REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 29, 1999, between ST.
ANNES INVESTMENTS, LTD., a British Virgin Islands corporation (the "Holder"),
and BRILLIANT DIGITAL ENTERTAINMENT, INC., a Delaware corporation having its
principal place of business at 0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxx
Xxxxx, XX 00000 (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holder and the Company have entered into a Securities
Purchase Agreement dated the date hereof (the "Purchase Agreement") providing
for the purchase by the Investor of up to those number of shares (the "Shares")
of the Company's Common Stock having an aggregate Purchase Price of $6,000,000;
and
WHEREAS, the Company desires to grant to the Holder the
registration rights set forth herein with respect to the Shares.
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Shares issued and sold to the Holder pursuant
to the Purchase Agreement, until (i) and all Shares have been disposed of
pursuant to a Registration Statement, (ii) all Shares have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) under the Securities Act ("Rule 144") are met,
(iii) all Shares have been otherwise transferred to holders who may trade such
Shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such Shares not
bearing a restrictive legend or (iv) such time as, in the opinion of counsel to
the Company, all Shares may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect)
under the Securities Act. The term "Registrable Securities" means any and/or all
of the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be deemed to be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
Section 2. RESTRICTIONS ON TRANSFER. The Holder
acknowledges and understands that prior to the registration of the Shares as
provided herein, the Shares are "restricted securities"
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as defined in Rule 144. The Holder understands that no disposition or transfer
of the Shares may be made by Holder in the absence of (i) an opinion of counsel
to the Holder that such transfer may be made without registration under the
Securities Act, (ii) such registration or (iii) as permitted by and in
accordance with the Purchase Agreement.
With a view to making available to the Holder the benefits of
Rule 144 or any other similar rule or regulation of the Commission that may at
any time permit the Holder to sell securities of the Company to the public
without registration, the Company agrees to:
(a) comply with the provisions of paragraph (c)(1)
of Rule 144; and
(b) file with the Commission in a timely manner
all reports and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of any Holder, make available other
information as required by, and so long as necessary to permit sales of, its
Registrable Securities pursuant to Rule 144.
Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE
SECURITIES.
(a) The Company agrees that it will prepare and
file with the Securities and Exchange Commission ("Commission"), within
forty-five (45) days from the date of this Agreement (the "Filing Date"), a
registration statement on Form S-1 under the Securities Act (or primary offering
if requested by the SEC) (the "Registration Statement"), at the sole expense of
the Company (except as otherwise provided in Section 3(c) hereof), in respect of
all Holders, so as to permit a public offering and resale of the Shares under
the Securities Act by the Holders.
The Company shall use its best efforts to cause the
Registration Statement to become effective on the earlier of (i) ninety (90)
days from the date of this Agreement, and within five (5) days of SEC clearance
to request acceleration of effectiveness (such earlier date, the "Target
Effectiveness Date"). The initial Registration Statement to be filed hereunder
shall cover at least 1,000,000 Shares. To the extent that the number of shares
registered in a Registration Statement is less then the number of Registrable
Securities, the Company shall prepare and file one or more additional
Registration Statements as may be required in order that all Registrable
Securities are registered. The provisions of this Section 3 shall apply to such
additional Registration Statements. The Company will notify Holder of the
effectiveness of the Registration Statement within one (1) Business Day of such
event.
(b) The Company will maintain the Registration
Statement or post- effective amendment filed under this Section 3 hereof
effective under the Securities Act until the earlier of (i) the date that all of
the Shares have been sold pursuant to the Registration Statement, (ii) all of
the Shares have been otherwise transferred to Holders who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend, or (iii) all Shares may be sold without any time, volume or
manner limitations pursuant to Rule 144(k) or any similar
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provision then in effect under the Securities Act in the opinion of counsel to
the Company, which opinion shall be reasonably acceptable to the Holder (the
"Effectiveness Period").
(c) 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 subparagraph 3(a) and in
complying with applicable securities and Blue Sky laws (including, without
limitation, all attorneys' fees of the Company) shall be borne by the Company.
