THE SECURITIES EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, HAVE BEEN TAKEN FOR INVESTMENT AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
NONTRANSFERABLE REDEEMABLE WARRANT AGREEMENT
This Warrant Agreement (the "AGREEMENT") is made and entered
into as of this 1st day of July, 1999 by and between Brilliant Digital
Entertainment, Inc., a Delaware corporation (the "COMPANY"), and iBidLive, N.V.
(with permitted transferee pursuant to Section 8.2 below, the "HOLDER").
By acceptance of this Warrant Agreement, the Holder hereby agrees as
follows:
1. GRANT OF WARRANT. The Company hereby grants to the Holder the right and
option (the "WARRANT") to purchase at any time during the "Exercise Period" (as
defined in Section 2 below), upon the terms and subject to the conditions set
forth in this Agreement, an aggregate of 200,000 shares of Common Stock, par
value $.001 per share, of the Company (the "COMMON STOCK"), for an exercise
price per share (the "EXERCISE PRICE") of $4.00 subject to adjustment as
provided in Section 5 below. The shares of Common Stock issuable upon exercise
of the Warrant are referred to as the "WARRANT SHARES," and the Warrant Shares
and the Warrant are together referred to as the "SECURITIES."
2. EXERCISE PERIOD. The Warrant shall be exercisable commencing on the
date hereof and terminate and expire at 5:00 p.m. (Los Angeles time) on June 30,
2000.
3. EXERCISE OF WARRANT. There is no obligation to exercise all or any
portion of the Warrant. The Warrant may be exercised, in whole or in part, at
any time after the date hereof only by delivery to the Company of:
3.1 Written notice of exercise in form and substance identical to and
containing the representations set forth in EXHIBIT A attached to this
Agreement; and
3.2 Payment of the Exercise Price for the Warrant Shares being acquired
upon exercise of the Warrant, by wire transfer in immediately available Federal
funds. Upon receipt of the foregoing, the Company shall promptly issue in the
name of the Holder a certificate evidencing the Warrant Shares being purchased
by such exercise and deliver such certificate to the address requested in the
notice of exercise.
4 REDEMPTION.
4.1 At any time after the date of this Agreement the Company may redeem
and cancel all, and not less than all, the unexercised rights to purchase
Warrant Shares evidenced by the Warrant for an aggregate redemption price (the
"REDEMPTION PRICE") of $.001 multiplied by the number of Warrant Shares then
issuable under the Warrant, provided, however, that before any such call for
redemption of the Warrant can take place the (i) high closing bid price for the
Common Stock in the over-the-counter market as reported by the NASD Automated
Quotation System or (ii) the closing sale price on the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a national
securities exchange, shall have for fifteen (15) consecutive trading days
subsequent to the date of this agreement equaled or exceeded 110% of the
Exercise Price.
4.2 In case the Company shall exercise its right to redeem all, and not
less than all, the unexercised rights to purchase Warrant Shares evidenced by
the Warrant, it shall give or cause to be given notice to the Holder by mailing
to the Holder a notice of redemption, first class, postage prepaid, to the
address of the Holder set forth in Section 10.2 below, within twenty (20)
calendar days of the aforementioned fifteen (15) consecutive trading days and
not later than the thirtieth (30th) day before the date fixed for redemption.
Any notice mailed in the manner provided herein shall be conclusively presumed
to have been duly given whether or not the Holder receives such notice.
4.3 The notice of redemption shall specify (i) the Redemption Price, (ii)
the date fixed for redemption (the "REDEMPTION DATE"), and (iii) that the right
to exercise the Warrant shall terminate at the close of the market upon which
the Common Stock is then traded on the business day immediately preceding the
date fixed for redemption.
4.4 Any right to exercise the Warrant shall terminate on close of the
market upon which the Common Stock is then traded on the business day
immediately preceding the Redemption Date. The Redemption Price payable to the
Holder shall be mailed to the Holder at its address set forth in Section 10.2
below.
