EXHIBIT 10.1


                              SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

                            Dated as of June 16, 2004

                                  By and Among

                      BRILLIANT DIGITAL ENTERTAINMENT, INC.
                                    ("BDE"),

                                  ALTNET, INC.
                                   ("ALTNET"),

                               DETERSHAN PTY. LTD.
                                 ("DETERSHAN"),

                          BIG SEVEN ENTERTAINMENT, LLC
                                 ("BIG SEVEN"),

                                       And

                                  MICHAEL TOIBB
                                  ("M. TOIBB")


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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

1.   Definitions...............................................................2
     1.1      Certain Definitions..............................................2
     1.2      Other Definitions................................................5

2.   Deliveries to Escrow......................................................6

3.   Big Seven Operations......................................................6

4.   Proceeds from the Sale or Other Business Combination of Big Seven.........7

5.   Management Fee............................................................7

6.   Operating Indemnification and Insurance...................................7

7.   Deliveries................................................................8

8.   Further Assurances........................................................8

9.   Representations and Warranties of M. Toibb................................8
     9.1      Title to Membership Interests....................................9
     9.2      Authority and Capacity; Enforceability...........................9
     9.3      No Conflicts.....................................................9
     9.4      Purchase for Investment..........................................9
     9.5      Accredited Investor.............................................10
     9.6      No Consents Required............................................10
     9.7      Brokers.........................................................10

10.  Representations and Warranties of M. Toibb About Big Seven...............10
     10.1     Organization, Standing and Corporate Power......................10
     10.2     Membership Interests............................................11
     10.3     Subsidiaries; Other Interests...................................11
     10.4     Financial Statements............................................11
     10.5     Compliance with Laws and Other Instruments......................12
     10.6     Contracts.......................................................12
     10.7     No Conflicts....................................................12
     10.8     Litigation and Proceedings......................................12
     10.9     Inventory.......................................................13
     10.10    Accounts Receivable.............................................13
     10.11    Conduct of Business.............................................13
     10.12    Assets.  13
     10.13    Real Property...................................................13
     10.14    Insurance.......................................................14
     10.15    Tax Matters.....................................................14
     10.16    Intellectual Property...........................................14


                                      (i)
<PAGE>


     10.17    Permits........................................................ 14
     10.18    Environmental Compliance Matters................................14
     10.19    Employee Benefits...............................................15
     10.20    Employee Relations..............................................15
     10.21    No Consents Required............................................15
     10.22    Brokers........................................................ 15

11.  Representations and Warranties of BDE....................................15
     11.1     Organization, Standing and Corporate Power......................15
     11.2     Authority; Enforceability; Effect of Agreement..................15
     11.3     Brokers.........................................................16
     11.4     No Consents Required............................................16
     11.5     Securities Reports..............................................16

12.  Representations and Warranties of Altnet.................................16
     12.1     Organization, Standing and Corporate Power......................16
     12.2     Authority; Enforceability; Effect of Agreement..................16
     12.3     Brokers.........................................................17
     12.4     No Consents Required............................................17

13.  Representations and Warranties of Detershan..............................17
     13.1     Organization, Standing and Corporate Power......................17
     13.2     Authority; Enforceability; Effect of Agreement..................17
     13.3     Brokers.........................................................17
     13.4     No Consents Required............................................17

14.  Conduct and Transactions During the Escrow Period........................18
     14.1     Conduct of Business.............................................18
     14.2     Inspection of Records...........................................19
     14.3     Resignation.....................................................19
     14.4     Release.........................................................19
     14.5     Non-Competition Agreement.......................................20

15.  Further Agreements of the Parties........................................20
     15.1     Confidentiality.................................................20
     15.2     Tax Returns and Payments........................................21
     15.3     M. Toibb Assistance.............................................21
     15.4     Expenses........................................................21
     15.5     Registration Rights.............................................21

16.  Survival of Representations and Warranties; Indemnity....................22
     16.1     Survival of Representations and Warranties......................22
     16.2     Indemnification By M. Toibb.....................................22
     16.3     Indemnification by BDE..........................................23
     16.4     Limitation on Indemnification...................................23
     16.5     Notice of Claim.................................................24
     16.6     Direct Claims...................................................24


                                      (ii)
<PAGE>


     16.7     Third Party Claims..............................................24

17.  Miscellaneous............................................................25
     17.1     Notices.........................................................25
     17.2     Entire Agreement................................................26
     17.3     Publicity.......................................................26
     17.4     Assignment......................................................26
     17.5     Waiver and Amendment............................................26
     17.6     Governing Law...................................................26
     17.7     Severability....................................................26
     17.8     Captions........................................................26
     17.9     Counterparts....................................................26
     17.10    Costs and Attorneys' Fees.......................................27
     17.11    Rights Cumulative...............................................27
     17.12    Judicial Interpretation.........................................27

18.  Events of Default and Remedies...........................................27
     18.1     Events of Default...............................................27
     18.2     Remedies........................................................28


                                     (iii)
<PAGE>


                     SETTLEMENT AGREEMENT AND MUTUAL RELEASE


         This Settlement Agreement and Mutual Release (this "AGREEMENT"),  dated
as of June 16, 2004, is by and among BRILLIANT  DIGITAL  ENTERTAINMENT,  INC., a
Delaware corporation ("BDE"),  ALTNET, INC., a Delaware corporation  ("ALTNET"),
DETERSHAN   PTY.   LTD.,  an  Australian   company   ("DETERSHAN"),   BIG  SEVEN
ENTERTAINMENT,  LLC, a California  limited liability company ("BIG SEVEN" or the
"Company"), and MICHAEL TOIBB, an individual ("M. TOIBB" or "SELLER").

                                    RECITALS

         A.  M.  Toibb  is the  record  and  beneficial  owner  of  100%  of the
Membership  Interests  (defined in SECTION 1.1) of Big Seven,  which  Membership
Interests  constitutes 100% of the Equity Interests  (defined in SECTION 1.1) of
Big Seven;

         B. BDE is a developer of rich media advertising  serving  technologies,
software authoring tools and content for three dimensional,  or 3D, animation on
the World  Wide Web and,  through  its Altnet  subsidiary.  operates a peer- to-
peer-  based  content  distribution  network  that  allows  for the  secure  and
efficient distribution of content,  including,  music, video, software and other
digital files to computer users;

         C. Big Seven is a distributor of digital content,  which by contract it
owns,  controls  or  licenses,  through on line  peer-to-peer  networks  through
arrangements with BDE and Altnet;

         D. Detershan  provides the types of services  described in Exhibit A to
the Confidential  Agreement-Deal Memorandum dated as of February 26, 2003 by and
among BDE, Detershan and Big Seven (the "DEAL MEMORANDUM");

         E. BDE, Altnet and Big Seven have agreed to a nonexclusive relationship
whereby they will produce,  publish and distribute video content provided by Big
Seven as  agreed  upon by them  and  distributed  through  BDE's  secure  Altnet
Network;

         F. The BDE,  Altnet-Big  Seven  relationship  has been the  subject  of
significant  operating  disputes and  misunderstandings  resulting in threatened
litigation among them and their Affiliates (as defined below);

