SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BRILLIANT DIGITAL ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 95-4592204
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
- --------------------------------------------------------------------------------
6355 TOPANGA CANYON BOULEVARD, SUITE 120
WOODLAND HILLS, CALIFORNIA 91367
(Address of Principal Executive Offices) (Zip Code)
BRILLIANT DIGITAL ENTERTAINMENT, INC.
STOCK OPTION AGREEMENT
(Full Title of the Plan)
MARK DYNE, CHAIRMAN OF THE BOARD
BRILLIANT DIGITAL ENTERTAINMENT, INC.
6355 TOPANGA CANYON BOULEVARD, SUITE 120
WOODLAND HILLS, CALIFORNIA 91367
(Name and Address of Agent for Service)
(818) 615-1500
(Telephone Number, Including Area Code, of Agent for Service)
Copies to:
JOHN J. MCILVERY, ESQ.
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
2029 CENTURY PARK EAST, 24TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 728-3000
<TABLE>
CALCULATION OF REGISTRATION FEE
=================================================================================
Proposed Proposed
<CAPTION>
Title of Maximum Maximum Amount of
Securities to be Amount to be Offering Price Aggregate
Registered Registered Per Share Offering Price Registration Fee
- ------------------- ------------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock, 250,000 Shares (1) $ 3.00 (2) $ 750,000 $209
$0.001 par value
- ------------------- ------------------ ---------------- ---------------- ------------------
<FN>
(1)In the event of a stock split, stock dividend, or similar transaction
involving the Registrant's common stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act.
(2)Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(h)(1) under the Securities Act of 1933, as amended, and based
upon the exercise price of the option pursuant to which such shares may be
acquired.
</FN>
</TABLE>
<PAGE>
PART I*
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance
with Rule 428 under the Securities Act of 1933, as amended, and the
Note to Part I of Form S-8.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Commission are
incorporated herein by reference:
(a) Annual Report on Form 10-KSB for the year ended December 31, 1998, as
amended;
(b) Quarterly Reports on Form 10-QSB for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
(c) Current Reports on Form 8-K dated July 1, 1999 and July 14, 1999;
(d) Description of our capital stock contained in our Registration
Statement on Form 8-A, filed on October 29, 1996, as amended by our
Registration Statement on Form 8-A/A, filed on November 20, 1996; and
(e) All documents subsequently filed by Registrant pursuant to Section
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated
by reference in this Registration Statement and to be part hereof from
the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The securities to be offered are registered under Section 12 of the
Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation and its Bylaws provide for
the indemnification by the Registrant of each director, officer and employee of
the Registrant to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Section 145 of
the Delaware General Corporation Law provides in relevant part that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
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In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
The Registrant's Certificate of Incorporation provides that a director of
the Registrant shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director. Section 102(o)(7)
of the Delaware General Corporation Law provides that a provision so limiting
the personal liability of a director shall not eliminate or limit the liability
of a director for, among other things: breach of the duty of loyalty; acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; unlawful payment of dividends; and transactions from which
the director derived an improper personal benefit.
The Registrant has entered into separate but identical indemnity agreements
(the "Indemnity Agreements") with each director of the Registrant and certain
officers of the Registrant (the "Indemnitees"). Pursuant to the terms and
conditions of the Indemnity Agreements, the Registrant indemnified each
Indemnitee against any amounts which he or she becomes legally obligated to pay
in connection with any claim against him or her based upon any action or
inaction which he or she may commit, omit or suffer while acting in his or her
capacity as a director and/or officer of the Registrant or its subsidiaries,
provided, however, that Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action, had no reasonable cause
to believe Indemnitee's Conduct was unlawful.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
5.1 Opinion and Consent of Troop Steuber Pasich Reddick & Tobey, LLP.
10.1 Stock Option Agreement (Non-Statutory Stock Option), dated October 27,
1999, between Registrant and Ron Chaimowitz.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of MRI Moores Rowland
23.3 Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in
Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement;
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<PAGE>
(2) That, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of the appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 24th day of
November, 1999.
BRILLIANT DIGITAL ENTERTAINMENT, INC.