5. ADJUSTMENTS TO EXERCISE PRICE, REDEMPTION PRICE AND NUMBER OF SHARES.
The Exercise Price, Redemption Price and number of Shares shall be subject to
adjustment from time to time as follows:
5.1 In the event the Company should at any time or from time to time after
the date of this Warrant (the "ISSUANCE DATE") fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "COMMON STOCK EQUIVALENTS") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Exercise Price and the Redemption Price shall be appropriately decreased
(i.e., the per share
Page 2
Exercise Price and the Redemption Price shall be adjusted such that the
aggregate exercise price and for all Warrant Shares issuable upon exercise of
the Warrant in full and the Redemption Price for the entire Warrant, as
adjusted, shall remain the same) and the number of Warrant Shares shall be
increased in proportion to such increase in the aggregate number of shares of
Common Stock outstanding and those issuable with respect to such Common Stock
Equivalents.
5.2 If the number of shares of Common Stock outstanding at any time after
the Issuance Date is decreased by a combination of the outstanding shares of
Common Stock, then, following the record date of such combination, the Exercise
Price and Redemption Price shall each be appropriately increased (i.e., the per
share Exercise Price and the Redemption Price shall be adjusted such that the
aggregate exercise price for all Warrant Shares issuable upon exercise of the
Warrant in full and the aggregate redemption price for the entire Warrant, as
adjusted, shall remain the same) and the number of Shares shall be decreased in
proportion to such decrease in the aggregate number of shares of Common Stock
outstanding and those issuable with respect to such Common Stock Equivalents.
5.3 In case of any capital reorganization, any reclassification of the
Common Stock (other than a change in par value or a recapitalization described
in Section 5.1 or 5.2 of this Agreement), or the consolidation of the Company
with, or a sale of substantially all of the assets of the Company to (which sale
is followed by a liquidation or dissolution of the Company), or merger of the
Company with, another person, the Holder shall thereafter be entitled upon
exercise of the Warrant to purchase the kind and number of shares of stock or
other securities or the amount or value of any cash, assets or other property
receivable upon such event by a holder of the number of shares of the Common
Stock which the Warrant entitles the holder of the Warrant to purchase from the
Company immediately prior to such event; and in any such case, appropriate
adjustment shall be made in the application of the provisions set forth in this
Agreement with respect to the Holder's rights and interests thereafter, to the
end that the provisions set forth in this Agreement (including the specified
changes and other adjustments to the Exercise Price and Redemption Price) shall
thereafter be applicable in relation to any shares or other property thereafter
purchasable upon exercise of the Warrant.
5.4 If it is expected that there will occur any event described in Section
5.3 hereof, the Company shall give the holder of the Warrant notice thereof,
which notice shall be given at such time or times as notice is given to the
holders of the Company's Common Stock.
5.5 The provisions of this Section 5 are intended to be exclusive, and the
holder of the Warrant shall have no rights other than as set forth in this
Agreement (and the rights of a stockholder upon exercise of the Warrant) upon
the occurrence of any of the events described in this Section 5.
5.6 The grant of the Warrant shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure, or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.
Page 3
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. The Holder makes
the following representations, warranties and covenants:
6.1 The Holder is acquiring the Securities for its own account with the
present intention of holding such Securities for investment purposes only and
not with a view to, or for sale in connection with, any distribution of such
Securities (other than a distribution in compliance with all applicable federal
and state securities laws).
6.2 The Holder is an experienced and sophisticated investor and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the relative merits and the risks of an investment in the Securities
and of protecting its own interests in connection with this transaction.
6.3 The Holder is willing to bear and is capable of bearing the economic
risk of an investment in the Securities.
6.4 The Company has made available, prior to the date of this Agreement,
to the Holder the opportunity to ask questions of the Company and its officers,
and to receive from the Company and its officers information concerning the
terms and conditions of the Securities and this Agreement and to obtain any
additional information with respect to the Company, its business, operations and
prospects, as reasonably requested by the Holder.