         G. BDE, Altnet, Big Seven, M. Toibb and their respective Affiliates (as
defined  below)  now desire to  resolve,  settle  and  terminate  all claims by,
between and among them,  now known or unknown,  which each may have  against the
other,  on the terms and conditions set forth in this  Agreement,  including but
not limited to the claims  associated  directly or indirectly with the execution
and performance of the parties under the Deal Memorandum;

         H. As part of the Settlement described in Recital G above, on the terms
and subject to the conditions set forth in this  Agreement,  M. Toibb desires to
sell to BDE, and BDE desires to purchase  from M. Toibb,  all of the  Membership
Interests;


<PAGE>


                                    AGREEMENT

         NOW, THEREFORE, in consideration of the mutual recitals,  covenants and
conditions in this Agreement, and for other valuable consideration,  the receipt
and sufficiency of which are hereby acknowledged,  BDE, Altnet,  Detershan,  Big
Seven and M. Toibb agree as follows:

         1.       DEFINITIONS.

                  1.1      CERTAIN  DEFINITIONS.   All  terms  defined  in  this
Agreement shall have the defined  meanings when used in this Agreement or in any
agreement,  note,  certificate,  report  or  other  document  made or  delivered
pursuant to this Agreement,  unless otherwise  defined or the context  otherwise
requires. The following terms shall have the following meanings:

                  "ACTION"  means  any  litigation,  action,  suit,  proceeding,
arbitration   or  claim  before  any  court  or   Governmental   Authority,   or
investigation by any Governmental Authority.

                  "AFFILIATE"  shall mean, with respect to any specified Person,
(i) any other Person who,  directly or  indirectly,  owns or controls,  is under
common  ownership or control with, or is owned or controlled  by, such specified
Person, (ii) any other Person who is a director,  officer, partner or trustee of
the specified Person or a Person described in clause (i) of this definition,  or
(iii) any  Person of which the  specified  Person  and/or any one or more of the
Persons  specified in clause (i) or (ii) of this definition,  individually or in
the aggregate,  beneficially own 10% or more of any class of voting  securities.
For purposes of this Agreement,  Mr. And Mrs. Harris Toibb are not  "Affiliates"
of the  Company or Seller,  but shall be "deemed to be" solely for  purposes  of
Section 16.3 of this Agreement.

                  "BEST  KNOWLEDGE"  with  respect to any Person  shall mean and
include (i) actual knowledge of the Person,  including,  the actual knowledge of
any of the officers or directors of such Person, and (ii) that knowledge which a
prudent  businessperson  could have  obtained in the  management of his business
after making reasonable inquiry, and after exercising reasonable diligence, with
respect thereto.

                  "BIG SEVEN IP" shall mean all IP that Big Seven owns, licenses
and/or uses.

                  "BUSINESS  CONDITION"  of any Person shall mean the  financial
condition,  results of  operations,  business,  properties  or prospects of such
Person.

                  "COMMITMENT"   means  (a)   options,   warrants,   convertible
securities,  exchangeable  securities,  subscription rights,  conversion rights,
exchange rights,  or other Contracts that could require a Person to issue any of
its Equity  Interests or to sell any Equity Interests it owns in another Person;
(b) any other securities  convertible into,  exchangeable or exercisable for, or
representing the right to subscribe for any Equity Interest of a Person or owned
by a Person;  (c) statutory  pre-emptive  rights or  pre-emptive  rights granted
under a Person's  Organizational  Documents;  and (d) stock appreciation rights,
phantom stock, profit  participation,  or other similar rights with respect to a
Person.


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<PAGE>


                   "COMMON  STOCK" shall mean the common stock,  par value $.001
per share, of BDE.

                  "CONTRACT"   shall  mean  any  written  or  oral  note,  bond,
debenture, mortgage, license, agreement, commitment, contract or understanding.

                  "ENVIRONMENTAL  AND SAFETY LAWS" shall mean all applicable (i)
federal, state, local and foreign statutes, regulations,  ordinances and similar
provisions  having the force or effect of law, (ii) judicial and  administrative
orders and determinations, (iii) contractual obligations and (iv) common law, in
each case as currently in effect,  concerning  public health and safety,  worker
health and safety,  and pollution or protection  of the  environment,  including
without  limitation  all  those  relating  to  the  presence,   use  production,
generation,  handling, transport,  treatment,  storage, disposal,  distribution,
labeling, testing, processing,  discharge, release, threatened release, control,
or cleanup of any  hazardous  or  otherwise  mixtures,  pesticides,  pollutants,
contaminants,  toxic  chemicals,  petroleum  products or  byproducts,  asbestos,
polychlorinated biphenyls, noise or radiation.

                  "EQUITY  INTERESTS"  means (a) with respect to a  corporation,
any and all shares of capital stock and any  Commitments  with respect  thereto,
(b) with respect to a partnership,  limited liability company,  trust or similar
Person,  any and all units,  interests  or other  partnership/limited  liability
company interests,  including but not limited to Membership  Interests,  and any
Commitments  with  respect  thereto,  and  (c) any  other  equity  ownership  or
participation in a Person.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended.

                  "ERISA  AFFILIATE"  means,  with  respect  to any  Person,  an
affiliate of such Person as determined under Section 414(b),  (c), (m) or (o) of
the Code.

                  "ESCROW  HOLDER"  means  Robert  L.  Berger  &  Associates,  a
California limited liability company.

                  "EXPLOIT" shall mean manufacture,  advertise, license, market,
merchandise,  promote,  publicize,  sell, use, market, supply or distribute, and
"EXPLOITATION" and "EXPLOITED" shall have a correlative meaning.

                  "GAAP" shall mean generally  accepted  accounting  principles,
consistently applied.

                  "GOVERNMENTAL  AUTHORITY" shall mean any nation or government,
any state or other  political  subdivision  thereof,  and any entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government.

                  "HAZARDOUS   SUBSTANCE"  means  those  substances  defined  as
hazardous  substances in 42 U.S.C. ss. 9601(14) and all other substances defined
as hazardous under other applicable Laws.


                                       3
<PAGE>


                  "IP"  shall mean any and all United  States and  foreign:  (a)
patents  (including design patents,  industrial  designs and utility models) and
patent  applications  (including  docketed patent  disclosures  awaiting filing,
reissues, divisions,  continuations-in-part and extensions),  patent disclosures
awaiting  filing   determination,   inventions  and  improvements  thereto;  (b)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans, and registrations and applications for registration thereof; (c)
copyrights  (including  software) and  registrations  thereof;  (d)  inventions,
processes,  designs,  formulae,  trade  secrets,  know-how,  industrial  models,
confidential and technical information, manufacturing, engineering and technical
drawings,  product  specifications and confidential  business  information;  (e)
intellectual property rights similar to any of the foregoing; and (f) copies and
tangible  embodiments thereof (in whatever form or medium,  including electronic
media).