(Registrant)
By: /S/ MICHAEL OZEN
--------------------------------
Michael Ozen
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Mark
Dyne and Michael Ozen, and each of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign this
Registration Statement and to file a new registration statement under Rule 461
or Instruction E of Form S-8 of the Securities Act of 1933 and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/S/ MARK DYNE Chief Executive Officer and Chairman November 24, 1999
- -------------------------------- of the Board of Directors
Mark Dyne
/S/ KEVIN BERMEISTER President and Director November 24, 1999
- --------------------------------
Kevin Bermeister
/S/ MICHAEL OZEN Chief Financial Officer (Principal Financial November 24 1999
- -------------------------------- and Accounting Officer) and Secretary
Michael Ozen
/S/ MARK MILLER Vice President, Operations and Production November 24, 1999
- -------------------------------- and Director
Mark Miller
/S/ DIANA MARANON Director November 24, 1999
- --------------------------------
Diana Maranon
/S/ RAY MUSCI Director November 24, 1999
- --------------------------------
Ray Musci
Director November 24, 1999
- --------------------------------
Garth Saloner
/S/ JEFF SCHEINROCK Director November 24, 1999
- --------------------------------
Jeff Scheinrock
</TABLE>
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION
5.1 Opinion and Consent of Troop Steuber Pasich Reddick & Tobey, LLP
10.1 Stock Option Agreement (Non-Statutory Stock Option), dated
October 27, 1999, between Registrant and Ron Chaimowitz
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of MRI Moores Rowland
23.3 Consent of Troop Steuber Pasich Reddick & Tobey, LLP
(included in Exhibit 5.1)
24.1 Power of Attorney (included as part of the Signature Page of this
Registration Statement).
Exhibit 5.1
[LETTERHEAD OF TROOP STEUBER PASICH REDDICK & TOBEY, LLP]
November 24, 1999
Brilliant Digital Entertainment, Inc.
6355 Topanga Canyon Boulevard, Suite 120
Woodland Hills, California 91367
Ladies/Gentlemen:
At your request, we have examined the Registration Statement on Form S-8
(the "Registration Statement") to which this letter is attached as Exhibit 5.1
filed by Brilliant Digital Entertainment, Inc., a Delaware corporation (the
"Company"), in order to register under the Securities Act of 1933 (the "Act"),
250,000 shares of common stock, par value $.001 per share (the "Shares"), of the
Company issuable pursuant to the Company's Stock Option Agreement (the
"Agreement").
We are of the opinion that the Shares have been duly authorized and upon
issuance and sale in conformity with and pursuant to the Agreement, the Shares
will be validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the use of our name in the Prospectus constituting a part
thereof.
Respectfully submitted,
/s/ Troop Steuber Pasich Reddick & Tobey, LLP
TROOP STEUBER PASICH REDDICK & TOBEY, LLP
OPTION CERTIFICATE
(NON-STATUTORY STOCK OPTION)
THIS IS TO CERTIFY that Brilliant Digital Entertainment, Inc., a Delaware
corporation (the "COMPANY"), has granted to the person named below ("OPTIONEE")
a non-statutory stock option (the "OPTION") to purchase shares of the Company's
Common Stock (the "SHARES") as follows:
Name of Optionee: Ron Chaimowitz
Address of Optionee: 255 Old Army Road
Scarsdale, NY 10583
Number of Shares: 250,000
Option Exercise Price: $3.00 per share
Date of Grant: October 27, 1999
Option Expiration Date: October 26, 2009
EXERCISE SCHEDULE: Except as otherwise provided in the Stock Option
Agreement attached hereto as Annex I, the Option shall become exercisable as
follows:
NUMBER OF SHARES VESTING DATE
62,500 January 1, 2001
62,500 January 1, 2002
62,500 January 1, 2003
62,500 January 1, 2004
SUMMARY OF OTHER TERMS: This Option is defined in the Stock Option
Agreement (Non-statutory Stock Option) (the "OPTION AGREEMENT") which is
attached to this Option Certificate (the "CERTIFICATE") as Annex I. This
Certificate summarizes certain of the provisions of the Option Agreement for
your information, but is not complete. Your rights are governed by the Option
Agreement, not by this summary. The Company strongly suggests that you carefully
review the full Option Agreement prior to signing this Certificate or exercising
the Option.
