EXHIBIT 10.9
[FORM OF]
BRILLIANT DIGITAL ENTERTAINMENT, INC.
DEFERRED COMPENSATION RELINQUISHMENT
OPPORTUNITY AGREEMENT
RECITALS:
WHEREAS, Brilliant Digital Entertainment, Inc. ("Company") has adopted
the Brilliant Digital Entertainment, Inc. Deferred Compensation Plan effective
January 1, 1997 ("Plan") for the benefit of ________________ ("Employee") and
another employee. Except as otherwise defined herein, all capitalized terms
shall have the meaning set forth in the Plan.
WHEREAS, in accordance with the terms of the Plan, Employee at the
request of the Company agreed to defer a portion of his compensation until July
1, 2004, provided that such deferred compensation accrued interest at the rate
of 8% per annum until paid in full. Under the Plan, Company is required to
distribute to Employee all compensation deferred by Employee under the Plan,
together with all accrued interest thereon, no later than July 1, 2004. The
amount of compensation Employee deferred pursuant to the Plan, together with all
interest accrued thereon, is reflected in Employee's Account.
WHEREAS, Company now desires to offer Employee a one-time opportunity
to relinquish all of Employee's right, title and interest under the Plan,
including all of Employee's right, title and interest in Employee's Account
("Employee's Plan Benefit"), in exchange for the right to acquire, at a price of
$0.12 per share, an amount of Company stock calculated in accordance with
Section 1.2 of this Agreement (the "Stock Options"). The Stock Options shall
have a term of ten years and be exercisable by Employee in accordance with
Section 1.4 of this Agreement.
NOW, THEREFORE, Company has determined to offer the Employee the
one-time opportunity to relinquish Employee's Plan Benefit and, in exchange, to
receive the Stock Options as follows:
SECTION 1: ELECTION TO EXCHANGE PLAN BENEFITS FOR STOCK OPTIONS
1.1 Employee shall have until June 30, 2003 to determine
whether he wishes to relinquish Employee's Plan Benefit and, in exchange, to
receive the Stock Options. In the event Employee elects not to relinquish
Employee's Plan Benefit, Employee's Plan Benefit shall remain in effect and be
paid by Company in accordance with the Plan.
1.2 In the event Employee elects to relinquish Employee's
Plan Benefit and receive the Stock Options, Employee shall have the right to
receive, upon exercise of the Stock Options in accordance with the terms of this
agreement, the number of shares derived by dividing the Employee's balance in
his Account under the Plan on the date of such election (the "Relinquishment
Amount") by the difference between (a) the value of a share of stock of the
Company as of the date the Employee makes the election to relinquish Employee's
Plan Benefit, which value shall be equal to the average closing price of the
Company's Common Stock on the
American Stock Exchange for the 5 trading days immediately prior to the date the
Employee makes the election to relinquish Employee's Plan Benefit and (b) $.12.
Employee shall have no right to exercise all or any portion of the Stock Options
except as provided in Section 1.4 below.
1.3 Employee shall elect to relinquish Employee's Plan
Benefit and receive the Stock Options pursuant to the terms of this Agreement by
delivering written notice thereof to Company prior to June 30, 2003. Employee's
notice pursuant to this Section 1.3 shall be delivered to Company at the address
set forth in Section 3 below. As soon as reasonably practicable following
receipt of Employee's notice, Company shall advise Employee in writing as to the
maximum number of shares of Company stock, calculated in accordance with Section
1.2 above, Employee shall be entitled to receive upon Employee's exercise of the
Stock Options in accordance with this Agreement.
1.4 In the event Employee elects to relinquish Employee's
Plan Benefit and receive the Stock Options, the Stock Options shall be governed
by, and Employee shall be entitled to exercise the Stock Options only in
accordance with, the terms of the form of Stock Option Agreement (Non-Statutory
Stock Option) attached hereto as Exhibit A. The Stock Options will be fully
vested at the time of grant but not be exercisable by Employee until July 1,
2004. In addition, to the extent the Company remains listed on the American
Stock Exchange and stockholder approval of the Stock Option is required for the
Company to remain in compliance with the listing standards of the American Stock
Exchange, then the Stock Options shall automatically terminate and cease to have
any force or effect as of June 30, 2004 unless such stockholder approval has
been duly obtained by the Company on or prior to such date. In the event of any
such termination of the Stock Options, the Employee Plan Benefit shall be
restored and Employee shall be entitled to receive a cash payment equal to the
Relinquishment Amount on July 1, 2004. The Relinquishment Amount will not bear
interest during the period commencing on the date of Employee's election to
receive the Stock Options and ending on the date of termination of the Stock
Options.