                  "LAW" shall mean any  federal,  state or local  statute,  law,
rule,  regulation,  ordinance,  order,  code,  policy or rule of common  law, in
effect as of the date hereof and as amended,  and any judicial or administrative
interpretation thereof by a Governmental  Authority or otherwise,  including any
judicial or administrative order, consent, decree or judgment.

                  "LIEN"  shall  mean  any  charge,  equitable  interest,  lien,
mortgage,  easement,  right-of-way,  pledge, security interest, or other similar
interest or right.

                  "MEMBERSHIP  INTERESTS"  means an  ownership  interest  in Big
Seven, which includes a member's share of the profits and losses of Big Seven, a
member's right to receive  distributions of Big Seven's assets, a member's right
to vote or  participate  in the  management of Big Seven as permitted  under Big
Seven's Organizational Documents, and a member's right to information concerning
the business and affairs of Big Seven, as provided in Big Seven's Organizational
Documents  and under the  provisions  of the  Beverly-Killea  Limited  Liability
Company Act.

                  "ORDER" means any order, judgment,  injunction, award, decree,
writ, or similar action of any Governmental Authority.

                  "ORGANIZATIONAL    DOCUMENTS"    means   the    articles    of
incorporation,  certificate  of  incorporation,  charter,  bylaws,  articles  of
formation, regulations, operating agreement, certificate of limited partnership,
partnership  agreement,   and  all  other  similar  documents,   instruments  or
certificates  executed,  adopted,  or filed  in  connection  with the  creation,
formation, or organization of a Person, including any amendments thereto.

                  "PERSON"   shall  mean  an   individual   or  a   partnership,
corporation,   trust,  association,   limited  liability  company,  Governmental
Authority or other entity.

                  "SECURITIES REPORTS" shall mean all reports,  proxy statements
or registration  statements (and all of the exhibits to any of the foregoing) of
BDE filed with the Securities  Exchange  Commission under Section 13 or 15(d) of
the Securities  Exchange Act of 1934, as amended,  or the Securities Act of 1933
or the rules or regulations promulgated thereunder.

                  "SUBSIDIARY"  of any  Person  shall  mean any  entity of which
securities or other ownership  interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are owned directly or indirectly by such Person.


                                       4
<PAGE>


                  "TAX" or  "TAXES"  mean all  taxes,  charges,  fees,  imposts,
levies or other  assessments,  including,  without  limitation,  all net income,
gross  receipts,  sales,  use, AD VALOREM,  value  added,  transfer,  franchise,
profits, inventory,  capital stock, license,  withholding,  payroll, employment,
social  security,  unemployment,   excise,  severance,  stamp,  occupation,  and
property  taxes,  customs  duties,  fees,  assessments  and  charges of any kind
whatsoever,  together with any interest and any  penalties,  additions to tax or
additional  amounts  imposed by any taxing  authority  (domestic or foreign) and
shall include any transferee liability in respect of Taxes.

                  "TAX RETURN" or "TAX RETURNS" mean all returns,  declarations,
reports,  estimates,  information returns and statements required to be filed in
respect of any Taxes.

                  "TRANSFER" shall mean sell, assign, transfer,  pledge, grant a
security  interest in, or otherwise  dispose of, with or without  consideration,
and "TRANSFERRED" shall have a correlative meaning.

                  1.2      OTHER DEFINITIONS. The following terms shall have the
meanings given the terms in the Sections set forth below:

            TERM                                                         SECTION
            ----                                                         -------

            Code....................................................       10.19
            Common Stock............................................        2.0
            Claim...................................................       16.5
            Claim Notice............................................       16.5
            Big Seven Plans.........................................       10.19
            Damages.................................................       16.2
            Direct Claim............................................       16.5
            Disclosure Letter.......................................        9.0
            Escrow Agreement........................................        2.0
            General Release.........................................       14.4
            Indemnified Party.......................................       16.5
            Indemnifying Party......................................       16.5
            Leased Real Property....................................       10.13
            Non-Competition Agreement...............................        2.0
            Notices.................................................       17.1
            BDE Indemnified Party...................................       16.2
            BDE Indemnified Parties.................................       16.2
            Real Property Leases....................................       10.13
            Securities Act..........................................        9.4
            M. Toibb Indemnified Parties............................       16.3


                                       5
<PAGE>


            TERM                                                         SECTION
            ----                                                         -------

            M. Toibb Indemnified Party..............................       16.3
            Third Party Claim.......................................       16.5

         2.       DELIVERIES TO ESCROW.

                  Concurrent  with the execution and delivery of this Agreement,
M. Toibb shall  deliver to Escrow  Holder,  evidence of  ownership of all of the
outstanding  Membership Interests in Big Seven which shall be held by the Escrow
Holder for delivery to BDE in  accordance  with the terms of this  Agreement and
that certain Escrow  Agreement by and among BDE, Big Seven and M. Toibb dated of
even date herewith and attached hereto as Exhibit A (the "ESCROW  AGREEMENT") on
a date one year from the date of this  Agreement  unless an earlier  delivery is
made in accordance  with the terms of this  Agreement and the Escrow  Agreement,
and BDE shall deliver to Escrow Holder a stock certificate of BDE, registered in
the name of BDE, evidencing 6,666,667 treasury shares of Common Stock, par value
$.001  per  share,  of BDE,  accompanied  by a stock  assignment  separate  from
certificate providing for the transfer of the treasury shares to M. Toibb, which
treasury shares and stock assignment shall be held by Escrow Holder for delivery
to M.  Toibb in  accordance  with the  terms of this  Agreement  and the  Escrow
Agreement (the  "ESCROWED  COMMON  STOCK")  (unless BDE elects,  pursuant to the
terms of the Escrow  Agreement,  to exchange all or part of the Common Stock for
cash in the amount of Fifteen  Cents  ($0.15) per share (as  adjusted  for stock
splits,  reverse  stock  splits,  etc.),  in which  event  such cash shall be so
delivered to M. Toibb in lieu of the  substituted  shares of Common  Stock) on a
date one year from the date of this Agreement unless an earlier delivery is made
in accordance with the terms of this Agreement and the Escrow Agreement.  In the
event that either of the deliveries to Escrow Holder,  described in this Section
2 of this Agreement and the Escrow  Agreement,  is not timely made in the manner
described herein and in the Escrow Agreement, this Agreement shall be terminated
and be void  AB  INITIO  and  shall  be of no  force  or  effect  and all  other
agreements which are  contemplated by this Agreement,  including but not limited
to (i) the  Non-Competition  Agreement  by and between BDE and M. Toibb dated of
even  date  herewith  and  attached  hereto as  Exhibit B (the  "NON-COMPETITION
AGREEMENT"), and (ii) any releases or covenants not to sue or similar agreements
such as the Mutual  General  Release by and among BDE,  Altnet,  Detershan,  Big
Seven and M. Toibb dated of even date herewith and attached  hereto as Exhibit C
(the "MUTUAL GENERAL RELEASE"),  shall be terminated  automatically  without any
action  required  on  the  part  of any  party  hereto  or  thereto.  Absent  an
intervening event expressly  described in this Agreement or the Escrow Agreement
as having a contrary effect or an accelerating  effect, the Common Stock and the
Membership  Interests  shall be delivered  by the Escrow  Holder to M. Toibb and
BDE,  respectively,  on the  date  which  is one  year  after  the  date of this
Agreement.