Among the terms of the Option Agreement are the following:
EMPLOYMENT: The Option Agreement does not obligate the Company to retain
you for any period of time. Unless otherwise agreed IN WRITING, the Company
reserves the right to terminate any employee at any time, with or without cause.
See Section 5(g) of the attached Option Agreement.
<PAGE>
TERMINATION OF EMPLOYMENT: While the Option terminates on the Option
Expiration Date, it may terminate earlier if you cease to be employed by the
Company. See Section 5 of the attached Option Agreement.
TRANSFER: The Option is personal to you, and cannot be sold, transferred,
assigned or otherwise disposed of to any other person, except on your death. See
Section 15(f) of the attached Option Agreement.
EXERCISE: You can exercise the Option (once it is exercisable), in whole
or in part, by delivering to the Company a Notice of Exercise identical to
Exhibit "A" attached to the Option Agreement, accompanied by payment of the
Exercise Price for the Shares to be purchased. The Company will then issue a
certificate to you for the Shares you have purchased. You are under no
obligation to exercise the Option. See Section 4 of the attached Option
Agreement.
ADJUSTMENTS UPON RECAPITALIZATION: The Option contains provisions which
affect your rights in the event of stock splits, stock dividends, mergers and
other major corporate reorganizations. See Section 7 of the attached Option
Agreement.
WAIVER: By signing this Certificate, you will be agreeing to all of the
terms of the Option Agreement, including those not summarized in this
Certificate. You will waive your rights to options or stock which may otherwise
have been promised to you. See Section 8 of the attached Option Agreement.
WITHHOLDING: The Company may require you to make any arrangements
necessary to insure the proper withholding of any amount of tax, if any,
required to be withheld by the Company as a result of the exercise of the
Option. See Section 13 of the attached Option Agreement.
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<PAGE>
AGREEMENT
Brilliant Digital Entertainment, Inc., a Delaware corporation, and
Optionee each hereby agrees to be bound by all of the terms and conditions of
the Stock Option Agreement (Non-Statutory Stock Option) which is attached hereto
as Annex I and incorporated herein by this reference as if set forth in full in
this document.
DATED: October 27, 1999
BRILLIANT DIGITAL ENTERTAINMENT,
By: /s/ KEVIN BERMEISTER
------------------------------
Kevin Bermeister
Its: President
OPTIONEE
/s/ RON CHAIMOWITZ
------------------------------
(Signature)
RONALD CHAIMOWITZ
------------------------------
(Please print your name exactly as you
wish it to appear on any stock certificates
issued to you upon exercise of the Option)
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<PAGE>
ANNEX I
STOCK OPTION AGREEMENT
(NON-STATUTORY STOCK OPTION)
This STOCK OPTION AGREEMENT (this "OPTION AGREEMENT") is made and entered
into as of the execution date of the Option Certificate to which it is attached
(the "CERTIFICATE") by and between Brilliant Digital Entertainment, Inc., a
Delaware corporation (the "COMPANY"), and the person named in the Certificate
("OPTIONEE").
The Board of Directors of the Company (the "BOARD") has authorized the
grant to Optionee of a non-statutory stock option to purchase shares of the
Company's Common Stock, par value $.001 per share (the "COMMON STOCK"), upon the
terms and subject to the conditions set forth in this Option Agreement.
The Company and Optionee agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to Optionee the right and option (the
"OPTION"), upon the terms and subject to the conditions set forth in this Option
Agreement, to purchase all or any portion of that number of shares of the Common
Stock (the "SHARES") set forth in the Certificate at the Option exercise price
set forth in the Certificate (the "EXERCISE PRICE").
2. TERM OF OPTION.
The Option shall terminate and expire on the Option Expiration Date
set forth in the Certificate (the "Expiration Date"), unless sooner terminated
as provided herein. In no event shall the Option be exercisable after the
expiration of ten years from the date it was granted.
3. EXERCISE PERIOD.
(a) Subject to the provisions of Sections 3(b), 5 and 7(b) of this
Option Agreement, the Option shall become exercisable (in whole or in part) upon
and after the dates set forth under the caption "Exercise Schedule" in the
Certificate. The installments shall be cumulative; I.E., the Option may be
exercised, as to any or all Shares covered by an installment, at any time or
times after the installment first becomes exercisable and until the Option
Expiration Date or the termination of the Option.