SECTION 2: TERMINATION OF AGREEMENT
1.5 The Company shall have the right to terminate this
Agreement prior to Employee's election pursuant to Section 1 above upon the
occurrence of any of the following:
(i) Upon the death of the Employee; and
(ii) For "cause." Cause shall be defined as the
Employee's commission of a crime of moral turpitude, gross or
willful misconduct, or such other act which would severely
damage the reputation of the Company.
SECTION 3: NOTICES. Any and all notices referred to herein shall be sufficient
if furnished in writing and sent by registered mail to the respective parties at
the respective addresses set forth below:
COMPANY: Brilliant Digital Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
EMPLOYEE: [Name]
[Address]
SECTION 4: ASSIGNMENT'S BINDING EFFECT. This Agreement shall inure to the
benefit of, and be enforceable by the parties and their successors and assigns.
SECTION 5: INTERPRETATION. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid and effective under
applicable law. If any of the provisions of this Agreement shall contravene or
be invalid under the laws of any jurisdiction where applicable, such
contravention or invalidity shall not invalidate all of the provisions of this
Agreement but rather the Agreement shall be construed, insofar as the laws of
that particular jurisdiction are concerned, as not containing the invalid or
contravening provision, and the rights and obligations of the parties shall be
enforced to the fullest extent possible.
SECTION 6: RECOVERY OF EXPENSES. In the event a dispute arises with respect to
this Agreement, the prevailing party in such dispute shall be entitled to
recover all expenses, including, without limitation, reasonable attorneys' fees
and expenses incurred in ascertaining such party's rights in preparing to
enforce, or in enforcing such party's rights under this Agreement whether or not
it was necessary for such party to institute suit.
SECTION 7: ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements between the Company and Employee with respect to the subject
matter hereof. This Agreement cannot be changed or terminated or any performance
or condition waived, in whole or in part except by writing signed by the party
against whom enforcement of the changes, termination or waiver is sought. The
waiver of any breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other breach of the same or any other
term and condition.
SECTION 8: EXECUTION OF COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
SECTION 9: GOVERNING LAW. The validity and effect of this Agreement shall be
governed and construed and enforced in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, the parties have entered into this agreement effective as of
May 30, 2003.
COMPANY BRILLIANT DIGITAL ENTERTAINMENT, INC.
By:
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▇▇▇▇▇ ▇▇▇▇
Its: Chief Financial Officer
EMPLOYEE
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[Name]
Exhibit A
Stock Option Agreement
BRILLIANT DIGITAL ENTERTAINMENT, INC.
NON-STATUTORY STOCK OPTION:
NOTICE OF STOCK OPTION GRANT
You ("OPTIONEE") have been granted the following option (the "OPTION")
to purchase Common Stock ($.001 par value) of Brilliant Digital Entertainment,
Inc. (the "COMPANY"):
Name of Optionee:
Total Number of Shares Granted:
Type of Option: Non-Qualified Stock Option
Exercise Price Per Share: $0.12
Date of Grant: ________ __, 2003
Date Exercisable: July 1, 2004
Expiration Date: ________ __, 2013; PROVIDED,
HOWEVER, that to the extent the
Company remains listed on the
American Stock Exchange and
stockholder approval of this
Option is required for the Company
to remain in compliance with the
listing standards of the American
Stock Exchange, then this Option
shall automatically terminate and
cease to have any force or effect
as of June 30, 2004 unless such
stockholder approval has been duly
obtained by the Company on or
prior to such date.
By your signature and the signature of the Company's representative
below, you and the Company agree that this option is granted under and governed
by the terms and conditions of the Brilliant Digital Entertainment, Inc. Stock
Option Agreement (Non-Statutory Stock Option), which is attached to and made a
part of this document.
BRILLIANT DIGITAL
OPTIONEE: ENTERTAINMENT, INC.
By: By:
---------------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇
Print Name: Its: Chief Financial Officer
ANNEX I
BRILLIANT DIGITAL ENTERTAINMENT, INC.