         3.       BIG SEVEN OPERATIONS.

                  From and after the date of this Agreement,  so long as none of
BDE,  Altnet,  Detershan or their  Affiliates has breached any provision of this
Agreement, the Escrow Agreement, or any agreement contemplated by this Agreement
until the earlier of (i) the  termination  of the Escrow and the  delivery to M.
Toibb of the Common Stock and to BDE of the  Membership  Interests in Big Seven,
in accordance  with the terms of this Agreement and the Escrow  Agreement;  (ii)
the sale of all or substantially all of the assets of Big Seven arranged by BDE;
or (iii) the  consummation  of a business  combination  of Big Seven and another
Person,  (irrespective of whether Big Seven is the surviving entity) arranged by
BDE, BDE or a Subsidiary of BDE shall have all rights to operate  (including the
right to appoint the manager and  officers  and other  employees  of Big Seven),
terminate,  or to arrange for the sale of and sell all or


                                       6
<PAGE>


substantially all the operations and assets (including  contracts) of Big Seven,
and M. Toibb, in his capacity as a member of Big Seven or otherwise,  shall have
no such rights. From and after the date of this Agreement,  as among BDE and its
affiliates,  on the one hand, and M. Toibb, on the other, BDE or a Subsidiary of
BDE shall have the sole  right to all  profits  and BDE and any such  Subsidiary
shall  have  the  sole  obligation  for  all  liabilities  arising  directly  or
indirectly from the operations of Big Seven, and M. Toibb shall have no right to
any such profits and none of any such liabilities.

                  SUBJECT TO THE TERMS OF SECTION 3 OF THIS AGREEMENT,  M. TOIBB
HEREBY EXPRESSLY AND IRREVOCABLY  APPOINTS BDE AND ITS SUCCESSORS AND ASSIGNS AS
M. TOIBB'S PROXY AND  ATTORNEY-IN-FACT  TO VOTE M. TOIBB'S MEMBERSHIP  INTERESTS
AND OTHER VOTING  SECURITIES OF BIG SEVEN AND TAKE ANY AND ALL SUCH OTHER ACTION
THAT M.  TOIBB  COULD TAKE IN HIS  CAPACITY  AS A MEMBER OF BIG SEVEN AS BDE MAY
DIRECT IN CONNECTION WITH A TRANSACTION EFFECTED IN ACCORDANCE WITH THIS SECTION
3. SUCH  APPOINTMENT  OF BDE AS PROXY AND  ATTORNEY-IN-FACT  IS COUPLED  WITH AN
INTEREST AND SHALL BE VALID UNTIL TERMINATION OF THIS AGREEMENT.

         4.       PROCEEDS FROM THE SALE OR OTHER  BUSINESS  COMBINATION  OF BIG
                  SEVEN.

                  Any proceeds which are received from the sale of the assets or
other business  combination of Big Seven during the term of the Escrow Agreement
and for the twelve (12) month period  following  the  termination  of the Escrow
Agreement as contemplated herein and in the Escrow Agreement, shall be allocated
and  paid as  follows:  (i) the  first  $1,000,000  (i.e.,  proceeds  from $0 to
$1,000,000)  of such proceeds  shall be allocated and paid to BDE; (ii) the next
$180,000 of such proceeds (i.e.,  proceeds from $1,000,001 to $1,180,000)  shall
be  allocated  and paid to M. Toibb;  and (iii) all  remaining  proceeds  (i.e.,
proceeds in excess of $1,180,000) shall be allocated and paid to BDE;  provided,
however, that, at such time as such sale or business combination is consummated,
BDE  agrees to cause the Escrow  Holder to deliver to M. Toibb the Common  Stock
(unless  BDE  elects  the cash  payment  alternative  set  forth  in the  Escrow
Agreement,  in which  event BDE shall  cause the Escrow  Holder to deliver  such
cash),  and such  delivery  shall be a  condition  to the  consummation  of such
transaction.

         5.       MANAGEMENT FEE.

                  During the period  commencing on the date of execution of this
Agreement  and  ending  on the  earlier  of (i) one  year  from the date of this
Agreement,  (ii) the  termination  of this Agreement  pursuant to its terms,  or
(iii) the  termination  of the  Escrow  Agreement,  BDE  shall  pay to M.  Toibb
monthly,  on the last day of each  calendar  month  (commencing  with the  month
during which this  Agreement is executed  and  delivered,  and pro rated for any
partial month),  a management fee in the cash amount of Fifteen Thousand Dollars
($15,000).

         6.       OPERATING INDEMNIFICATION AND INSURANCE.

                  BDE and  Altnet  shall  indemnify  M.  Toibb  from any and all
losses,  Damages  or  other  liabilities,  costs  and  expenses  which  he might
otherwise  suffer or incur  from  action or


                                       7
<PAGE>


inaction  by BDE or its  Affiliates  during  the period of time that BDE has the
right to  operate,  terminate  or cause the sale of Big Seven and its  assets or
operations,  all as set forth more fully in SECTION 16.3 of this  Agreement  and
BDE shall use its commercially  reasonable efforts to, no later than thirty days
following the date hereof,  obtain an insurance policy insuring M. Toibb against
losses or damages arising from such action or inaction by BDE, its Affiliates or
M. Toibb for a period of time  commencing on the date of such  insurance  policy
and  expiring  not earlier  than the date upon which the statute of  limitations
expires with respect to any judicial or quasi-judicial  action that may be taken
against M. Toibb with respect to the foregoing,  which insurance policy shall be
of a type and in an amount reasonably satisfactory to M. Toibb.  Notwithstanding
the  foregoing,  BDE shall not be  required  to spend more than  Forty  Thousand
Dollars  ($40,000) per annum for such insurance  policy,  and to the extent such
insurance policy costs more than Forty Thousand Dollars  ($40,000) per annum, it
shall be a condition to BDE's  obligation to obtain such insurance that M. Toibb
pay the additional amount. Alternatively, for each year that BDE is obligated to
provide such insurance,  and solely at the election of M. Toibb,  for any reason
or no reason,  M. Toibb may seek to obtain,  and may obtain  such  insurance  or
similar  insurance from a different  carrier,  the terms and conditions of which
shall be to the sole satisfaction of M Toibb and BDE shall pay to M Toibb or, at
his request,  directly to the insurance  company of M Toibb's choice, on written
notice to BDE that M Toibb has determined to obtain such alternative  insurance,
within a sufficient  time period to allow M Toibb to make any necessary  payment
to bind such insurance or pay any premium  thereon.  Upon such notice to BDE and
the  payment  by BDE of  Forty  Thousand  Dollars  ($40,000)  to M Toibb  or the
insurance  company  of his  choice  as  directed  by M Toibb,  then BDE shall be
relieved of its  responsibility to obtain insurance for such year until the time
for the annual  renewal of such insurance  policy,  at which time BDE shall have
the  obligations  set forth above with respect to such ensuing year and for each
year thereafter  until the passage of the statute of limitations with respect to
an claim which be made against M. Toibb as set forth above.

