EXHIBIT 10.48
AMENDMENT NUMBER ONE TO SECURED CONVERTIBLE PROMISSORY NOTES
THIS AMENDMENT NUMBER ONE TO SECURED CONVERTIBLE PROMISSORY NOTES
("AMENDMENT"), is made and entered into as of the 19th day of December, 2001, by
Brilliant Digital Entertainment, Inc., a Delaware corporation ("BORROWER"), in
favor of Xxxxxx Xxxxx ("Xxxxx"), an individual, as agent (in such capacity,
"AGENT") for himself and the lenders and holders in whose favor the Secured
Convertible Promissory Notes referred to below were executed (Toibb and such
lenders and holders collectively "HOLDERS").
W I T N E S S E T H:
WHEREAS, Borrower executed a Secured Convertible Promissory Note dated as
of May 23, 2001 (the "NOTES") in favor of each Holder;
WHEREAS Borrower has requested that Xxxxxx Xxxxx and another party make
additional loans to Borrower to finance Borrower's and its subsidiaries'
operations (the "New Loans") and in connection with, and as a condition to, the
making of the New Loans, the Purchase Agreements, the Notes, the Security
Agreement and certain other documents will be amended pursuant to certain
documents (the "Amendment Documents") that will be executed and delivered in
connection with the New Loans;
WHEREAS, in connection with the New Loans, Borrower and Agent, among
others, have executed Note and Warrant Purchase Agreements dated as of December
10, 2001, and will execute of even date herewith two Secured Convertible
Promissory Notes, two Warrants to Purchase Common Stock of Brilliant Digital
Entertainment, Inc., a Security and Pledge Agreement and a Guaranty (all such
documents being hereinafter referred to as the "NEW TRANSACTION DOCUMENTS"; and
such definition shall be incorporated by this reference into the Notes);
WHEREAS, it is a condition to the making of the New Loans that the Notes be
amended in the manner set forth herein; and
WHEREAS, Section 11.8 of each of the Note and Warrant Purchase Agreements
dated April, 2001 between Borrower and a Holder permits Toibb, on behalf of
himself and the other Holders as Agent, to amend each of the Notes with the
consent of the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto amend the Notes as
follows:
1. The language of SUBSECTION 8(a)(ii) of the Notes is hereby deleted in
its entirety and replaced with the following language:
"(ii) A default or event of default shall occur in respect of any of the
other Convertible Notes or any other indebtedness of Borrower that exceeds, in
the aggregate, $75,000 and, if
subject to a cure right, such default or event of default shall not be cured
within the applicable cure period;"
2. The language of SUBSECTION 8(a)(iv) of the Notes is hereby deleted in
its entirety and replaced with the following language:
"(iv) Borrower (i) shall generally not pay or shall be unable to pay its
debts as such debts become due, or (ii) shall make an assignment for the benefit
of creditors or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets, or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or (iv) shall have had any
such petition or application filed or any such proceeding commenced against it
that is not dismissed within thirty (30) days, or (v) shall indicate, by any act
or intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for relief
or the appointment of a custodian, receiver or trustee for it or a substantial
part of its assets, or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30) days or more;"
3. The language of SUBSECTION 8(a)(vi) of the Notes is hereby deleted in
its entirety and replaced with the following language:
"A default or event of default shall occur under any of the other
Transaction Documents or under the New Transaction Documents and, if subject to
a cure right, such default or event of default shall not be cured within the
applicable cure period;"
4. The language of SUBSECTION 8(a)(viii) of the Notes is hereby deleted in
its entirety and replaced with the following language.
"A default or event of default shall occur in respect of any agreement
of Borrower that requires the payment by Borrower of an amount in excess of
$75,000;"
5. New SUBSECTIONS 8(a) (ix), (x) AND (xi) are hereby added to the Notes,
to read in their entirety as follows:
"(ix) Borrower shall fail to provide the Agent with a copy of a signed
letter of intent with an investor who is, and on terms and conditions that are,
reasonably satisfactory to the Agent, dated no later than February 28, 2002,
pursuant to which such investor agrees to acquire equity in Borrower in
consideration for an investment of at least three million dollars ($3,000,000)
(the "EQUITY INVESTMENT");
(x) The Equity Investment shall fail to fund by April 15, 2002; or
(xi) Either of Borrower's agreements with Consumer Empowerment B.V.
(better known as "Kazaa") or StreamCast Networks, Inc. (better known as
"Morpheus") shall be terminated or amended in such a way as to result in a
Material Adverse Effect."
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6. The paragraph at the end of SECTION 8(a) of the Notes is hereby deleted
in its entirety and replaced with the following language:
"With respect to any Event of Default described above in SUBSECTIONS
8(a)(v), (vi) and (viii) that is capable of being cured and that does not
already provide its own cure procedure (a "CURABLE DEFAULT"), the occurrence of
such Curable Default shall not constitute an Event of Default hereunder if
Borrower provides notice to Holder of such Curable Default in accordance with
the provisions hereof within three (3) business days of Borrower learning of
such default and such Curable Default is fully cured and/or corrected within
fifteen (15) days of Borrower's notice thereof to Holder."
7. A new SECTION 15 is hereby added to the Notes, to read in its entirety
as follows:
"15. WAIVER OF JURY TRIAL. Borrower and Holder each waive all right to
trial by jury in any action or proceeding to enforce or defend any rights or
remedies hereunder or relating hereto."
8. MISCELLANEOUS. Except as expressly set forth in this Amendment, all of
the terms of the Notes shall remain in full force and effect. All references in
the Notes to the "Purchase Agreement", the "Warrants", the "Security Agreement"
or any of the other documents executed in connection with the Purchase Agreement
shall mean and be a reference to such documents as and to the extent they are
amended by the Amendment Documents and all references in such documents to the
Convertible Notes or the Notes shall mean and be a reference to the Notes as
amended hereby. This Amendment shall be governed by and construed in accordance
with the laws of the State of California applicable to contracts made in, and to
be performed within, said state.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
Number One to Secured Convertible Promissory Note to be executed and delivered
by its duly authorized officer on the date first set forth above.
BRILLIANT DIGITAL ENTERTAINMENT, INC.,
a Delaware corporation
By: /S/ XXXXXX XXXXXX
-----------------------------------
Xxxxxx Xxxxxx
Title: Chief Operating Officer and
Chief Financial Officer
Accepted and acknowledged by:
XXXXXX XXXXX,
as Agent for the Holders
/S/ XXXXXX XXXXX
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Xxxxxx Xxxxx
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