STOCK OPTION AGREEMENT
(NON-STATUTORY STOCK OPTION)
1. GRANT OF OPTION
1.1 OPTION. On the terms and conditions set forth in the
Notice of Stock Option Grant and this Agreement, the Company grants to the
Optionee the Option to purchase at the Exercise Price the number of Shares set
forth in the Notice of Stock Option Grant. This option is intended to be a
Non-Qualified Stock Option.
1.2 DEFINED TERMS. Capitalized terms are defined at the
end of this Agreement.
2. RIGHT TO EXERCISE
Subject to the other conditions set forth in this Agreement, all or
part of this option may be exercised prior to its expiration or termination at
the time or times set forth in the Notice of Stock Option Grant. In addition,
all of the remaining unexercised options shall immediately become fully
exercisable if: (a) a Change in Control occurs, and (b) solely to the extent the
Company remains listed on the American Stock Exchange and stockholder approval
of this Option is required for the Company to remain in compliance with the
listing standards of the American Stock Exchange, that stockholder approval has
been duly obtained by the Company.
3. NO TRANSFER OR ASSIGNMENT OF OPTION
Except as provided herein, Optionee may not assign, sell or transfer
the Option, in whole or in part, other than by will or by operation of the laws
of descent and distribution. The Board of Directors, in its sole discretion may
permit the transfer of the Option as follows: (i) by gift to a member of the
Optionee's immediate family or (ii) by transfer by instrument to a trust
providing that the Option is to be passed to beneficiaries upon death of the
trustor (either or both (i) or (ii) referred to as a "PERMITTED TRANSFEREE").
For purposes of this SECTION 3, "IMMEDIATE FAMILY" shall mean the Optionee's
spouse (including a former spouse subject to terms of a domestic relations
order); child, stepchild, grandchild, child-in-law; parent, stepparent,
grandparent, parent-in-law; sibling and sibling-in-law, and shall include
adoptive relationships. A transfer permitted under this SECTION 3 hereof may be
made only upon written notice to and approval thereof by Board of Directors. A
Permitted Transferee may not further assign, sell or transfer the transferred
option, in whole or in part, other than by will or by operation of the laws of
descent and distribution. A Permitted Transferee shall agree in writing to be
bound by the provisions of this Agreement.
4. EXERCISE PROCEDURES
4.1 NOTICE OF EXERCISE. The Optionee or the Optionee's
representative may exercise this option by delivering a written notice in the
form of Exhibit A attached hereto ("NOTICE OF EXERCISE") to the Company in the
manner specified pursuant to SECTION 9.3 hereof.
Such notice shall specify the election to exercise this option, the number of
Shares for which it is being exercised and the form of payment, which must
comply with SECTION 5. The notice shall be signed by the person who is entitled
to exercise this option. In the event that this option is to be exercised by the
Optionee's representative, the notice shall be accompanied by proof
(satisfactory to the Company) of the representative's right to exercise this
option.
4.2 ISSUANCE OF SHARES. After receiving a proper notice
of exercise, the Company shall cause to be issued a certificate or certificates
for the Shares as to which this option has been exercised, registered in the
name of the person exercising this option (or in the names of such person and
his or her spouse as community property or as joint tenants with right of
survivorship). The Company shall cause such certificate or certificates to be
delivered to or upon the order of the person exercising this option.
4.3 WITHHOLDING TAXES. In the event that the Company
determines that it is required to withhold any tax as a result of the exercise
of this option, the Optionee, as a condition to the exercise of this option,
shall make arrangements satisfactory to the Company to enable it to satisfy all
withholding requirements. The Optionee shall also make arrangements satisfactory
to the Company to enable it to satisfy any withholding requirements that may
arise in connection with the exercise or disposition of Shares purchased by
exercising this option.
5. PAYMENT FOR STOCK
5.1 GENERAL RULE. The entire Exercise Price of Shares
issued upon exercise of the Option shall be payable in full by cash or check for
an amount equal to the aggregate Exercise Price for the number of shares being
purchased. Alternatively, the Exercise Price may be paid by:
5.1.1 CASHLESS EXERCISE. A copy of instructions to
a broker directing such broker to sell the Shares for which this option is
exercised, and to remit to the Company the aggregate Exercise Price of such
option;
5.1.2 STOCK-FOR-STOCK EXERCISE. Paying all or a
portion of the Exercise Price for the number of Shares being purchased by
tendering Shares owned by the Optionee, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the aggregate
Purchase Price of the shares with respect to which this option or portion hereof
is exercised; or
5.1.3 ATTESTATION EXERCISE. By a stock for stock
exercise by means of attestation whereby the Optionee identifies for delivery
specific Shares already owned by Optionee and receives a number of Shares equal
to the difference between the Option Shares thereby exercised and the identified
attestation Shares.