         7.       DELIVERIES.

                  Concurrent  with the execution and delivery of this Agreement,
(i) BDE shall deliver to Big Seven and M. Toibb such  documents and  instruments
as such persons may reasonably request to evidence the satisfaction of all terms
of this  Agreement;  and (ii) Big Seven or M. Toibb,  as the case may be,  shall
deliver or cause to be  delivered  to BDE the  resignation,  effective as of the
date of this Agreement,  of Big Seven's manager,  the appointment of Mark Miller
as Big Seven's manager, and such documents and instruments as BDE may reasonably
request to evidence the satisfaction of all the terms of this Agreement.

         8.       FURTHER ASSURANCES.

                  From and after the date of this Agreement,  each party to this
Agreement shall deliver or cause to be delivered,  as appropriate,  such further
certificates,  consents and other documents as may be necessary to carry out the
terms of this Agreement.

         9.       REPRESENTATIONS AND WARRANTIES OF M. TOIBB.

                  Except as set forth in the disclosure  letter  delivered by M.
Toibb to BDE  concurrently  with the execution  and delivery of this  Agreement,
which  letter  shall  refer to the


                                       8
<PAGE>


relevant  Sections  of  this  Agreement  (the  "DISCLOSURE  LETTER"),  M.  Toibb
represents and warrants to BDE as follows:

                  9.1      TITLE TO MEMBERSHIP  INTERESTS.  M. Toibb is the sole
owner,  beneficially and of record, and has good and marketable title to, all of
the  Membership  Interests,  free and clear of all Liens (other than  applicable
restrictions  generally  imposed by the securities laws of the United States and
the  various  states).  On delivery to the Escrow  Holder of the  Assignment  of
Membership  Interests  of Big Seven,  duly  executed by M. Toibb for transfer to
BDE,  title to all of the  Membership  Interests  of Big Seven  will be free and
clear of any Liens (other than applicable  restrictions generally imposed by the
securities  laws of the  United  States  and the  various  states).  M.  Toibb's
Membership  Interests  are not subject to any purchase  option,  call,  right of
first refusal, subscription or similar right under any provision of any Contract
to which M.  Toibb is a party or by or to which M. Toibb or any of its assets or
properties  may be bound or subject or otherwise.  Other than this Agreement and
the Escrow  Agreement,  M. Toibb's  Membership  Interests are not subject to any
voting  trust  agreement  or any  other  Contract,  arrangement,  commitment  or
understanding,  including any Contract  restricting or otherwise relating to the
voting, dividend rights or disposition of the Membership Interests. M. Toibb has
no  outstanding  contractual  obligations  or rights to  purchase  or  otherwise
acquire, whether from Big Seven or otherwise, any Equity Interests of Big Seven.

                  9.2      AUTHORITY AND CAPACITY;  ENFORCEABILITY. M. Toibb has
the full  capacity and  authority  required to execute,  deliver and perform his
obligations under this Agreement and to consummate the transactions contemplated
by this  Agreement.  This  Agreement  constitutes  a valid and  legally  binding
obligation  of M. Toibb,  enforceable  against M. Toibb in  accordance  with its
terms,  except as  enforceability  may be limited  by the effect of  bankruptcy,
insolvency, reorganization,  moratorium, fraudulent conveyance and other similar
laws relating to or affecting  creditors' rights generally,  or the availability
of equitable remedies.

                  9.3      NO CONFLICTS. The execution, delivery and performance
by M. Toibb of this  Agreement  and each other  agreement  and  assignment to be
delivered by M. Toibb  pursuant to this  Agreement,  the  compliance by M. Toibb
with the terms and  provisions  hereof and thereof and the  consummation  of the
transactions  contemplated  hereby and thereby  will not (i) require M. Toibb to
obtain any  consent,  approval or action of, or make any filing with or give any
notice to, any Governmental Authority or any Person; (ii) violate, conflict with
or  result  in the  breach  of  any  of  the  terms  of,  result  in a  material
modification or  acceleration of the effect of,  otherwise cause the termination
of or give any other  contracting  party the  right to  terminate  or a right of
first  refusal,  or  constitute  (or  with  notice  or  lapse  of time or  both,
constitute) a default under,  any Contract to which M. Toibb is a party or by or
to which M. Toibb or any of M. Toibb's  respective  assets or properties  may be
bound or  subject,  or result  in the  creation  of any Lien upon the  assets or
properties of M. Toibb pursuant to the terms of any of these Contracts; or (iii)
violate any Law or Order against, or binding upon, M. Toibb or any of M. Toibb's
respective assets or properties.

                  9.4      PURCHASE FOR  INVESTMENT.  M. Toibb is acquiring  the
Common  Stock for  investment  purposes  only and not with a view to the sale or
distribution  thereof in violation of any applicable federal or state securities
laws.  M. Toibb  acknowledges  that the Common  Stock to be acquired by M. Toibb
pursuant to this Agreement is not  registered  under the Securities Act


                                       9
<PAGE>


of 1933,  as amended  (the  "SECURITIES  ACT") and  cannot be sold or  otherwise
disposed of except in compliance  with the Securities Act or in reliance upon an
exemption from the Securities Act. M. Toibb acknowledges that the certificate(s)
representing the Common Stock shall bear a legend in substantially the following
form:

         "THE SECURITIES  EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE U.S.  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
         ACT"), OR ANY OTHER APPLICABLE  SECURITIES LAWS AND HAVE BEEN ISSUED IN
         RELIANCE UPON AN EXEMPTION FROM THE  REGISTRATION  REQUIREMENTS  OF THE
         SECURITIES ACT AND SUCH OTHER  SECURITIES  LAWS.  NEITHER THIS SECURITY
         NOR ANY  INTEREST  OR  PARTICIPATION  HEREIN  MAY BE  REOFFERED,  SOLD,
         ASSIGNED, TRANSFERRED,  PLEDGED, ENCUMBERED,  HYPOTHECATED OR OTHERWISE
         DISPOSED OF,  EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT
         UNDER THE  SECURITIES  ACT OR PURSUANT TO A TRANSACTION  THAT IS EXEMPT
         FROM, OR NOT SUBJECT TO, SUCH REGISTRATION."

                  9.5      ACCREDITED  INVESTOR.  M.  Toibb  is  an  "accredited
investor"  as that  term is  defined  in Rule  501(a) of the  General  Rules and
Regulations under the Securities Act.

                  9.6      NO CONSENTS  REQUIRED.  To the Best  Knowledge  of M.
Toibb,  there are no Permits or other  actions of, or filings  with,  any Person
required of M. Toibb in connection  with the execution of, and the  consummation
of the transactions contemplated by, this Agreement or any other agreement to be
delivered  by M.  Toibb  pursuant  to this  Agreement  that Big  Seven or BDE is
obligated to pay.