(b) Notwithstanding anything to the contrary contained in this
Option Agreement, the Option may not be exercised, in whole or in part, unless
and until any then-applicable requirements of all federal, state and local laws
and regulatory agencies shall have been fully complied with to the reasonable
satisfaction of the Company and its counsel.
<PAGE>
4. EXERCISE OF OPTION.
There is no obligation to exercise the Option, in whole or in part.
The Option may be exercised, in whole or in part, only by delivery to the
Company of:
(a) written notice of exercise in form and substance identical to
Exhibit "A" attached to this Option Agreement stating the number of Shares then
being purchased (the "Purchased Shares");
(b) payment of the Exercise Price of the Purchased Shares, either
(1) in cash, or (2) with the consent of the Board (which may be withheld in its
absolute discretion), by (i) delivery to the Company of other shares of Common
Stock with an aggregate Fair Market Value equal to the total Exercise Price of
the Purchased Shares, (ii) according to a deferred payment or other arrangement
(which may include without limiting the generality of the foregoing, the use of
other shares of Common Stock) with the person to whom the Option is granted or
to whom the Option is transferred pursuant to the terms of this Option
Agreement, or (iii) in any other form of legal consideration that may be
acceptable to the Board; and
(c) if requested by the Company, a letter of investment intent in
such form and containing such provisions as the Company may require.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be payable at the minimum rate of interest
necessary to avoid the imputation of interest, under the applicable provision of
the Internal Revenue Code of 1986, as amended (the "CODE") and Treasury
Regulations.
Following receipt of the notice and payment referred to above, the
Company shall issue and deliver to Optionee a stock certificate or stock
certificates evidencing the Purchased Shares; PROVIDED, HOWEVER, that the
Company shall not be obligated to issue a fraction or fractions of a share of
its Common Stock, and may pay to Optionee, in cash or by check, the Fair Market
Value of any fraction or fractions of a share exercised by Optionee. "FAIR
MARKET VALUE" shall be determined as follows: (1) if the Common Stock is listed
on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market, the Fair Market Value of a share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in the Common Stock) on the last
market trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems reliable; (2) if the
Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market) or is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a share of Common Stock shall
be the mean between the bid and asked prices for the Common Stock on the last
market trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems reliable; and (3) in the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Board.
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5. TERMINATION OF SERVICES.
(a) If Optionee shall cease to be an officer, director, consultant
or employee of the Company, or any Subsidiary or Parent of the Company (i) after
a termination by the Company or any Subsidiary of the Company other than for
"cause" (as defined below), including, without limitation, a termination
following expiration of Optionee's employment agreement with the Company or any
Subsidiary of the Company, or (ii) after Optionee terminates his employment with
the Company or any Subsidiary of the Company for "Good Reason" (as defined
below), all outstanding unvested Options granted hereunder shall vest and
otherwise be exercisable at any time following such event until the earlier to
occur of (1) five years following the date of such event and (2) the Expiration
Date. To the extent unexercised at the end of the period referred to above, the
Option shall terminate. The Board, in its sole and absolute discretion, shall
determine whether or not authorized leaves of absence shall constitute
termination of employment for purposes of this Option Agreement.
(b) If Optionee ceases to be an officer, director, consultant or
employee of the Company, or any Subsidiary or Parent of the Company for any
reason other than death or disability or any event described in Section 5(a),
Optionee shall have the right, subject to the provisions of Section 5(d) below,
to exercise the Option at any time following such termination until the earlier
to occur (1) 90 days following the date of such termination and (2) the
Expiration Date. The Option may be exercised following such termination only to
the extent exercisable as of the date of such termination. To the extent
unexercised at the end of the period referred to above, the Option shall
terminate. The Board, in its sole and absolute discretion, shall determine
whether or not authorized leaves of absence shall constitute termination of
employment for purposes of this Option Agreement.
