by the Company to the Purchasers:
(a) the Common Stock to be issued will be registered pursuant to
the Securities Act of 1933, the Company has timely filed all the material
required to be filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 for a period of at least twelve months preceding the date
hereof, and the Company will continue to file all such material on a timely
basis;
(b) the Company is in full compliance, to the extent applicable,
with all reporting obligations under either Section 12(b), 12(g) or 15(d) of the
Securities Exchange Act of 1934. The Company has registered its Common Stock
pursuant to Section 12 of the Exchange Act and the Common Stock is listed on OTC
Bulletin Board, and has received no notice, either oral or written, with respect
to its continued eligibility for such listing;
(c) the Common Stock will be offered and sold in compliance with
all U.S. securities laws and regulations; it being understood that this
representation, warranty and agreement is made relying exclusively on the
representations, warranties and agreements made by the Distributor and/or
Purchasers herein or in the applicable subscription documents. The Company
will, at its expense, make all filings required under the Securities Act or the
Securities Exchange Act, and any applicable domestic securities exchange or
trading market, if any;
(d) all information furnished by the Company to Purchasers will
not contain any untrue statement of material fact or omit to state a material
fact required to be stated or necessary to make the statements therein not
misleading; provided however, that this representation and warranty does not
extend to written material furnished to the Company by Distributor relating to
Distributor or the distribution process;
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(e) the Company has all requisite corporate power and authority to
execute and perform this agreement. All corporate action necessary for the
authorization, execution, delivery and performance of this agreement and the
transaction contemplated hereby have been taken. This agreement constitutes a
valid and binding obligation of the Company;
(f) the execution and performance of this agreement by the Company
and the offer and sale of the Common Stock will not violate any provision of the
Articles of Incorporation or By-laws of the Company or any material agreement or
other instrument to which the Company is party or by which it is bound, and
which violation(s) would have a material adverse effect on the business or
financial condition of the Company. Any material necessary approvals, U.S.
governmental and private, will be obtained by the Company prior to the issuance
of the Common Stock;
(g) the Company makes no other representation or warranty with
respect to the Company, its finances, assets, business or prospects or
otherwise, except as expressly set forth herein or in the Agreement. Distributor
will advise each Purchaser and potential Purchaser of the foregoing, and that
such Purchaser is relying on its own investigation with respect to all such
matters, and that it will be given reasonable access to any and all material
publicly available documents and Company personnel it may require for such
investigation; and
(h) The Company is eligible to and will file a Registration
Statement on Form SB-2 with a Plan of Distribution substantially as set forth in
Annex III.
10. (a) During the period commencing on the Closing Date and
continuing through and including the one hundred and twenty (120) days after the
Effective Date, the Company will not issue any Common Stock or securities
convertible into Common Stock for consideration consisting of cash or cash
equivalents (except upon the exercise of outstanding options or warrants, if
any), except through the Distributor.
(b) Intentionally omitted.
(c) (i) If the Bridge Loan referenced in Section 8 remains
outstanding during the period commencing on the one hundred and twenty first
(121) day after the Effective Date and continuing through and including twelve
(12) months after the Effective Date (the "Restricted Period"), the Company
hereby grants to the Distributor a right of first refusal (the "Right of First
Refusal") to place the New Securities (as defined below) that the Company may,
from time to time and in one or more transactions, propose to sell and issue.
This Right of First Refusal shall be subject to the provisions of this Section
9. This right will terminate upon full repayment of the Bridge Loan.
(ii) The term "New Securities" means any offering by the Company
of any capital stock or debentures (provided such stock or debentures is or is
convertible into Common Stock).
(iii) In the event that the Company proposes to undertake an
issuance of New Securities during the Restricted Period, the Company shall give
written notice thereof (an "Offering Notice"). The Offering Notice shall
specify, in detail, the type of New Securities, the price and the general terms
and conditions upon which the Company proposes to issue the same.
(iv) The Distributor shall have the right, for a period (the
"Exercise Period") expiring at 11:59 PM (Eastern Time) on the fifth (5th)
business day after the giving of the Offering Notice, to purchase or place the
New Securities for the price and on the general terms and conditions specified
in the Offering Notice. Such exercise shall be effected by the Distributor
giving written notice of such exercise (the "Exercise Notice") to the Company as
hereinafter provided.
(v) In the event the Distributor declines or fails to
exercise in full the Right of First Refusal before the expiration of the
Exercise Period , the Company shall have the right, for a period of sixty (60)
days thereafter (the "Third Party Sale Period"), to sell the New Securities as
to which the Distributor did not exercise the Right of First Refusal to one or
more third parties at a price and upon terms and conditions no more favorable to
the Purchasers thereof than specified in the Offering Notice. Within two (2)
business days of the consummation of such sale to a third party during the Third
Party Sale Period, the Company shall provide the Distributor with notice
thereof, specifying the material terms thereof and confirming that such
transaction was consummated upon terms and conditions no more favorable to the
Purchasers thereof than specified in the Offering Notice. In the event the
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Company has not sold the New Securities before the expiration of the Third Party
Sale Period, the Company shall not sell any New Securities (whether the New
Securities described in the Offering Notice or other New Securities) without
affording the Purchaser the right to exercise the Right of First Refusal as
provided herein.
11. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York. Each of the parties consents
to the jurisdiction of the federal courts whose districts encompass any part of
the City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto. This Agreement may
be signed in one or more counterparts, each of which shall be deemed an
original. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by mail or delivered personally or by courier and shall
be effective five days after being placed in the mail, if mailed, or upon
receipt, if delivered personally or by courier, in each case addressed to a
party at such party's address as a party shall have provided by notice to the
other party. Each party hereto shall cooperate and shall take such further
action and shall execute and deliver such further documents as may be reasonably
requested by any other party in order to carry out the provisions and purposes
of this Agreement.
Dated: March 21, 2002
vFINANCE INVESTMENTS, INC.
By: /s/
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Its
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AGREED & ACCEPTED:
BRIGHTCUBE, INC.
By: /s/ Xxxx Xxxxxx
Its Chief Financial Officer
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