The Holder shall bear the cost of underwriting and/or brokerage discounts, fees
and commissions, if any, applicable to the Registrable Securities and the fees
and expenses of its counsel in excess of $7,500. The Holder and its counsel
shall have a reasonable period, not to exceed three (3) Business Days, to review
the proposed Registration Statement or any amendment thereto, prior to filing
with the Commission, and the Company shall provide each Holder with copies of
any comment letters received from the Commission with respect thereto within two
(2) Business Days of receipt thereof. The Company shall make reasonably
available for inspection by Holder, any underwriter participating in any
disposition pursuant to the Registration Statement, and any attorney, accountant
or other agent retained by such Holder or any such underwriter all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the Company's officers, directors and
employees to supply all information reasonably requested by such Holder or any
such underwriter, attorney, accountant or agent in connection with the
Registration Statement, in each case, as is customary for similar due diligence
examinations; PROVIDED, HOWEVER, that all records, information and documents
that are designated in writing by the Company, in good faith, as confidential,
proprietary or containing any material non-public information shall be kept
confidential by such Holder and any such underwriter, attorney, accountant or
agent (pursuant to an appropriate confidentiality agreement in the case of any
such Holder or agent), unless such disclosure is made pursuant to judicial
process in a court proceeding (after first giving the Company an opportunity
promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of confidentiality;
and PROVIDED, FURTHER, that, if the foregoing inspection and information
gathering would otherwise disrupt the Company's conduct of its business, such
inspection and information gathering shall, to the maximum extent possible, be
coordinated on behalf of the Holder and the other parties entitled thereto by
one firm of counsel designed by and on behalf of the majority in interest of
Holder and other parties. The Company shall qualify any of the securities for
sale in such states as such Holder reasonably designates and shall furnish
indemnification in the manner provided in Section 6 hereof. However, the Company
shall not be required to qualify in any state which will require an escrow or
other restriction relating to the Company and/or the sellers, or which will
require the Company to qualify to do business in such state or require the
Company to file therein any general consent to service of process. The Company
at its expense will supply the Holder with copies of the Registration Statement
and the prospectus included therein and other related documents in such
quantities as may be reasonably requested by the Holder.
(d) The Company shall not be required by this
Section 3 to include a Registrable Securities in any Registration Statement if,
in the opinion of counsel for both the Holder
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and the Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for the Holder and
the Company) the proposed offering or other transfer as to which such
registration is requested is exempt from applicable federal and state securities
laws and would result in all purchasers or transferees obtaining securities
which are not "restricted securities"(as such term is defined in Rule 144 under
the Securities Act).
(e) In the event that (i) the Registration
Statement to be filed by the Company pursuant to Section 3(a) above is not filed
with the Commission on or prior to the Filing Date, (ii) the Registration
Statement is not declared effective by the Commission on or prior to the Target
Effectiveness Date (or, if the Registration Statement receives a review by the
Commission staff, within one hundred twenty (120) days from the date of this
Agreement), or (iii) at any time the Registration Statement is not maintained as
effective by the Company during the Effectiveness Period (each of the events in
(i), (ii) and (iii), a "Registration Default"), then the Company will, on the
date of the occurrence of the applicable Registration Default and on each
monthly anniversary thereof until such applicable Registration Default is cured,
pay each Holder in cash (pro-rated on a daily basis), as liquidated damages and
not as penalty, one percent (1%) of the aggregate market value of Shares
purchased from the Company under the Purchase Agreement and then held by the
Investor for every seven (7) day period or portion thereof after such
Registration Default, PROVIDED, that the payment of such liquidated damages
shall not relieve the Company from its obligations to register the Registrable
Securities pursuant to this Section. The market value of the Common Stock for
this purpose shall be the closing price (or last trade, if so reported) on the
Principal Market for each day during such Registration Default. Notwithstanding
anything herein to the contrary, no liquidated damages under this Section 3(e)
shall be due for (A) any permitted Blackout Notices (as defined herein)
delivered pursuant to one or more Potential Material Events (as defined in
Section 3(h)) under subsections (i) and (ii) of Section 3(h) pursuant to which
the Registration Statement or the prospectus included therein may not be used by
the Holder to sell or resell Registrable Securities for an aggregate of not more
than twenty (20) days during any twelve month period (which need not be
consecutive days) and (B) any permitted Blackout Notices delivered pursuant to
one or more Potential Material Events under subsections (iii) of Section 3(h)
during the period of time permitted by Section 3(h)(iii). If the Company does
not remit the liquidated damages to the Holder as set forth above, the Company
will pay the Holder reasonable costs of collection, including attorneys fees, in
addition to the liquidated damages. The registration of the Registrable
Securities pursuant to this provision shall not affect or limit Holder's other
rights or remedies as set forth in this Agreement.