(c) If, by reason of death or disability (a "SPECIAL TERMINATING
EVENT"), Optionee shall cease to be an officer, director, consultant or employee
the Company or any Subsidiary or Parent of the Company, then Optionee,
Optionee's executors or administrators or any person or persons acquiring the
Option directly from Optionee by bequest or inheritance, shall have the right to
exercise the Option at any time following such Special Terminating Event until
the earlier to occur of (1) one year following the date of such Special
Terminating Event and (2) the Expiration Date. The Option may be exercised
following a Special Terminating Event only to the extent exercisable at the date
of the Special Terminating Event. To the extent unexercised at the end of the
period referred to above, the Option shall terminate. For purposes of this
Option Agreement, "disability" shall mean total and permanent disability as
defined in Section 22(e)(3) of the Code. Optionee shall not be considered
permanently disabled unless he furnishes proof of such disability in such form
and manner, and at such times, as the Board may from time to time require.
(d) If Optionee shall be terminated for "cause" by the Company or
any Subsidiary or any Parent of the Company, Optionee shall have the right to
exercise the Option at any time following such terminating event until the
earlier to occur of (1) 30 days following the date of such terminating event and
(2) the Expiration Date.
(e) For purposes of this Option Agreement, "CAUSE" and "GOOD REASON"
shall have the respective meanings ascribed thereto under an employment
agreement between Optionee
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and the Company or any Subsidiary or Parent of the Company (or, if there was
such an employment agreement which is no longer in effect, as defined in such
employment agreement as last in effect).
(f) If any provision of the employment agreement between Optionee
and the Company or any Subsidiary or Parent of the Company (or, if there was
such an employment agreement which is no longer in effect, as defined in such
employment agreement as last in effect) provides for the accelerated vesting of
the Options granted hereunder under certain circumstances, then those provisions
shall apply as though fully set forth herein.
(g) Nothing in the Certificate or this Option Agreement shall confer
upon Optionee any right to continue in the service and/or employ of the Company
or any Subsidiary or Parent of the Company or shall affect the right of the
Company or any Subsidiary or Parent of the Company to terminate the relationship
or employment of Optionee, with or without cause.
6. RESTRICTIONS ON PURCHASED SHARES.
(a) SECURITIES LAW RESTRICTIONS. None of the Purchased Shares shall
be Transferred (with or without consideration) and the Company shall not be
required to register any such Transfer and the Company may instruct its transfer
agent not to register any such Transfer, unless and until all of the following
events shall have occurred:
(1) the Purchased Shares are Transferred pursuant to and in
conformity with (i) (A) an effective registration statement filed with the
Securities and Exchange Commission (the "COMMISSION") pursuant to the 1933 Act,
or (B) an exemption from registration under the 1933 Act, and (ii) the
securities laws of any state of the United States; and
(2) Optionee has, prior to the Transfer of such Purchased
Shares, and if requested by the Company, provided all relevant information to
Company's counsel so that upon Company's request, Company's counsel is able to,
and actually prepares and delivers to the Company a written opinion that the
proposed Transfer (i) (A) is pursuant to a registration statement which has been
filed with the Commission and is then effective, or (B) is exempt from
registration under the 1933 Act as then in effect, and the Rules and Regulations
of the Commission thereunder, and (ii) is either qualified or registered under
any applicable state securities laws, or exempt from such qualification or
registration. The Company shall bear all reasonable costs of preparing such
opinion.
(b) NONCOMPLYING TRANSFERS INVALID. Any attempted Transfer which is
not in full compliance with this Section 6 shall be null and void AB INITIO, and
of no force or effect.
7. ADJUSTMENTS UPON RECAPITALIZATION.
(a) Subject to the provisions of Section 7(b), if any change is made
in the Common Stock, without receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company) the Option will be appropriately adjusted, to preserve the economic
terms of the Option, in the class(es) and number of shares and price per share
of stock subject to the Option. Such adjustments
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shall reasonably be made by the Board, the determination of which shall be
final, binding and conclusive. The conversion of any convertible securities of
the Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company."
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then, at the sole discretion of the Board and to the extent permitted
by applicable law, the Option shall (i) terminate upon such event and may be
exercised prior thereto to the extent then exercisable or (ii) continue in full
force and effect and, if applicable, the surviving corporation or an Affiliate
of such surviving corporation shall assume the Option and/or shall substitute
similar option or award in place of the Option.
(c) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, and its
determination shall be final, binding and conclusive.
(d) The grant of the Option 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.