                  9.7      BROKERS.  M.  Toibb  has not  retained  or  otherwise
engaged or employed any broker, finder or any other person, or paid or agreed to
pay any fee or commission to any agent,  broker,  finder or other person, for or
on account of acting as a finder or broker in connection  with this Agreement or
the transactions  contemplated hereby that Big Seven or BDE is obligated to pay.
Notwithstanding the foregoing, M. Toibb agrees to pay any such fees, should such
fees  be  incurred  in  connection  with  this  Agreement  or  the  transactions
contemplated hereby.

         10.      REPRESENTATIONS AND WARRANTIES OF M. TOIBB ABOUT BIG SEVEN.

                  Except  as set  forth  in the  Disclosure  Letter,  M.  Toibb,
represents and warrants to BDE as follows:

                  10.1     ORGANIZATION, STANDING AND CORPORATE POWER. Big Seven
is a limited liability company corporation duly organized, validly existing, and
in good standing  under the Laws of the State of  California.  Big Seven has the
requisite  power and authority  necessary to own or lease its  properties and to
carry on its  businesses as currently  conducted.  Big Seven is not in breach of
any provision of its  Organizational  Documents.  There is no written  Operating
Agreement  of Big  Seven.  There is no  pending  or  threatened  Action  for the
dissolution,  liquidation, insolvency, or rehabilitation of Big Seven. Big Seven
is qualified,  licensed or domesticated as a foreign corporation or other entity
in  all  jurisdictions  where  the  failure  to be  so


                                       10
<PAGE>


qualified,  licensed or  domesticated  as a foreign  corporation or other entity
could have a material adverse effect on the Business Condition of Big Seven. The
Articles of  Organization of Big Seven were filed with the Secretary of State of
the State of California on February 28, 2003.

                  Prior  to the  execution  of  this  Agreement,  M.  Toibb  has
delivered  to BDE or its  attorneys  true and  complete  copies  of Big  Seven's
Organizational Documents, each as amended to date.

                  10.2     MEMBERSHIP INTERESTS. M. Toibb's Membership Interests
represent  100% of the Equity  Interests in and to Big Seven.  All of M. Toibb's
Membership  Interests have been duly  authorized and are validly  issued,  fully
paid  and  non-assessable.   There  are  no  Certificates  which  represent  the
Membership Interests. There are no Commitments of Big Seven outstanding or other
rights  outstanding  that give any Person the right to receive  any  benefits or
rights  similar to any rights  enjoyed by or  accruing  to the holders of Equity
Interests Big Seven.  There are no options,  warrants,  agreements,  convertible
securities,  exchangeable  securities,  commitments or other rights  outstanding
pursuant  to which Big Seven may  become  obligated  to  purchase  or redeem any
shares  of  capital  stock  or  other  securities  of Big  Seven.  There  are no
outstanding bonds,  debentures,  notes or other indebtedness having the right to
vote on any  matters on which Big  Seven's  members  or  managers  may vote.  M.
Toibb's  Membership  Interests  have not been  issued in  violation  of,  and M.
Toibb's  Membership  Interests  are not subject to, any purchase  option,  call,
right of first refusal,  preemptive  right,  subscription or similar right under
any  provision of  applicable  law, Big Seven's  Organizational  Documents,  any
Contract to which Big Seven is a party or by or to which Big Seven or any of its
assets or properties may be bound or subject or otherwise.

                  10.3     SUBSIDIARIES;  OTHER  INTERESTS.  Big Seven  does not
control,  directly  or  indirectly,   any  other  Person  or  own,  directly  or
indirectly, any shares of capital stock or other securities of any other Person.
Big Seven does not have any Subsidiaries.

                  10.4     FINANCIAL STATEMENTS.

                           10.4.1   Big  Seven  has  no  Financial   Statements.

                           10.4.2   As of the date of this Agreement,  Big Seven
does  not have any  material  liabilities,  obligations  or  commitments  of any
nature,  whether  accrued,  absolute,   contingent  or  otherwise,   matured  or
unmatured, which have not been disclosed to BDE in the Disclosure Letter.


                                       11
<PAGE>


                  10.5     COMPLIANCE  WITH LAWS AND OTHER  INSTRUMENTS.  To the
Best Knowledge of M. Toibb, Big Seven and its manager, are and at all times have
been in compliance in all material respects with (i) Big Seven's  Organizational
Documents,  and (ii) all applicable Laws and Orders relating to Big Seven or the
conduct of its business or operations or the use of its assets or properties. To
the Best  Knowledge of M. Toibb,  there are no bases or grounds for any Material
Action  with  respect to Big Seven  relating  to, or arising  under,  any Law or
Order,  and Big Seven has not  received and does not know of the issuance of any
written notice of any violation or alleged  violation of any Law or Order by any
Governmental Authority.

                  10.6     CONTRACTS.  The Disclosure Letter contains a true and
complete  list of all  Contracts to which Big Seven is a party or by or to which
any of its assets or properties are bound or subject. Big Seven has delivered or
made available to BDE true and complete copies of all of the Contracts set forth
in the Disclosure  Letter.  Except as set forth in the Disclosure Letter, all of
the Contracts  referred to in the  Disclosure  Letter are valid and binding upon
Big Seven and, to the Best  Knowledge of M. Toibb,  on the other  parties to the
Contracts in accordance with their terms.  Except as set forth in the Disclosure
Letter,  Big Seven is not in default in any  material  respect  under any of the
Contracts,  nor to the Best Knowledge of M. Toibb does any condition  exist that
with notice or lapse of time or both would  constitute a material  default under
any  Contract  or that  would  give to any  party to any  Contract  any right of
termination,  first refusal,  cancellation,  acceleration or modification of any
Contract. Except as set forth in the Disclosure Letter, to the Best Knowledge of
M. Toibb, no other party to any Contract is in default under any Contract in any
material  respect nor does any condition exist that with notice or lapse of time
or both would constitute a material default under any Contract.

                  10.7     NO CONFLICTS. The execution, delivery and performance

by M. Toibb of this  Agreement  and each other  agreement  to be delivered by M.
Toibb pursuant to this Agreement,  the compliance by M. Toibb with the terms and
provisions   hereof  and  thereof  and  the  consummation  of  the  transactions
contemplated  hereby and  thereby  will not (i)  require Big Seven to obtain any
consent,  approval  or action of, or make any filing with or give any notice to,
any  Governmental  Authority or any Person;  (ii)  violate or conflict  with Big
Seven's Organizational Documents;  (iii) violate, conflict with or result in the
material  breach of any of the terms of,  result in a material  modification  or
acceleration  of the effect of,  otherwise  cause the termination of or give any
other contracting  party the right to terminate or a right of first refusal,  or
constitute  (or with  notice or lapse of time or both,  constitute)  a  material
default under, any Contract, or result in the creation of any material Lien upon
the assets or properties of Big Seven pursuant to the terms of any Contract;  or
(iv) violate,  in any material  respect,  any Law or Order  against,  or binding
upon, Big Seven or any of its material assets or properties.

                  10.8     LITIGATION  AND  PROCEEDINGS.  Except as set forth in
the  Disclosure  Letter,  there is no pending  or, to the Best  Knowledge  of M.
Toibb, threatened Action (or basis for any Action) to which Big Seven is a party
or  involving  any of Big  Seven's  assets or  properties,  and Big Seven is not
subject to any Order.