(f) No provision contained herein shall preclude
the Company from selling securities pursuant to any Registration Statement in
which it is required to include Registrable Securities pursuant to this Section
3.
(g) If at any time or from time to time after the
effective date of the Registration Statement the Company notifies the Holder in
writing (such writing a "Blackout Notice") of the existence of a Potential
Material Event, the Holder shall not offer or sell any Shares pursuant to a
Registration Statement from the time of its receipt of the Blackout Notice from
the Company with respect to a Potential Material Event until such Holder
receives written notice from
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the Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the right to such holders to sell pursuant
to a Registration Statement for more than twenty (20) days in the aggregate
during any twelve month period. If a Potential Material Event shall occur prior
to the date the Registration Statement is filed, then the Company's obligation
to file the Registration Statement shall be delayed without penalty for not more
than twenty (20) days. Notwithstanding anything herein to the contrary, the
Company may not deliver a Blackout Notice pursuant to a Potential Material Event
under subsections (i) or (ii) of Section 3(h) hereunder within twelve (12)
Business Days following a Put Notice Date (as defined in the Purchase Agreement)
and may not deliver a Blackout Notice pursuant to a Potential Material Event
under subsection (iii) of Section 3(h) hereunder within twenty (20) Business
Days following a Put Notice Date.
(h) "Potential Material Event" means any of the
following: (i) the possession by the Company of material information not ripe
for disclosure in a registration statement, as determined in good faith by the
Chief Executive Officer or the Board of Directors of the Company that disclosure
of such information in the Registration Statement would be detrimental to the
business and affairs of the Company; (ii) any material engagement or activity by
the Company which would, in the good faith determination of the Chief Executive
Officer or the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Chief Executive Officer or
the Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information, or (iii) the
requirement of the Company to update the Company's financial statements
contained or incorporated by reference in the Registration Statement during the
period after 45 days and within 90 days from the end of the Company's fiscal
year end, which requirement arises solely due to the staleness of the Company's
financial statements contained or incorporated by reference in the Registration
Statement pursuant to Regulation S-X promulgated by the Commission.
Section 4. COOPERATION WITH COMPANY. Holder will cooperate
with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding the Holder and proposed manner of sale
of the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. The
Holder hereby consents to be named as an underwriter in the Registration
Statement.