6.5 The Holder is an "accredited investor" as that term is defined under
Rule 501(a)(8) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "SECURITIES ACT").
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
makes the following representations, warranties and covenants:
7.1 The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has the
requisite corporate power and authority to carry on its business as now being
conducted and to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby.
7.2 All corporate action on the part of the Company, its directors and
shareholders necessary for the authorization, execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby has been taken. This Agreement constitutes the
valid and binding obligation of the Company, enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
7.3 The Warrant Shares, when issued in accordance with the terms of this
Warrant, will be duly authorized, validly issued and nonassessable shares of the
Common Stock of the Company, free and clear of any liens, claims or restrictions
imposed by or through the Company other than as set forth in this Agreement.
Page 4
7.4 The Company covenants that it will at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the issuance of the Warrant Shares upon exercise of all
or part of the Warrant, such number of shares of Common Stock as shall then be
issuable upon the exercise of the entire Warrant.
8. RESTRICTIONS ON TRANSFER OR EXERCISE OF THE WARRANT AND SHARES.
8.1 Each certificate for Warrant Shares initially issued upon the exercise
of the Warrant shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
CONDITIONS SPECIFIED IN A CERTAIN WARRANT AGREEMENT DATED JULY
1, 1999. NO TRANSFER, SALE, PLEDGE, HYPOTHECATION, ENCUMBRANCE
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL REGISTERED OR
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO IT, THAT THE TRANSACTION IS EXEMPT FROM REGISTRATION, AND
UNTIL SUCH CONDITIONS AS ARE CONTAINED IN THE WARRANT
AGREEMENT HAVE BEEN FULFILLED. A COPY OF THE FORM OF THE
WARRANT AGREEMENT IS ON FILE AT THE OFFICES OF BRILLIANT
INTERACTIVE, INC. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF THE WARRANT AGREEMENT."
If the Warrant Shares are no longer subject to the transfer
restrictions imposed by applicable state and federal securities law because
either (i) the resale of the Warrant Shares has been registered on a
registration statement declared effective by the Commission or (ii) in the
reasonable opinion of counsel for the Company, or the opinion of counsel for the
Holder, which opinion is reasonably satisfactory to counsel for the Company, all
future dispositions of any of the Warrant Shares by the contemplated transferee
would be exempt from or would satisfy the registration and prospectus delivery
requirements of the Securities Act and the qualification requirements of the
applicable state securities laws, then the restrictions on transfer of such
securities contained in this Section 8.1 shall not apply to any subsequent
transfer thereof and the Company shall, promptly upon request by the Holder,
remove the legend set forth above and shall promptly issue, in exchange for the
certificate bearing such legend, a certificate without such legend to the
Holder.
8.2 THE HOLDER AGREES THAT THE WARRANT MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED OR HYPOTHECATED EXCEPT (I) TO ITS SUCCESSORS IN A MERGER OR
CONSOLIDATION OR OTHER BUSINESS COMBINATION; (II) TO PURCHASERS OF ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS; OR (III) BY OPERATION OF LAW. HOLDER FURTHER
AGREES THAT THE COMPANY SHALL HAVE NO OBLIGATION TO EFFECT ANY TRANSFER OF THE
WARRANT PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE UNLESS THE TRANSFEREE,
PURCHASER, ASSIGNEE OR PLEDGEE, AS THE CASE MAY BE, SHALL HAVE EXECUTED AN
AGREEMENT OBLIGATING THE TRANSFEREE TO COMPLY WITH ALL TERMS AND CONDITIONS OF
THIS AGREEMENT APPLICABLE TO THE TRANSFEROR.
8.3 Prior to any exercise of the Warrant or any transfer or attempted
transfer of any of the Warrant or Warrant Shares, the Holder shall give the
Company written notice of his intention so to do, describing briefly the manner
of any such proposed exercise, sale or transfer.
Page 5
The Holder may effect such exercise or transfer, provided that such exercise or
transfer is not prohibited by this Section 8 and such exercise or transfer
complies with all applicable federal and state securities laws and regulations.