                                       12
<PAGE>


                  10.9     INVENTORY. Big Seven has no inventory.

                  10.10    ACCOUNTS  RECEIVABLE.  Except  as  set  forth  in the
Disclosure Letter, Big Seven has no accounts receivable.

                  10.11    CONDUCT OF BUSINESS.  Since February 28, 2003, except
for this Agreement and changes  contemplated  by this  Agreement,  Big Seven has
conducted its business only in the ordinary course of business and there has not
been any: (i) purchase, redemption, retirement or other acquisition by Big Seven
of any  Equity  Interests  of Big  Seven;  (ii)  declaration  or  payment of any
dividend or other  distribution or payment to any member of Big Seven in respect
of any  Equity  Interests  of Big  Seven;  (iii)  increase  by Big  Seven in the
compensation  payable or to become payable by Big Seven to any member,  manager,
officer or employee of Big Seven being paid $35,000 or more; (iv) payment of any
bonus,  pension,  retirement or insurance  payment or arrangement to or with, or
advance  or loan of any money to,  any  Person,  or entry  into any  employment,
severance,  loan or similar  Contract  with any  Person,  except for  employment
agreements  entered into in the ordinary course of business with Persons who are
not  executive  officers of Big Seven and who do not receive,  on an  annualized
basis,  base  compensation in excess of $35,000;  (v) incurrence by Big Seven of
any  indebtedness or trade payables other than  indebtedness  and trade payables
incurred by Big Seven in the ordinary  course of business;  or (vi)  Transfer or
lease of any assets to, or entry into any  agreement  or  arrangement  with,  an
Affiliate  of Big Seven  (other  than  payment of  salaries  to  officers in the
ordinary  course of business and consistent  with past practice) or any of their
respective Affiliates.

                  10.12    ASSETS.  Except for Liens set forth on the Disclosure
Letter,  Big Seven has good and marketable  title, or leasehold  interests in or
legal right to use, all of its assets, in each case free and clear of any Liens,
other than (A) Liens for current taxes not yet delinquent,  (B) Liens imposed by
Law, (C) easements and  restrictions  which are neither  individually nor in the
aggregate  material  to Big  Seven,  or (D) Liens  disclosed  in the  Disclosure
Letter. Each item of material tangible personal property of Big Seven is in good
operating  condition  and  repair,  ordinary  wear  and tear  excepted,  for the
requirements of the business of Big Seven as currently conducted.

                  10.13    REAL  PROPERTY.  Big Seven  does not own or lease any
real property.


                                       13
<PAGE>


                  10.14    INSURANCE. Big Seven has no policies of insurance.

                  10.15    TAX MATTERS.  Big Seven (i) has prepared and duly and
timely  filed all Tax Returns  required to be filed  (subject to any  extensions
applicable to the Tax Return,  which  extensions are described in the Disclosure
Letter) and all of these Tax Returns accurately reflect the Tax liability of Big
Seven in all material  respects  for the periods to which they relate,  (ii) has
paid all Taxes  shown to be due and  payable  on the Tax  Returns  or which have
become due and payable  pursuant to any assessment,  deficiency  notice,  30-day
letter, or other notice received by it, and (iii) has properly accrued all Taxes
for the  periods  subsequent  to the  periods  covered by the Tax  Returns.  Big
Seven's Tax Returns have not been examined by any appropriate  taxing authority.
Big Seven has not  executed or filed with the  Internal  Revenue  Service or any
other taxing  authority  any  agreement  now in effect  extending the period for
assessment or collection of any income or other Taxes.  Big Seven is not a party
to any pending action or proceeding by any Governmental Authority for assessment
or  collection  of Taxes,  and to the Best  Knowledge of M. Toibb,  no claim for
assessment or collection of Taxes has been asserted against Big Seven. Big Seven
has  delivered  or made  available  to BDE true and  correct  copies  of all Tax
Returns with respect to all of the tax years filed by Big Seven since  formation
and all communications  relating to these Tax Returns. All Taxes which Big Seven
is required to withhold or collect, including without limitation,  sales and use
taxes,  have been duly withheld or collected and, to the extent  required,  have
been paid over to the proper Governmental Authority.

                  10.16    INTELLECTUAL  PROPERTY.  Big  Seven  has no  patents,
trademarks or copyrights other than those (a) gained by the use of the name "Big
Seven"  and "Big  Seven  Entertainment"  in  commerce  and in the  course of its
business,  and (b) licensed/owed via registration of the following domain names:
kazaadult.com,  kazaadult.net,  kazaadult.org, kazaadult.tv, and kazaaadult.com.
Big Seven has not received any written notice of  infringement  or other written
complaint to the effect that Big Seven or any of its  Affiliates has violated or
infringed  the IP or  any  other  proprietary  rights  of  others.  To the  Best
Knowledge  of M.  Toibb,  neither  Big  Seven  nor  any  of its  Affiliates  has
wrongfully  Exploited any IP owned or licensed by any Person for which Big Seven
could  suffer any Damages,  and neither Big Seven nor any Person  employed by or
affiliated with Big Seven has violated any confidential  relationship which such
Person may have had with any third  party for which Big Seven  could  suffer any
Damages. Except as set forth in the Contracts, no royalties,  honoraria, damages
or fees are payable by Big Seven to other  Persons by reason of the ownership or
use by Big Seven of any IP. No Affiliate of Big Seven owns or holds, directly or
indirectly,  any interests in any Big Seven IP. To M. Toibb's Best Knowledge, no
Person has  interfered  with,  infringed  upon,  misappropriated,  or  otherwise
violated any IP right of Big Seven.  Big Seven has not Transferred to any Person
any right to Exploit any Big Seven IP.

                  10.17    PERMITS. To the Best Knowledge of M. Toibb, Big Seven
has all  Permits  that are  material  to the  conduct  of Big  Seven's  business
including,   without  limitation,   all  Permits  relating  to  compliance  with
Environmental  and Safety  Laws.  Big Seven has not received any notice from any
source to the effect  that there is lacking  any  material  Permit  required  in
connection  with the  current use or  operation  of the  assets,  properties  or
business of Big Seven.

                  10.18    ENVIRONMENTAL   COMPLIANCE   MATTERS.   To  the  Best
Knowledge of M. Toibb, Big Seven has complied in all material respects and is in
compliance in all material


                                       14
<PAGE>


respects  with  all  Environmental  and  Safety  Laws,  and to M.  Toibb's  Best
Knowledge,  no  facts,  events or  conditions  relating  to the past or  present
facilities,  properties  or  operations  of Big  Seven  will  give  rise  to any
liabilities  pursuant  to  Environmental  and Safety  Laws,  including,  without
limitation, any relating to onsite or offsite releases or threatened releases of
Hazardous  Substances,  personal  injury,  property damage or natural  resources
damage.