Section 5. REGISTRATION PROCEDURES. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible, subject to the Holder's assistance and cooperation as reasonably
required:
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(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such registration
statement whenever the Holder of such Registrable Securities shall desire to
sell or otherwise dispose of the same (including prospectus supplements with
respect to the sales of securities from time to time in connection with a
registration statement pursuant to Rule 415 promulgated under the Securities
Act) and (ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not misleading
and (B) the Prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration
Period include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(b) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Holders and reflect in such documents all such comments as
the Holders (and their counsel) reasonably may propose respecting the Selling
Shareholders and Plan of Distribution sections (or equivalents) and (ii) furnish
to each Holder such numbers of copies of a prospectus including a preliminary
prospectus or any amendment or supplement to any prospectus, as applicable, in
conformity with the requirements of the Securities Act, and such other
documents, as such Holder may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by such Holder;
(c) register and qualify the Registrable Securities
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Holder shall reasonably request (subject to
the limitations set forth in Section 3(d) above), and do any and all other acts
and things which may be necessary or advisable to enable each Holder to
consummate the public sale or other disposition in such jurisdiction of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(d) list such Registrable Securities on the
American Stock Exchange and any other national securities exchange or trading
facility on which the Common Stock is then listed or quoted for trading,
including, but not limited to, the NASDAQ National Market and the NASDAQ
Small-Cap Market;
(e) notify each Holder of Registrable Securities
covered by the Registration Statement, at any time when a prospectus relating
thereto covered by the Registration Statement is required to be delivered under
the Securities Act, of the occurrence of any event of
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which it has knowledge as a result of which the prospectus included in the
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 the Company shall prepare and file a curative
amendment under Section 5(a) as quickly as commercially possible;
(f) as promptly as practicable after becoming aware
of such event, notify each Holder who holds Registrable Securities being sold
(or, in the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) cooperate with the Holders who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Holders reasonably may request and registered in such names as the Holder may
request; and, within three business days after a Registration Statement which
includes Registrable Securities is declared effective by the Commission, deliver
and cause legal counsel selected by the Company to deliver to the transfer agent
for the Registrable Securities (with copies to the Holders whose Registrable
Securities are included in such Registration Statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(h) take all such other lawful actions reasonably
necessary to expedite and facilitate the disposition by the Holders of their
Registrable Securities in accordance with the intended methods therefor provided
in the prospectus which are customary for issuers to perform under the
circumstances;
(i) in the event of an underwritten offering,
promptly include or incorporate in a Prospectus supplement or post-effective
amendment to the Registration Statement such information as the managers
reasonably agree should be included therein and to which the Company does not
reasonably object and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment; and
(j) maintain a transfer agent and registrar for its
Common Stock.
Section 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold
harmless the Holder and each person, if any, who controls the Holder within the
meaning of the Securities Act ("Distributing Holder") against any losses,
claims, damages or liabilities, joint or several (which shall, for all purposes
of this Agreement, include, but not be limited to, all reasonable costs of
defense and
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investigation and all reasonable attorneys' fees), to which the Distributing
Holder may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus or amendment or supplement thereto, or
arise out of or are based upon 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; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holder, specifically for use in the preparation
thereof. This Section 6(a) shall not inure to the benefit of any Distributing
Holder with respect to any person asserting such loss, claim, damage or
liability who purchased the Registrable Securities which are the subject thereof
if the Distributing Holder failed to send or give (in violation of the
Securities Act or the rules and regulations promulgated thereunder) a copy of
the prospectus contained in such Registration Statement to such person at or
prior to the written confirmation to such person of the sale of such Registrable
Securities, where the Distributing Holder was obligated to do so under the
Securities Act or the rules and regulations promulgated thereunder. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Distributing Holder agrees that it will
indemnify and hold harmless the Company, and each officer, director of the
Company or person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages or liabilities (which shall,
for all purposes of this Agreement, include, but not be limited to, all
reasonable costs of defense and investigation and all reasonable attorneys'
fees) to which the Company or any such officer, director or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus or amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by such Distributing Holder,
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which the Distributing Holder may otherwise
have.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not
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relieve the indemnifying party from any liability which it may have to any
indemnified party except to the extent of actual prejudice demonstrated by the
indemnifying party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the
Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
Distributing Holder and the indemnifying party and the Distributing Holder shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the Distributing Holder (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the Distributing Holder, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of attorneys for the Distributing Holder,
which firm shall be designated in writing by the Distributing Holder). No
settlement of any action against an indemnified party shall be made without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
Section 7. CONTRIBUTION. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company and the applicable Distributing Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), in either such case (after contribution from others) on the
basis of relative fault as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
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information supplied by the Company on the one hand or the applicable
Distributing Holder on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Distributing Holder agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in this
Section 7. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding any other provision
of this Section 7, in no event shall any (i) Holder be required to undertake
liability to any person under this Section 7 for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder from the sale of
such Holder's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any Registration Statement under
which such Registrable Securities are to be registered under the Securities Act
and (ii) underwriter be required to undertake liability to any person hereunder
for any amounts in excess of the aggregate discount, commission or other
compensation payable to such underwriter with respect to the Registrable
Securities underwritten by it and distributed pursuant to the Registration
Statement.