8.4 If in the reasonable opinion of counsel for the Company,
notwithstanding the opinion of counsel to a Holder to the contrary, if any, the
proposed transfer of such Warrant Shares or the Warrant may not be effected
without registration thereof under the Securities Act and such registration has
not occurred, the Company shall, as promptly as practicable, so notify the
Holder and the Holder shall not consummate the proposed transfer.
9. DISPUTES.
9.1 ARBITRATION.
a. Except as otherwise expressly provided for in Section 9.3 below, all
disputes arising in connection with this Agreement shall be finally settled by
arbitration in Los Angeles, California, in accordance with the rules of the
American Arbitration Association (the "RULES OF ARBITRATION") and judgment on
the award rendered by the arbitration panel (the "ARBITRATION PANEL") may be
entered in any court or tribunal of competent jurisdiction.
b. Any party which desires to initiate arbitration proceedings as provided
in Section 9.1(a) above may do so by delivering written notice to the other
party (the "ARBITRATION NOTICE") specifying (A) the nature of the dispute or
controversy to be arbitrated, (B) the name and address of the arbitrator
appointed by the party initiating such arbitration and (C) such other matters as
may be required by the Rules of Arbitration.
c. The party who receives an Arbitration Notice shall appoint an
arbitrator and notify the initiating party of such arbitrator's name and address
within 30 days after delivery of the Arbitration Notice; otherwise, a second
arbitrator shall be appointed at the request of the party who delivered the
Arbitration Notice as provided in the Rules of Arbitration. The two arbitrators
so appointed shall appoint a third arbitrator who shall be the chairman or the
Arbitration Panel and who shall be of American nationality. Should the
arbitrators appointed by the parties not agree upon the appointment of the third
arbitrator within 30 days of their appointment, the third shall be appointed in
accordance with the Rules of Arbitration.
d. In any arbitration proceeding conducted pursuant to the provisions of
this Section 9, both parties shall have the right to discovery, to call
witnesses and to cross-examine the opposing party's witnesses, either through
legal counsel, expert witnesses or both, and such proceedings shall be conducted
in the English language.
9.2 FINALITY OF DECISION. All decisions of the Arbitration Panel shall be
final, conclusive and binding on all parties and shall not be subject to
judicial review. The arbitrator shall divide all costs (other than fees of
counsel) incurred in conducting the arbitration proceeding and the final award
in accordance with what they deem just and equitable under the circumstances.
9.3 LIMITATIONS. Notwithstanding anything to the contrary contained in
Sections 9.1 and 9.2 above, any claim by either party for injunctive or other
equitable relief, including specific
Page 6
performance, may be brought in any court of competent jurisdiction and any
judgment, order or decree relating thereto shall have precedence over any
arbitral award or proceeding.
10. MISCELLANEOUS PROVISIONS.
10.1 FURTHER ASSURANCES. The Company and the Holder agree to execute such
further documents or instruments and to take such other actions as are necessary
to carry out the transactions contemplated by this Agreement and the other
agreements referred to herein.
10.2 NOTICES. Any and all notices and other communications to be served
hereunder shall be either delivered (i) by hand; (ii) by prepaid overnight
delivery service; or (iii) by certified or registered mail, postage pre-paid, in
each case, addressed as follows:
If to the Holder:
iBidLive, N.V.
3rd Floor, Wisma Ali Bawal 2
00 Xxxxx Xxxxxxx
00000 Xxxxxxxx Xxxx, Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxx
Attn: XXXXX XXXXX XXXXXX BIN ABDULLAH
If to the Company:
Brilliant Digital Entertainment, Inc.
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Attn: Chief Executive Officer
or at such other address and to the attention of such other person as any party
hereto may designate by written notice to the other in accordance with the terms
hereof.
Any such notice shall be effective (i) if delivered by hand,
when personally delivered; (ii) if given by overnight delivery service, on the
business day following deposit with such service addressed as aforesaid; or
(iii) if given by registered or certified mail, 72 hours after deposit in the
mail postage pre-paid, addressed as aforesaid.
