BRILLIANT DIGITAL ENTERTAINMENT, INC.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered as of
the 1st day of January, 2000, by and between Brilliant Digital Entertainment,
Inc., a Delaware corporation (the "Company"), and Continental Capital & Equity
Corporation, a Florida corporation ("Purchaser").
This Agreement is being entered into between the parties pursuant to that
certain Market Access Program Marketing Agreement, dated as of December 16,
1999, between the Company and Purchaser (the "Marketing Agreement"). In
consideration of the mutual covenants and agreements set forth in this Agreement
and in the Marketing Agreement, the parties to this Agreement agree as follows:
1. PURCHASE AND SALE OF SHARES. Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, 50,000 shares (the "Shares")
of the Company's common stock, par value $.001 per share (the "Common Stock").
2. PURCHASE PRICE. The aggregate purchase price for the Shares is $50.00
(or $.001 per share), which amount will be delivered to the Company currently
with the execution and delivery of this Agreement
3. RESTRICTIONS ON THE SHARES.
3.1 RESTRICTIONS ON TRANSFER OF SHARES. None of the Shares shall be
transferred (with or without consideration), sold, offered for sale, assigned,
pledged, hypothecated or otherwise disposed of (each a "Transfer"), and the
Company shall not be required to register any such Transfer and the Company may
instruct its transfer agent not to register any such Transfer, unless and until
all of the following events shall have occurred:
(a) The Shares are Transferred pursuant to and in conformity with
(i) (x) an effective registration statement filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Act"); or (y) an exemption from registration under the Act; and
(ii) the securities laws of any state of the United States; and
(b) Purchaser has, prior to the Transfer of such Shares, and if
requested by the Company, provided all relevant information to the Company's
counsel so that upon the Company's request, the Company's counsel is able to,
and actually prepares and delivers to the Company a written opinion that the
proposed Transfer is (i) (x) pursuant to a registration statement which has been
filed with the Commission and is then effective; or (y) exempt from registration
under the Act as then in effect, and the Rules and Regulations of the Commission
thereunder; and (ii) is either qualified or registered under any applicable
state securities laws, or exempt from such qualification or registration. The
Company shall bear all reasonable costs of preparing such opinion.
3.2 ADDITIONAL RESTRICTIONS ON TRANSFER OF NON-VESTED SHARES.
Purchaser agrees, for itself and for its heirs, successors and assigns, that
Purchaser shall have no right or power under any circumstance to Transfer any
interest in Shares which are "Non-Vested Shares," as determined by this Section
3.2, except to the Company. As used in this Agreement, "Vested Shares" means all
Shares which Purchaser has the right to Transfer at a specified point in time
and "Non-
Vested Shares" means all Shares which Purchaser does not have the right to
Transfer at a specified point in time. The vesting schedule is set forth in
Section 3.3.
3.3 DETERMINATION OF VESTED SHARES. The Shares which shall be "Vested
Shares" shall be determined solely on the basis of the length of time that
Purchaser continues to provide services to the Company under the Marketing
Agreement, as follows:
(a) 36,663 Shares shall become Vested Shares in eleven
consecutive equal monthly installments of 3,333 Shares each on the last day of
the calendar month, with the first installment vesting on January 31, 2000, so
long as Purchaser has been providing and is continuing to provide services to
the Company under the Marketing Agreement on the last day of such calendar
month; and
(b) 13,337 Shares shall become Vested Shares on December 31,
2000, so long as Purchaser has been providing and is continuing to provide
services to the Company under the Marketing Agreement on December 31, 2000.
