EXHIBIT 10.54
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is made as of December
19, 2001, by and among Brilliant Digital Entertainment, Inc., a Delaware
corporation (the "COMPANY"), and each of the parties (each an "INVESTOR" and
collectively, the "INVESTORS") listed on the SCHEDULE OF INVESTORS attached
hereto as EXHIBIT A (the "SCHEDULE OF INVESTORS").
RECITALS
A. Certain of the parties hereto are parties to those certain Note and
Warrant Purchase Agreements, dated April 2001, as amended, whereby the Investors
provided loans to the Company in exchange for the Company's issuance of certain
Secured Convertible Promissory Notes (the "ORIGINAL NOTES") convertible into
shares of the Company's Common Stock, par value $0.001 per share (the "SHARES")
and Warrants (the "ORIGINAL WARRANTS") to purchase shares (the "WARRANT SHARES")
of Common Stock.
B. Certain of the parties hereto are parties to those certain Note and
Warrant Purchase Agreements, dated of even date herewith, pursuant to which
certain of the Investors have invested additional capital in the Company in
exchange for certain Secured Convertible Promissory Notes (the "NEW NOTES")
convertible into the Shares and Warrants (the "NEW WARRANTS") to purchase
additional Warrant Shares.
C. The parties desire to enter into this Agreement which will govern the
registration rights of the Shares held by the Investors in accordance with the
terms and conditions herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. For purposes of this Agreement:
"AFFILIATE" means, with respect to a Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such Person in question. For the purposes of this definition, "CONTROL"
(including, with correlative meanings, the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
duly constituted committee of that Board which has been delegated the authority
to take the specific action in question.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, warrants, subscription rights, participations or other equivalents
(however designated) of capital stock.
"COMMON STOCK" means the Company's common stock, par value $0.001 per
share.
"ELIGIBLE OFFERING" means any public offering of Common Stock by the
Company other than: (i) any registration relating solely to the sale of
securities to participants in a Company stock plan, (ii) any registration
relating to corporate reorganization or other transaction under Rule 145 of the
Act, (iii) any registration on any form (other than Form X-0, X-0 or S-3) which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities, and (iv) any registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC (or any other federal agency at the time
administering the Securities Exchange Act of 1934, as amended) promulgated
thereunder.
"FORM S-3" means such form under the Act as in effect on the date hereof or
any registration form under the Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
"PERSON" means any individual, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint
stock company, government bureau or agency or other subdivision thereof or other
entity of any kind or nature.
"QUALIFIED OFFERING" means a firmly underwritten public offering of the
Company's Common Stock pursuant to an effective registration statement filed
with the SEC.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document by the SEC.
"REGISTRABLE SECURITIES" means (i) any Common Stock held by the Investors,
(ii) any Common Stock issuable upon conversion and/or exercise of the Original
Notes, the Original Warrants, the New Notes and the New Warrants, (iii) any
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
the shares referenced in (i) or (ii) above, and (iv) any Common Stock of the
Company issued by way of a stock split of the shares referenced in (i), (ii) or
(iii) above.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC (or any other federal agency at the time
administering the Securities Act of 1933, as amended) promulgated thereunder.
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"TRADING DAY" shall mean any day on which shares of the Company's Common
Stock are traded on the American Stock Exchange, any other national market or
over the counter, as the case may be.
1.2 REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.
(a) FILING. At any time upon receipt of a written request delivered at any
time after December 19, 2002, from the Investors holding at least fifty percent
(50%) of the total Registrable Securities which are outstanding or which are
issuable upon conversion or exercise at the time of the request, the Company
agrees to file, and cause to become effective as promptly as practicable
thereafter, a shelf registration statement pursuant to Rule 415 under the
Securities Act of 1933 (the "REGISTRATION STATEMENT") on Form S-3 covering the
shares of Common Stock into which the Shares may be converted (the "UNDERLYING
SHARES"), which Registration Statement (or post-effective amendment filed under
this Section 1.2) shall remain effective until the earlier of: (i) two (2) years
from the date of effectiveness and (ii) such time as all registration rights
granted to the Investor hereunder have terminated pursuant to Section 4.2 hereof
(the "EFFECTIVENESS PERIOD"). If the Company is not eligible to use Form S-3,
the Registration Statement shall be on Form S-1 and shall be amended to Form S-3
at such time as the Company becomes eligible to use Form S-3. NOTWITHSTANDING
THE FOREGOING, the Company shall not be obligated to file and cause to be
effective a Registration Statement in the event that (1) the Company shall
furnish to the Investor a certificate signed by the Chief Executive Officer or
Chairman of the Board of Directors stating that in the good faith judgment of
the Board of Directors, it would be seriously detrimental to the Company and its
stockholders for such Registration Statement to be effected at such time, in
which event the Company shall have the right to defer the filing of the
Registration Statement for a period of not more than 90 days, or (2) if the
Company has already filed three Registration Statements at the request of the
Investors pursuant to this Section 1.2(a);
(b) EFFECTIVENESS. The Company shall use its commercially reasonable
efforts to cause such Registration Statement to become effective within 90 days
after filing with the SEC or, if earlier, within five (5) days of SEC clearance
to request acceleration of effectiveness. The Registration Statement shall
include appropriate language regarding reliance upon Rule 416 to the extent
permitted by the SEC. The Company will notify the Investor of the effectiveness
of the Registration Statement within one Trading Day of such event.