10.3 AMENDMENT; WAIVER. This Agreement shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors,
heirs and personal representatives. No provision of this Agreement may be
amended or waived unless in writing signed by all of the parties to this
Agreement. Waiver of any one provision of this Agreement shall not be deemed to
be a waiver of any other provision.
10.4 GOVERNING LAW. This Agreement shall be governed by and construed both
as to validity and performance and enforced in accordance with the laws of the
State of California without giving effect to the choice of law principles
thereof. Each of the parties hereto hereby waive their right to a jury trial
with respect to any such legal actions.
Page 7
10.5 ATTORNEYS' FEES. If any action, suit or other proceeding is
instituted to remedy, prevent or obtain relief from a default in the performance
by any party of its obligations under this Agreement, the prevailing party shall
recover all of such party's costs and reasonable attorneys' fees incurred in
each and every such action, suit or other proceeding, including any and all
appeals or petitions therefrom.
10.6 NO FINDERS. The parties each agree to indemnify and hold harmless the
other against any expense incurred by reason of any consulting, brokerage
commission or finder's fee alleged to be payable to any person in connection
with the transactions contemplated hereby because of any act, omission or
statement of indemnifying party or any dealings by the indemnifying party with
any consultant, broker or finder.
10.7 EXPENSES. Each of the parties shall pay its own expenses incurred in
connection with the preparation of this agreement and the consummation of the
transactions contemplated hereby.
10.8 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable 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.
10.9 HEADINGS. The section and subsection headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the parties.
10.10 SURVIVAL. The provisions of Section 9 and Section 10 shall survive
termination of this Agreement.
10.11 INTERPRETATION. In all matters of interpretation, whenever necessary
to give effect to any provision of this Agreement, each gender shall include the
others, the singular shall include the plural, and the plural shall include the
singular. The titles of the paragraphs of this Agreement are for convenience
only and shall not in any way affect the interpretation of any provision or
condition of this Agreement. Each party and its counsel have reviewed and
revised this Agreement. As a result, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments or
exhibits thereto.
10.12 ENTIRE AGREEMENT. This Agreement constitutes and embodies the entire
understanding and agreement of the parties hereto relating to the subject matter
hereof and there are no other agreements or understandings, written or oral, in
effect between the parties relating to such subject matter except as expressly
referred to herein.
Page 8
IN WITNESS WHEREOF, the parties have entered into and executed this
Warrant Agreement as of the date first above written.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
By: /S/ XXXXXXX XXXX
---------------------------
Name: Xxxxxxx Xxxx
Title: Chief Financial Officer
Page 9
EXHIBIT A
NOTICE OF EXERCISE
(TO BE SIGNED ONLY UPON EXERCISE OF THE WARRANT)
TO: Brilliant Digital Entertainment, Inc.
The undersigned hereby irrevocably elects (to the extent indicated
herein) to exercise the Warrant granted to the undersigned pursuant to that
certain Nontransferable Redeemable Warrant Agreement dated July 1, 1999 between
the undersigned and Brilliant Digital Entertainment, Inc., a Delaware
corporation (the "COMPANY") and to purchase ---------- shares of Common Stock
(the "SECURITIES") of the Company. The closing of the exercise of the Warrant
shall take place at ----- on -----------------, -------- at the principal
executive office of the Company located at Brilliant Digital Entertainment,
Inc., 0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxxxxxxx Xxxxx, XX 00000.
The undersigned represents, warrants and agrees that the undersigned
(a) is acquiring the Securities for its own account with the present intention
of holding such Securities for investment purposes only and not with a view to,
or for sale in connection with, any distribution of such Securities (other than
a distribution in compliance with all applicable federal and state securities
laws and the provisions of the Agreement), (b) is an "accredited investor" as
that term is defined under Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
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(Signature)
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(Print Name)
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(Title, if Any)