3.4 OBLIGATION TO RESELL SHARES. On the termination of Purchaser's
"engagement by the Company" (as defined in Section 3.5 below), for any reason,
whether with or without cause, the Company shall have the right to repurchase
from Purchaser and Purchaser shall be obligated to sell to the Company, all or
any of Purchaser's Non-Vested Shares at a purchase price of $.001 per share (the
"Repurchase Price"). Within 45 days of the date of the termination of
Purchaser's engagement by the Company, the Company shall deliver to Purchaser a
written notice specifying the number of Shares the Company desires to repurchase
under this Agreement, and the place, time and date (which in no event shall be
later than 30 days from the date of the Company's notice) of the closing of such
sale and purchase. At the closing, the Company agrees to deliver the Repurchase
Price to Purchaser for the number of Shares specified in the notice, and
Purchaser agrees to deliver to the Company a certificate or certificates
representing the number of Shares specified in the notice (except to the extent
all or any portion of such Shares are held in escrow pursuant to Section 3.6
below, in which case such Shares shall be delivered to the Company in accordance
with Section 3.6), together with collateral instruments of transfer executed in
blank.
3.5 ENGAGEMENT. Purchaser shall be considered to be in "ENGAGEMENT BY
THE COMPANY" while Purchaser is continuously engaged as an independent
contractor to the Company under the terms of the Marketing Agreement. This
Agreement shall not obligate the Company or any other entity to continue to
engage Purchaser as an independent contractor for any period of time. The term
of Purchaser's engagement by the Company as an independent contractor, and the
Company's and Purchaser's right to terminate that engagement, with or without
cause, shall be determined under the terms of the Marketing Agreement and not
this Agreement.
3.6 RETENTION OF SHARES IN ESCROW. Purchaser agrees that each
certificate representing the Shares issued to Purchaser hereunder, or deemed to
be issued to Purchaser hereunder, shall be delivered to Troop Xxxxxxx Xxxxxx
Xxxxxxx & Xxxxx, LLP, counsel to the Company ("Troop"), to be held Troop in
escrow in accordance with the terms of this Section 3.6. Purchaser agrees to
execute in blank collateral instruments of transfer reasonably requested by the
Company to enable the Company to repurchase Non-Vested Shares in accordance with
the terms of this Agreement. The Company shall instruct Troop to hold the Shares
in escrow and to release the Shares upon written instructions executed by the
Company as follows:
Page 2
(a) Any Non-Vested Shares repurchased by the Company pursuant to
the terms of this Agreement shall be released from escrow and delivered to the
Company upon receipt by Troop of written instructions executed by the Company;
(b) 10,000 of the Shares shall not be deposited into escrow and
shall be delivered to Purchaser as soon as practicable following execution of
this Agreement;
(c) Provided that following Shares have not previously been
released from escrow and delivered to the Company pursuant to Section 3.6(a)
above, 10,000 of the Shares shall be released from escrow and delivered to
Purchaser upon receipt by Troop of written instructions executed by the Company
on each of April 1, 2000, July 1, 2000, October 1, 2000 and December 31, 2000.
Nothing in this Section 3.6 shall in any way affect the determination
of whether Shares are Vested Shares or Non-Vested Shares, and the parties
acknowledge that Shares may be released from escrow prior to the date upon which
such Shares become Vested Shares under the terms of this Agreement.
3.7 NON-COMPLYING TRANSFERS. Every attempted Transfer of any shares of
the Stock in violation of this Section 3 shall be null and void AB INITIO, and
of no force or effect.
4. LEGENDS ON STOCK CERTIFICATES. Purchaser agrees that the Company may
place on each certificate representing Shares legends in substantially the
following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION IS NOT REQUIRED."
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE REGISTERED HOLDER OF THIS CERTIFICATE, WHICH
AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THE COMPANY HAS A RIGHT
TO REPURCHASE THE SECURITIES EVIDENCED BY THIS CERTIFICATE. A COPY
OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY."
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser has been
advised that the Common Stock has not been registered under the Act, nor
qualified under any state Blue Sky law, on the ground that no distribution or
public offering of the Common Stock is to be effected,
Page 3
and that in this connection the Company is relying in part on the
representations of Purchaser set forth in this Section 5. Purchaser represents
that:
5.1 INVESTMENT INTENT. Purchaser is acquiring the Shares solely for
its own account, for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of the Shares, except pursuant to a
registration statement under the Act as contemplated by the Marketing Agreement.