(c) EXPENSES. All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under Section 1.2(a) and in complying with applicable
Federal and State securities and Blue Sky laws shall be borne by the Company.
The Investor shall bear the cost of underwriting and/or brokerage discounts,
fees and commissions, if any, applicable to the Securities being registered. The
Investor and his counsel shall have a reasonable period, not to exceed five (5)
Trading Days, to review any amendment to the Registration Statement prior to
filing with the SEC, and the Company shall provide the Investor with copies of
any comment letters received from the SEC with respect thereto within two (2)
Trading Days of receipt thereof.
1.3 PIGGYBACK REGISTRATIONS. From and after December 19, 2002, Company
shall notify the Investors in writing at least 20 days prior to filing any
registration statement under the Securities Act for purposes of effecting an
Eligible Offering, and will afford the Investors an opportunity to include in
such registration statement all or any part of the Registrable Securities then
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held by any Investor. If the Investors desire to include in any such
registration statement all or any part of the Registrable Securities they hold,
such Investors shall, within 10 days after receipt of the above-described notice
from the Company, so notify the Company in writing, and in such notice shall
inform the Company of the number of Registrable Securities such Investor wishes
to include in such registration statement. If any Investor decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Investor shall nevertheless continue to
have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the Company
with respect to offerings of its securities, all upon the terms and conditions
set forth herein.
(a) UNDERWRITING. If a registration statement under which the Company gives
notice under this Section 1.3 is for an underwritten offering, then the Company
shall so advise the Investors. In such event, the right of the Investors'
Registrable Securities to be included in a registration pursuant to this Section
1.3 shall be conditioned upon the Investors' participation in such underwriting
and the inclusion of the Investors' Registrable Securities in the underwriting
to the extent provided herein. If the Investors are proposing to distribute
their Registrable Securities through such underwriting, such Investors shall
enter into an underwriting agreement in customary form with the managing
underwriter or underwriter(s) selected for such underwriting. Notwithstanding
any other provision of this Agreement, if the managing underwriter(s)
determine(s) in good faith that marketing factors require a limitation of the
number of shares to be underwritten, then the managing underwriter(s) may
exclude shares (including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in the registration
and the underwriting shall be allocated, FIRST, to the Company, SECOND to the
holders of any other registration rights granted by the Company prior to the
date of this Agreement, and THIRD, to the Investors, on a pro rata basis based
on the total number of Registrable Securities then held by each Investor. If any
Investor disapproves of the terms of any such underwriting, such Investor may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
(b) EXPENSES. The Company shall pay all expenses incurred in connection
with a registration pursuant to this Section 1.3 (excluding underwriters' or
brokers' discounts and commissions), including, without limitation all federal
and "blue sky" registration and qualification fees, printers' and accounting
fees, and fees and disbursements of counsel for the Company and the fees and
disbursements of special counsel for the Investors.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its commercially reasonable efforts to cause
such registration statement to become effective, and, upon the request of a
majority in interest of the Investors, keep such registration statement
effective for the Effectiveness Period;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement
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as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement;
(c) furnish to the Investors such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by the
Investors that are included in such registration;
(d) use all reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by a majority in
interest of the Investors, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering;
(f) at such time as the Investors' Registrable Securities are covered by
such registration statement, notify the Investors at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of a majority in interest of the
Investors prepare and file an amendment to any such prospectus as may be
necessary;
(g) furnish, at the request of a majority in interest of the Investors if
such Investors are requesting registration of Registrable Securities and such
securities are being sold through underwriters, a "comfort" letter dated as of
such date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to the Investors requesting registration, addressed to the
underwriters and to such Investors;
(h) cause all Registrable Securities registered hereunder to be listed on
each securities exchange on which similar securities issued by the Company are
then listed;
(i) cause the Company's officers, directors and independent certified
public accountants to provide all information reasonably requested by a
representative of the Investors and any attorney or accountant retained by the
Investors, in connection with such registration;
(j) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of the Registration Statement; and
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in the registration
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statement for sale in any jurisdiction, use its commercially reasonable efforts
promptly to obtain the withdrawal of such order.