5.2 WITHHOLDING PAYMENT. The Exercise Price shall include
payment of the amount of all federal, state, local or other income, excise or
employment taxes subject to withholding (if any) by the Company or any parent or
subsidiary corporation as a result of the exercise of a Stock Option. The
Optionee may pay all or a portion of the tax withholding by cash or check
payable to the Company, or, at the discretion of the Board of Directors, upon
such terms as the Board of Directors shall approve, by (i) cashless exercise or
attestation exercise; (ii)
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Stock-for-Stock exercise; (iii) in the case of an Option, by paying all or a
portion of the tax withholding for the number of shares being purchased by
withholding shares from any transfer or payment to the Optionee ("STOCK
WITHHOLDING"); or (iv) a combination of one or more of the foregoing payment
methods. The fair market value of the number of shares subject to Stock
withholding shall not exceed an amount equal to the applicable minimum required
tax withholding rates.
6. TERM AND EXPIRATION
6.1 BASIC TERM. This option shall expire and shall not be
exercisable after the Expiration Date specified in the Notice of Stock Option
Grant.
6.2 EXERCISE AFTER DEATH. All or part of this option may
be exercised at any time before its expiration under SECTION 6.1 above by the
executors or administrators of the Optionee's estate or by any person who has
acquired this option directly from the Optionee by beneficiary designation,
bequest or inheritance. When the Optionee dies, this option shall remain
exercisable pursuant to the terms hereof until the Expiration Date specified in
the Notice of Stock Option Grant.
7. ADJUSTMENTS TO NUMBER OF OPTION SHARES
The number of Shares issuable upon exercise of this Option (or any
shares of stock or other securities or property receivable or issuable upon
exercise of this Option) and the Exercise Price are subject to adjustment upon
occurrence of the following events:
7.1 ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR
COMBINATIONS OF SHARES. The Exercise Price shall be proportionally decreased and
the number of Shares issuable upon exercise of this Option (or any shares of
stock or other securities at the time issuable upon exercise of this Option)
shall be proportionally increased to reflect any stock split or other
subdivision of the Stock. The Exercise Price shall be proportionally increased
and the number of Shares issuable upon exercise of this Option (or any shares of
stock or other securities at the time issuable upon exercise of this Option)
shall be proportionally decreased to reflect any reverse stock split,
consolidation or combination of the Stock.
7.2 ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR
OTHER SECURITIES OR PROPERTY. In case the Company shall make or issue, or shall
fix a record date for the determination of eligible holders entitled to receive,
a dividend or other distribution with respect to the Stock (or any shares of
stock or other securities at the time issuable upon exercise of the Option)
payable in (a) securities of the Company (including debt instruments) or (b)
assets (excluding cash dividends paid or payable solely out of retained
earnings), then, in each such case, the Optionee on exercise hereof at any time
after the consummation, effective date or record date of such dividend or other
distribution, shall receive, in addition to the Shares of Stock (or such other
stock or securities) issuable on such exercise prior to such date, and without
the payment of additional consideration therefor, the securities or such other
assets of the Company to which Optionee would have been entitled upon such date
if Optionee had exercised this Option on the date hereof and had thereafter,
during the period from the date hereof to and including the date of such
exercise, retained such shares and all such additional securities or
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other assets distributed with respect to such shares as aforesaid during such
period giving effect to all adjustments called for by this SECTION 7.
7.3 RECLASSIFICATION. If the Company, by reclassification
of securities or otherwise, shall change any of the securities as to which
purchase rights under this Option exist into the same or a different number of
securities of any other class or classes, this Option shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities that were
subject to the purchase rights under this Option immediately prior to such
reclassification or other change, and the Exercise Price therefore shall be
appropriately adjusted, all subject to further adjustment as provided in this
SECTION 7. No adjustment shall be made pursuant to this SECTION 7.3 upon any
conversion or redemption of the Stock which is the subject of SECTION 7.5.