8. WAIVER OF RIGHTS TO PURCHASE STOCK.
By signing this Option Agreement, Optionee acknowledges and agrees
that neither the Company nor any other person or entity is under any obligation
to sell or transfer to Optionee any option or equity security of the Company,
other than the Shares subject to the Option and any other right or option to
purchase Common Stock which was previously granted in writing to Optionee by the
Board. By signing this Option Agreement, Optionee specifically waives all rights
which he or she may have had prior to the date of this Option Agreement to
receive any option or equity security of the Company.
9. INVESTMENT INTENT.
Optionee represents and agrees that if he or she exercises the
Option in whole or in part, and if at the time of such exercise the Option
and/or the Purchased Shares have not been registered under the 1933 Act, he or
she will acquire the Shares upon such exercise for the purpose of investment and
not with a view to the distribution of such Shares, and that upon each exercise
of the Option he or she will furnish to the Company a written statement to such
effect.
10. LEGEND ON STOCK CERTIFICATES.
Optionee agrees that all certificates representing the Purchased
Shares will be subject to such stock transfer orders and other restrictions (if
any) as the Company may deem advisable under the rules, regulations and other
requirements of the Commission, any stock exchange upon which the Common Stock
is then listed and any applicable federal or state securities laws, and the
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Company may cause a legend or legends to be put on such certificates to make
appropriate reference to such restrictions.
11. NO RIGHTS AS SHAREHOLDER.
Except as provided in Section 7 of this Option Agreement, Optionee
shall have no rights as a shareholder with respect to the Shares until the date
of the issuance to Optionee of a stock certificate or stock certificates
evidencing such Shares. Except as may be provided in Section 7 of this Option
Agreement, no adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued.
12. MODIFICATION.
The Board (excluding the Optionee) may modify, extend or renew the
Option or accept the surrender of, and authorize the grant of a new option in
substitution for, the Option (to the extent not previously exercised). No
modification of the Option shall be made which, without the consent of Optionee,
would alter or impair any rights of the Optionee under the Option.
13. WITHHOLDING.
(a) The Company shall be entitled to require as a condition of
delivery of any Purchased Shares upon exercise of any Option that the Optionee
agree to remit, at the time of such delivery or at such later date as the
Company may reasonably determine, an amount sufficient to satisfy all federal,
state and local withholding tax requirements relating thereto, and Optionee
agrees to take such other action required by the Company to satisfy such
withholding requirements.
(b) With the consent of the Board (excluding the Optionee), and in
accordance with any rules and procedures from time to time adopted by the Board,
Optionee may elect to satisfy his or her obligations under Section 13(a) above
by (1) directing the Company to withhold a portion of the Shares otherwise
deliverable (or to tender back to the Company a portion of the Shares issued
where the Optionee (a "SECTION 16(B) RECIPIENT") is required to report the
ownership of the Shares pursuant to Section 16(a) of the Securities Exchange Act
of 1934, as amended (the "1934 ACT") , and has not made an election under
Section 83(b) of the Code) (a "WITHHOLDING RIGHT"); or (2) tendering other
shares of the Common Stock of the Company which are already owned by Optionee
which in all cases have a Fair Market Value (as determined in accordance with
the provisions of Section 4 hereof) on the date as of which the amount of tax to
be withheld is determined (the "TAX DATE") equal to the amount of taxes to be
paid by such method.
(c) To exercise a Withholding Right, the Optionee must follow the
election procedures set forth below, together with such additional procedures
and conditions set forth in this Option Agreement or otherwise adopted by the
Board or as may be necessary to comply with Section 16(b) of the 1934 Act:
(1) the Optionee must deliver to the Company a written notice
of election (the "ELECTION") and specify whether all or a stated percentage of
the applicable taxes will be paid in accordance with Section 13(b) above and
whether the amount so paid shall be made in
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accordance with the "flat" withholding rates for supplemental wages or as
determined in accordance with Optionee's form W-4 (or comparable state or local
form); and
(2) the Election once made will be irrevocable.
14. CHARACTER OF OPTION.
The Option is not intended to qualify as an "incentive stock option" as
that term is defined in Section 422 of the Code.
15. GENERAL PROVISIONS.
(a) FURTHER ASSURANCES. Optionee shall promptly take all actions and
execute all documents requested by the Company which the Company deems to be
reasonably necessary to effectuate the terms and intent of this Option
Agreement.