1.5 INVESTOR'S OBLIGATIONS. (i) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 1 that the
Investors shall furnish to the Company such information regarding such
Investors, the Registrable Securities held by the Investors and the intended
method of disposition of such securities, as shall be required to timely effect
the registration of its Registrable Securities.
(ii) Investors agree that upon receipt of written notice of a Blackout
Period from the Chief Executive Officer or Chairman of the Board of Directors,
the Investors will not offer or sell Registrable Securities or engage in any
transaction involving or relating to Registrable Securities during the time
period set forth in such notice (such Blackout Period not to exceed 30 days) and
will not disclose the contents of such notice until the Blackout Period has
ended. For purposes of this Section 1.5: "BLACKOUT PERIOD": shall mean the
occurrence of a material event which may be, in the good faith opinion of the
Board of Directors, materially adverse to the Company's financial condition,
business or operations or may require a disclosure which is not in the Company's
best interest in light of the existence of (A) any material acquisition or
financing activity involving the Company, including a proposed public offering
of debt or equity securities, (B) an undisclosed material event, the public
disclosure of which would have a material adverse effect on the Company, and (C)
a proposed material transaction involving the Company and a material portion of
its assets.
1.6 DELAY OF REGISTRATION. Investors shall not have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.7 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Section 1:
(a) BY THE COMPANY. To the extent permitted by law, the Company will
indemnify and hold the Investors harmless, any underwriter (as defined in the
Securities Act) for the Investors and each person, if any, who controls an
Investor or an Investor's underwriter within the meaning of the Securities Act
or the Exchange Act, against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;
(ii) 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; or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any federal or state securities law or any rule or
regulation
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promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by such registration
statement;
and the Company will reimburse each Investor or its underwriter or controlling
person for any legal or other expenses reasonably incurred by them, as incurred,
in connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection 1.7(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by an Investor, his underwriter or any controlling person of an
Investor.
(b) BY THE INVESTORS. To the extent permitted by law, the Investors will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, or any
underwriter, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
or underwriter may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by the Investors expressly for use in connection with such
registration; and the Investors will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this subsection 1.7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Investors, which consent shall
not be unreasonably withheld; and PROVIDED FURTHER, that the total amounts
payable in indemnity by the Investors under this subsection 1.7(b) in respect of
any Violation shall not exceed the net proceeds received by the Investors in the
registered offering out of which such Violation arises.
(c) NOTICE. Promptly after receipt by an indemnified party under this
Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.7, but
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the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 1.7.
(d) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity
agreements of the Company and the Investors are subject to the condition that,
insofar as they relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective or the amended
prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL
PROSPECTUS"), such indemnity agreement shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(e) SURVIVAL. The obligations of the Company and the Investors under this
Section 1.7 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise, and the termination of
this Agreement.
(f) SETTLEMENT. No indemnified party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
1.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to Section 1.2 and Section 1.3 may not
be assigned by the Investors.
1.9 HOLDBACK AGREEMENTS. Investor shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
equity securities of the Company, during the thirty days prior to and the
120-day period beginning on the effective date of any registration or any in
which Registrable Securities are included (except as part of such underwritten
offering), unless the underwriters managing the registered public offering
otherwise agree.
1.10 RULE144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) use its commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) as long as the Investors own any Registrable Securities, to furnish to
the Investors forthwith upon request a written statement by the Company as to
its compliance with
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the reporting requirements of said Rule 144, and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company and such other reports and documents of the Company as the Investors may
reasonably request in availing itself of any rule or regulation of the SEC
allowing Investor to sell any such securities without registration (at any time
after the Company has become subject to the reporting requirements of the
Exchange Act).
1.11 TERMINATION OF REGISTRATION RIGHTS. Investors shall not be entitled to
exercise any right provided in Section 1 hereof subsequent to the time at which
all Registrable Securities held by the Investors (and any affiliates of the
Investors with whom the Investors must aggregate their sales under Rule 144) can
be sold in any three month period without registration in compliance with Rule
144 of the Act.