7.4 ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR
CONSOLIDATION. In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), or any merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all the assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision shall
be made so that the Optionee shall thereafter be entitled to receive upon
exercise of this Option, during the period specified herein and upon payment of
the Exercise Price then in effect, the number of shares of stock or other
securities or property (including cash) to which the holder of the shares
deliverable upon exercise of this Option would have been entitled to receive in
such reorganization, consolidation, merger, sale or transfer if this Option had
been exercised immediately before such reorganization, merger, consolidation,
sale or transfer, all subject to further adjustment as provided in this SECTION
7. The foregoing provisions of this SECTION 7.4 shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and to
the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Option. If the per-share consideration payable to the
Optionee hereof for shares in connection with any such transaction is in a form
other than cash or marketable securities, then the value of such consideration
shall be the value as agreed upon in good faith by the Board of Directors. In
all events, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Option with respect to the rights and interests of the Optionee after the
transaction, to the end that the provisions of this Option shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Option.
7.5 CONVERSION OF COMMON STOCK. In case all or any
portion of the authorized and outstanding shares of Stock are redeemed or
converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Stock otherwise
ceases to exist, then, in such case, the Optionee, upon exercise hereof at any
time after the date on which the Stock is so redeemed or converted, reclassified
or ceases to exist (the "TERMINATION DATE"), shall receive, in lieu of the
number of Shares that would have been issuable upon such exercise immediately
prior to the Termination Date, the securities or property that would have been
received if this Option had been exercised in full and the Shares received
thereupon had been simultaneously converted immediately prior to the Termination
Date, all subject to further adjustment as provided in this Option.
Additionally, the Exercise Price shall be
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immediately adjusted such that the aggregate Purchase Price of the maximum
number of securities or other property for which this Option is exercisable
immediately after the Termination Date is equal to the aggregate Purchase Price
of the maximum number of Shares for which this Option was exercisable
immediately prior to the Termination Date, all subject to further adjustment as
provided herein.
8. RESTRICTIONS ON TRANSFER
8.1 LEGALITY OF INITIAL ISSUANCE. No Shares shall be
issued upon the exercise of this option unless and until the Company has
determined that:
8.1.1 It and the Optionee have taken any actions
required to register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof;
8.1.2 Any applicable listing requirement of any
stock exchange on which Stock is listed has been satisfied; and
8.1.3 Any other applicable provision of state or
federal law has been satisfied.
8.2 SECURITIES LAW RESTRICTIONS. Regardless of whether
the offering and sale of Shares under this Agreement have been registered under
the Securities Act or have been registered or qualified under the securities
laws of any state, the Company at its discretion may impose restrictions upon
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer
instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act,
the securities laws of any state or any other law.
8.3 INVESTMENT INTENT AT GRANT. The Optionee represents
and agrees that the Shares to be acquired upon exercising this option will be
acquired for investment, and not with a view to the sale or distribution thereof
in violation of applicable securities laws.
8.4 INVESTMENT INTENT AT EXERCISE. In the event that the
sale of Shares under this Agreement is not registered under the Securities Act
but an exemption is available which requires an investment representation or
other representation, the Optionee shall represent and agree at the time of
exercise that the Shares being acquired upon exercising this option are being
acquired for investment, and not with a view to the sale or distribution thereof
in violation of applicable securities laws, and shall make such other
representations as are deemed necessary or appropriate by the Company and its
counsel.
8.5 LEGENDS. All certificates evidencing Shares purchased
under this Agreement in an unregistered transaction shall bear the following
legend (and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law):
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"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
8.6 REMOVAL OF LEGENDS. If, in the opinion of the Company
and its counsel, any legend placed on a stock certificate representing Shares
sold under this Agreement no longer is required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.
8.7 ADMINISTRATION. Any determination by the Company and
its counsel in connection with any of the matters set forth in this SECTION 8
shall be conclusive and binding on the Optionee and all other persons.
9. MISCELLANEOUS PROVISIONS
9.1 RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the
Optionee's representative shall have any rights as a shareholder with respect to
any Shares subject to this option until the Optionee or the Optionee's
representative becomes entitled to receive such Shares by filing a notice of
exercise and paying the Purchase Price pursuant to SECTION 4 and SECTION 5
hereof.