(b) NOTICES. All notices, requests, demands and other communications
under this Option Agreement shall be in writing and shall be given to the
parties hereto as follows:
(1) If to the Company, to:
Brilliant Digital Entertainment, Inc.
6355 Topanga Canyon Boulevard, Suite 120
Woodland Hills, CA 91367
(2) If to Optionee, to the address set
forth in the records of the Company,
or at such other address or addresses as may have been furnished by such either
party in writing to the other party hereto. Any such notice, request, demand or
other communication shall be effective (i) if given by mail, 72 hours after such
communication is deposited in the mail by first-class certified mail, return
receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by
any other means, when delivered at the address specified in this subsection (b).
(c) TRANSFER OF RIGHTS UNDER THIS OPTION AGREEMENT. The Company may
at any time transfer and assign its rights and delegate its obligations under
this Option Agreement to any other person, corporation, firm or entity,
including its officers, directors and stockholders, with or without
consideration.
(d) REGISTRATION ON FORM S-8. On or before January 1, 2001, the
Company shall use its best efforts to file, and cause to be effective under the
Securities Act of 1933, as amended, a registration statement of Form S-8 (or a
comparable form) with respect to the shares of Common Stock (or other rights)
issued hereunder.
(e) RULE 16B-3 EXEMPTION. The Company will also use its best efforts
to ensure that the Option shall meet the requirements for exemption under Rule
16b-3 under the 1934 Act, as amended.
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(f) OPTION NON-TRANSFERABLE. Optionee may not sell, transfer, assign
or otherwise dispose of the Option except by will or the laws of descent and
distribution, and the Option may be exercised during the lifetime of Optionee
only by Optionee or by his or her guardian or legal representative in the case
of a disability, and upon Optionee's death only by his or her Estate or by any
person who acquired the Option by bequest or inheritance or by reason of the
death of Optionee.
(g) SUCCESSORS AND ASSIGNS. Except to the extent specifically
limited by the terms and provisions of this Option Agreement, this Option
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs and personal representatives.
(h) OTHER AGREEMENTS. To the extent any provision of this Option
Agreement is inconsistent with the express provisions of an employment agreement
between Optionee and the Company, the terms of the employment agreement shall
control.
(i) GOVERNING LAW. THIS OPTION AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE, EXCEPT TO THE EXTENT
PREEMPTED BY FEDERAL LAW, WHICH SHALL TO THAT EXTENT GOVERN.
(j) MISCELLANEOUS. Titles and captions contained in this Option
Agreement are inserted for convenience of reference only and do not constitute a
part of this Option Agreement for any other purpose. Except as specifically
provided herein, neither this Option Agreement nor any right pursuant hereto or
interest herein shall be assignable by any of the parties hereto without the
prior written consent of the other party hereto.
THE SIGNATURE PAGE TO THIS OPTION AGREEMENT CONSISTS OF THE LAST
PAGE OF THE CERTIFICATE.
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Exhibit "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
To: Brilliant Digital Entertainment, Inc.
The undersigned, the holder of the enclosed Stock Option Agreement
(Non-Statutory Stock Option), hereby irrevocably elects to exercise the purchase
rights represented by the Option and to purchase thereunder _________ * shares
of Common Stock of Brilliant Digital Entertainment, Inc. (the "COMPANY"), and
herewith encloses payment of $__________ and/or _________ shares of the
Company's Common Stock in full payment of the purchase price of such shares
being purchased.
Dated: __________________
-------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Option)
-------------------------------------
(Please Print Name)
-------------------------------------
(Address)
* Insert here the number of Shares called for on the face of the Option
(or, in the case of a partial exercise, the number of Shares being exercised),
in either case without making any adjustment for additional Common Stock of the
Company, other securities or property which, pursuant to the adjustment
provisions of the Option, may be deliverable upon exercise.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Brilliant Digital Entertainment, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 29, 1999, except for the third
paragraph of Note 11, as to which the date is April 14, 1999, relating to the
financial statements, which appears in Brilliant Digital Entertainment, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers
Los Angeles, California
November 19, 1999
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated 25 June 1999 relating to the financial
statements of Trojan Television Limited which appears in the Current Report on
Form 8-K of Brilliant Digital Entertainment, Inc. dated June 28, 1999.
/s/ MRI Moores Rowland
MRI Moores Rowland
London, England
November 24, 1999