2. AMENDMENT.
2.1 Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investors. Any amendment or waiver effected in accordance with this
Section 2.1 shall be binding upon the Investors and the Company.
3. GENERAL PROVISIONS.
3.1 NOTICES. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) hand delivered, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
If to the Company: If to the Investors:
Brilliant Digital Entertainment, Inc. To the addresses stated on
0000 Xxxxxxx Xxxxxx Xxxxxxxxx the signature pages hereto.
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Operating Officer
Facsimile: 000-000-0000
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With Copies to:
Akin, Gump, Strauss, Xxxxx & Xxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Fax Number: (000) 000-0000
Or at such address as the Investors shall have furnished to the Company in
writing. The parties hereto may from time to time change their address or
facsimile number for notices under this Section 3.1 by giving written notice of
such changed address or facsimile number to the other parties hereto as provided
in this Section 3.1.
3.2 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.
3.3 SEVERABILITY. Wherever possible each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement and shall be interpreted so as to be
effective and valid.
3.4 CONSTRUCTION AND INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be more strictly construed against the
party that itself or through its agent prepared the same, it being agreed that
the Company, the Investors and their respective agents have participated in the
preparation hereof.
3.5 ENTIRE AGREEMENT. This Agreement and the other written agreements
between the Company and the Investors represent the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; PROVIDED, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the obligations described herein, the provisions of this Agreement
shall control.
3.6 ARBITRATION. Any dispute or controversy arising under, out of, or in
connection with or in relation to this Agreement, and any amendments thereto or
the breach thereof, shall be determined and settled by arbitration to be held in
County of Los Angeles, State of California, in accordance with the rules of the
American Arbitration Association. Any award rendered therein shall be final and
binding on each and all of the Parties and judgment may be entered thereon in
any court of competent jurisdiction.
3.7 COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration or other
proceeding is instituted to remedy, prevent or obtain relief from a default in
the performance by any party to this Agreement of its obligations under this
Agreement, the prevailing party (as determined
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by the court or other fact-finder) will be entitled to recover from the losing
party all actual costs incurred in each and every such action, suit, arbitration
or other proceeding, including any and all appeals or petitions therefrom,
including, without limitation, reasonable attorneys' fees and disbursements.
3.8 GOVERNING LAW. THIS AGREMEENT IS MADE AND ENTERED INTO IN THE STATE OF
CALIFORNIA AND THE LAWS OF SAID STATE, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS
PRINCIPLES, SHALL GOVERN THE VALIDITY AND INTERPRETATION HEREOF AND THE
PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE DUTIES AND OBLIGATIONS
HEREUNDER.
3.9 ADJUSTMENTS FOR STOCK SPLITS AND CERTAIN OTHER CHANGES. Wherever in
this Agreement there is a reference to a specific number of shares of Common
Stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
SIGNATURE PAGES TO FOLLOW
Page 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
/S/ XXXXXX XXXXXX
--------------------------------------
By: Xxxxxx Xxxxxx
Its: Chief Operating Officer and Chief
Financial Officer
Address: 0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Chief Operating Officer
Facsimile: 000-000-0000
Page 12
INVESTOR SIGNATURE PAGE TO INVESTORS' RIGHTS AGREEMENT
INVESTORS:
/S/ XXXXXX XXXXX
-----------------------------------
XXXXXX XXXXX
Address: 0000 Xxxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
EUROPLAY 1, LLC
/S/ XXXX XXXX
-----------------------------------
By: Xxxx Xxxx
Title:
Address: 00000 Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: ________________________
Facsimile: 000-000-0000
XXXXXXX XXXX INC.
/S/ XXXXX XXXXXX
-----------------------------------
By: Xxxxx Xxxxxx
Its: President
Address: 000 X. Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: _______________________
Facsimile: 000-000-0000
CAPEL CAPITAL LTD.
/S/ XXXX XXXXXX
-----------------------------------
By: Xxxx Xxxxxx on behalf of
Mentor Trustees Limited
Its: Director
Address: XX Xxx 000
Xxxxxxx Xxxxx
Xx. Xxxxx Xxxx
XXXXXXXX
Channel Islands
Facsimile: 00-0000-000000
Exhibit A
SCHEDULE OF INVESTORS
Xxxxxx Xxxxx
Europlay 1, LLC
Xxxxxxx Xxxx Inc.
Capel Capital Ltd.