9.2 NO RETENTION RIGHTS. Nothing in this Agreement shall
confer upon the Optionee any right to continue in employment or other service
with the Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Optionee) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate his employment or other
service with the Company at any time and for any reason, with or without Cause.
9.3 NOTICE. Any notice required by the terms of this
Agreement shall be given in writing and shall be deemed effective upon personal
delivery or upon deposit with the United States Postal Service, by registered or
certified mail, with postage and fees prepaid. Notice shall be addressed to the
Company at its principal executive office and to the Optionee at the address
that he or she most recently provided to the Company.
9.4 ENTIRE AGREEMENT. The Notice of Stock Option Grant
and this Agreement constitute the entire contract between the parties hereto
with regard to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) that relate to the subject matter hereof.
9.5 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, AS SUCH
LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND PERFORMED IN SUCH STATE.
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10. DEFINITIONS
10.1 "AGREEMENT" shall mean this Stock Option Agreement.
10.2 "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Company, as constituted from time to time or, if a Committee
has been appointed, such Committee.
10.3 "CHANGE IN CONTROL" shall mean (i) the consummation
of a merger or consolidation of the Company with or into another entity or any
other corporate reorganization, if more than 50% of the combined voting power of
the continuing or surviving entity's securities outstanding immediately after
such merger, consolidation or other reorganization is owned, directly or
indirectly, by persons who were not shareholders of the Company immediately
prior to such merger, consolidation or other reorganization; or (ii) the sale,
transfer or other disposition of all or substantially all of the Company's
assets. A transaction shall not constitute a Change in Control if its sole
purpose is to change the state of the Company's incorporation or to create a
holding company that will be owned in substantially the same proportions by the
persons who held the Company's securities immediately before such transaction.
10.4 "CODE" shall mean the Internal Revenue Code of 1986,
as amended.
10.5 "COMMITTEE" shall mean a committee of the Board of
Directors, appointed by the Board of Directors to administer the Company's
employee stock option plan generally or this Agreement specifically.
10.6 "COMPANY" shall mean Brilliant Digital Entertainment,
Inc., a Delaware corporation.
10.7 "DATE OF GRANT" shall mean the date specified in the
Notice of Stock Option Grant.
10.8 "EXERCISE PRICE" shall mean the amount for which one
Share may be purchased from the Company upon exercise of this option, as
specified in the Notice of Stock Option Grant.
10.9 "FAIR MARKET VALUE" shall mean the fair market value
of a Share, determined as follows: (1) if the 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 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 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 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 Stock shall be the mean between the bid and asked
prices for the 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 Stock, the Fair Market Value shall be determined in good faith by the Board
of Directors.
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10.10 "NON-QUALIFIED STOCK OPTION" shall mean a stock
option not described in Sections 422(b) or 423(b) of the Code.
10.11 "NOTICE OF STOCK OPTION GRANT" shall mean the
document so entitled, to which this Agreement is attached.
10.12 "OPTIONEE" shall mean the individual named in the
Notice of Stock Option Grant.
10.13 "PURCHASE PRICE" shall mean the Exercise Price
multiplied by the number of Shares with respect to which this option is being
exercised.
10.14 "SECURITIES ACT" shall mean the Securities Act of
1933, as amended.
10.15 "SHARE" shall mean one share of Stock, as adjusted in
accordance with SECTION 7.
10.16 "STOCK" shall mean the Common Stock ($.001 par
value).
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EXHIBIT A
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
Brilliant Digital Entertainment, Inc.
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The undersigned, the holder of the enclosed Stock Option Agreement,
hereby irrevocably elects to exercise the purchase rights represented by the
Option and to purchase thereunder ______* shares of Common Stock ($.001 par
value) of Brilliant Digital Entertainment, Inc. (the "COMPANY"), and herewith
encloses payment of $_______ and/or _________ shares of the Company's common
stock in full payment of the purchase price of such shares being purchased.
Dated:
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(Signature must conform in all respects
to name of holder as specified on the face
of the Option)
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(Please Print Name)
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(Please Print Address)
* Insert here the number of shares called for on the face of the
Option, or, in the case of a partial exercise, the number of shares being
exercised, in either case without making any adjustment for additional Common
Stock ($.001 par value) of the Company, other securities or property that,
pursuant to the adjustment provisions of the Option, may be deliverable upon
exercise.