5.2 ECONOMIC RISK. Purchaser is able to bear the economic risk of an
investment in the Shares acquired by it pursuant to this Agreement and can
afford to sustain a total loss on such investment.
5.3 SOPHISTICATION. Purchaser (i) has a preexisting personal or
business relationship with the Company or its officers and/or directors, and
(ii) is an experienced and sophisticated investor, is able to fend for itself in
the transactions contemplated by this Agreement, and has such knowledge and
experience in financial and business matters that it is capable of evaluating
the risks and merits of acquiring the Shares. Purchaser has had, during the
course of this transaction and prior to its purchase of the Shares, the
opportunity to ask questions of, and receive answers from, the Company and its
management concerning the Company and the terms and conditions of this
Agreement. Purchaser hereby acknowledges that it has received all such
information as it considers necessary for evaluating the risks and merits of
acquiring the Shares and for verifying the accuracy of any information furnished
to it or to which it had access.
5.4 ACCREDITED INVESTOR. Purchaser is an "accredited investor" for
purposes of Regulation D promulgated by the Commission under the Act.
6. GENERAL PROVISIONS.
6.1 FURTHER ASSURANCES. Purchaser shall promptly take all actions and
execute all documents requested by the Company which the Company deems to be
reasonably necessary to effectuate the terms and intent of this Agreement.
6.2 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be given to the parties
hereto as follows:
(a) If to the Company, to:
Brilliant Digital Entertainment, Inc.
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Chief Financial Officer
(b) If to Purchaser, to:
Continental Capital & Equity Corporation
000 Xxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn:
Page 4
or at such other address or addresses as may have been furnished by either such
party in writing to the other party hereto. Any such notice request, demand or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by certified or registered mail, return
receipt requested, postage pre-paid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this Section 6.2.
6.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
6.4 GOVERNING LAW. THIS AGREMEENT IS MADE AND ENTERED INTO IN THE
STATE OF CALIFORNIA AND THE LAWS OF SAID STATE SHALL GOVERN THE VALIDITY AND
INTERPRETATION HEREOF AND THE PERFORMANCE BY THE PARTIES HERETO OF THEIR
RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER.
6.5 SEVERABILITY. Should any paragraph or any part of a paragraph
within this Agreement be rendered void, invalid or unenforceable by any Court of
law for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other paragraph or part of a paragraph in this
Agreement.
6.6 ATTORNEY'S FEES. In the event that any action, suit or proceeding
is instituted upon any breach of this Agreement, the prevailing party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses, including attorneys' fees incurred in each and every such
action, suit or proceeding (including any and all appeals or petitions
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal services actually performed in connection with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to "reasonable attorneys'
fees" as defined in any statute or rule of court.
6.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original but all of which
together shall constitute one and the same instrument.
6.8 MISCELLANEOUS. Title and captions contained in this Agreement are
inserted for convenience and reference only and do not constitute a part of this
Agreement for any purpose.
6.10 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Purchaser without the prior written consent
of the Company.
6.9 ENTIRE AGREEMENT. This Agreement and the Marketing Agreement
constitute the full and entire understanding and agreement between the parties
with regard to the subject hereof and thereof.
Page 5
IN WITNESS WHEREOF, this Agreement has been executed by the parties with
the intent that it be effective as of the date first above written.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
a Delaware corporation
By: /S/ XXXXXXX XXXX
------------------------------
Xxxxxxx Xxxx
Its: Chief Financial Officer
CONTINTENTAL CAPITAL & EQUITY CORPORATION,
a Florida corporation
By: /S/ X. XXXXXX
------------------------------
Its: PRESIDENT
-----------------------------
Page 6