Section 8. 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)
personally served, (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 hand delivery, telegram, or
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 second business day
following the date of mailing by reputable courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: BRILLIANT DIGITAL ENTERTAINMENT, INC.
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxx
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with a copy to:
(shall not constitute notice) Troop Xxxxxxx Pasich Reddick & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx, Esq.
Xxxxxxx Xxxxxxxx, Esq.
If to the Investor: St. Annes Investments, Ltd.
x/x XXXXXXXXXXXX
Xxxxx Xxxxxxxx Xxxxx 00
Xxxxxx, Xxxxxxxxxxx
CH-8022
with a copy to: Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
(shall not constitute notice) & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 8 by giving at least ten (10) days' prior written
notice of such changed address or facsimile number to the other party hereto.
Section 9. ASSIGNMENT. This Agreement is binding upon and
inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. The rights granted the Holder under this
Agreement may be assigned to any purchaser of substantially all of the
Registrable Securities (or the rights thereto) from Holder, as otherwise
permitted by the Purchase Agreement. In the event of a transfer of the rights
granted under this Agreement, the Holder agrees that the Company may require
that the transferee comply with reasonable conditions as determined in the
discretion of the Company.
Section 10. COUNTERPARTS/FACSIMILE. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
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Section 11. REMEDIES. The remedies provided in this
Agreement are cumulative and not exclusive of any remedies provided by law. If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
Section 12. CONFLICTING AGREEMENTS. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement or otherwise prevents the Company from complying with all of its
obligations hereunder.
Section 13. HEADINGS. The headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 14. GOVERNING LAW, ARBITRATION. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made in New York by persons domiciled in New
York City and without regard to its principles of conflicts of laws. Any dispute
under this Agreement shall be submitted to arbitration under the American
Arbitration Association (the "AAA") in New York City, New York, and shall be
finally and conclusively determined by the decision of a board of arbitration
consisting of three (3) members (hereinafter referred to as the "Board of
Arbitration") selected as according to the rules governing the AAA. The Board of
Arbitration shall meet on consecutive business days in New York City, New York,
and shall reach and render a decision in writing (concurred in by a majority of
the members of the Board of Arbitration) with respect to the amount, if any,
which the losing party is required to pay to the other party in respect of a
claim filed. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made by the Board
of Arbitration (either prior to or after the expiration of such thirty (30)
calendar day period) shall be final, binding and conclusive on the parties to
the dispute, and entitled to be enforced to the fullest extent permitted by law
and entered in any court of competent jurisdiction. The non-prevailing party to
any arbitration (as determined by the Board of Arbitration) shall pay the
expenses of the prevailing party, including reasonable attorneys' fees, in
connection with such arbitration.
Section 15. SEVERABILITY. If any provision of this
Agreement shall for any reason be held invalid or unenforceable, such invalidity
or unenforceablity shall not affect any other provision hereof and this
Agreement shall be construed as if such invalid or unenforceable provision
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had never been contained herein. Terms not otherwise defined herein shall be
defined in accordance with the Agreement.
Section 16. CAPITALIZED TERMS. All capitalized terms not
otherwise defined herein that are defined in the Purchase Agreement shall have
the meaning assigned to them in the Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed, on the day and year first
above written.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
By: /S/ XXXXXXX XXXX, CHIEF FINANCIAL OFFICER
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ST. ANNES INVESTMENTS, LTD
By: /S/ X. XXXX, DIRECTOR
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