                  10.19    EMPLOYEE  BENEFITS.  Big  Seven has no plans or other
arrangements involving direct or indirect compensation or benefits to directors,
officers or  consultants  or  providing  employee  benefits to  employees of Big
Seven, including, without limitation, all "employee benefit plans" as defined in
Section 3(3) of ERISA, or all bonus,  stock option,  stock purchase,  incentive,
deferred  compensation,  supplemental  retirement,  severance  and other similar
fringe or employee  benefit  plans,  or  employment  or  executive  compensation
agreements (collectively, the "BIG SEVEN PLANS").

                  10.20    EMPLOYEE RELATIONS.  Big Seven never has employed any
person.

                  10.21    NO  CONSENTS   REQUIRED.   There  are  no  approvals,
authorizations,  consents,  orders or other  actions  of, or filings  with,  any
Person that are required to be obtained or made by Big Seven in connection  with
the execution of, and the consummation of the transactions  contemplated  under,
this Agreement or to permit the  continuation  of the  Contracts,  upon the same
terms and conditions as are contained in such Contracts,  following consummation
of the transactions contemplated by this Agreement.

                  10.22    BROKERS.  Big Seven  has not  retained  or  otherwise
engaged or employed any broker, finder or any other person, or paid or agreed to
pay any fee or commission to any agent,  broker,  finder or other person, for or
on account of acting as a finder or broker in connection  with this Agreement or
the transactions contemplated hereby.

         11.      REPRESENTATIONS AND WARRANTIES OF BDE.

                  BDE represents and warrants to M. Toibb as follows:

                  11.1     ORGANIZATION,  STANDING AND CORPORATE POWER. BDE is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all  requisite  corporate  power and  corporate
authority to own,  lease and operate its  properties  and assets and to carry on
its business as now being conducted.

                  11.2     AUTHORITY; ENFORCEABILITY; EFFECT OF AGREEMENT.

                           11.2.1   BDE has full  corporate  power and corporate
authority  to enter into,  execute and deliver  this  Agreement  and perform its
obligations hereunder.  This Agreement has been duly authorized by all necessary
corporate  action of BDE. This Agreement has been duly executed and delivered by
BDE and  constitutes  a  valid  and  legally  binding  obligation  of BDE and is
enforceable  against BDE in accordance with its terms,  subject to the effect of
bankruptcy,  insolvency,  reorganization,  moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally,  or the
availability of equitable remedies.


                                       15
<PAGE>


                           11.2.2   The  execution  and  delivery by BDE of this
Agreement do not, and compliance by BDE with the provisions hereof will not, (A)
conflict  with  or  result  in a  breach  or  default  under  any of the  terms,
conditions or  provisions of any Contract to which BDE or any of its  Affiliates
is a party or otherwise  bound,  or to which any asset or property of BDE or any
of its Affiliates is subject; or (B) violate any Law applicable to BDE or any of
its  Affiliates;  or (C) result in the creation or imposition of any Lien on any
asset of BDE or any of its Affiliates.

                  11.3     BROKERS. BDE has not retained or otherwise engaged or
employed any broker,  finder or any other  person,  or paid or agreed to pay any
fee or  commission  to any  agent,  broker,  finder or other  person,  for or on
account of acting as a finder or broker in connection with this Agreement or the
transactions contemplated hereby.

                  11.4     NO  CONSENTS   REQUIRED.   There  are  no  approvals,
authorizations,  consents,  orders or other  actions  of, or filings  with,  any
Person that are  required to be obtained or made by BDE in  connection  with the
execution of, and the consummation of the transactions  contemplated under, this
Agreement,  including,  without limitation, the effective payment to M. Toibb of
the Purchase Price for the Membership Interests.

                  11.5     SECURITIES  REPORTS.  All Securities Reports filed or
required  to be filed by BDE from and after  January  1,  2003  have been  filed
timely and none of such reports contain any untrue  statement of a material fact
or omit to state a fact necessary to make any of the statements  made therein be
not  misleading.  All such  reports  comply in all  material  respects  with the
requirements of applicable federal and state securities laws.

         12.      REPRESENTATIONS AND WARRANTIES OF ALTNET.

                  Altnet represents and warrants to M. Toibb as follows:

                  12.1     ORGANIZATION, STANDING AND CORPORATE POWER. Altnet is
a corporation  duly organized,  validly  existing and in good standing under the
laws of the  State  of  Delaware  and  has all  requisite  corporate  power  and
corporate  authority to own,  lease and operate its properties and assets and to
carry on its business as now being conducted.

                  12.2     AUTHORITY; ENFORCEABILITY; EFFECT OF AGREEMENT.

                           12.2.1   Altnet   has  full   corporate   power   and
corporate  authority  to enter  into,  execute and deliver  this  Agreement  and
perform its  obligations  hereunder.  This Agreement has been duly authorized by
all necessary  corporate action of Altnet. This Agreement has been duly executed
and delivered by Altnet and constitutes a valid and legally  binding  obligation
of Altnet  and is  enforceable  against  Altnet in  accordance  with its  terms,
subject to the effect of  bankruptcy,  insolvency,  reorganization,  moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally, or the availability of equitable remedies.

                           12.2.2   The execution and delivery by Altnet of this
Agreement do not, and compliance by Altnet with the provisions  hereof will not,
(A)  conflict  with or  result in a breach or  default  under any of the  terms,
conditions or provisions of any Contract to which Altnet is a party or otherwise
bound,  or to which any asset or property  of Altnet is subject;  or


                                       16
<PAGE>


(B)  violate  any Law  applicable  to Altnet;  or (C) result in the  creation or
imposition of any Lien on any asset of Altnet.

                  12.3     BROKERS. Altnet has not retained or otherwise engaged
or employed any broker, finder or any other person, or paid or agreed to pay any
fee or  commission  to any  agent,  broker,  finder or other  person,  for or on
account of acting as a finder or broker in connection with this Agreement or the
transactions contemplated hereby.

                  12.4     NO  CONSENTS   REQUIRED.   There  are  no  approvals,
authorizations,  consents,  orders or other  actions  of, or filings  with,  any
Person that are required to be obtained or made by Altnet in connection with the
execution of, and the consummation of the transactions  contemplated under, this
Agreement.

         13.      REPRESENTATIONS AND WARRANTIES OF DETERSHAN.

                  Detershan represents and warrants to M. Toibb as follows:

                  13.1     ORGANIZATION, STANDING AND CORPORATE POWER. Detershan
is a corporation duly organized, validly existing and in good standing under the
laws of Australia  and the State of California  and has all requisite  corporate
power and  corporate  authority  to own,  lease and operate its  properties  and
assets and to carry on its business as now being conducted.

                  13.2     AUTHORITY; ENFORCEABILITY; EFFECT OF AGREEMENT.

                           13.2.1   Detershan  has  full  corporate   power  and
corporate  authority  to enter  into,  execute and deliver  this  Agreement  and
perform its  obligations  hereunder.  This Agreement has been duly authorized by
all  necessary  corporate  action of  Detershan.  This  Agreement  has been duly
executed and delivered by Detershan and  constitutes a valid and legally binding
obligation of Detershan and is enforceable  against Detershan in accordance with
its  terms,  subject to the effect of  bankruptcy,  insolvency,  reorganization,
moratorium,  fraudulent  conveyance  and  other  similar  laws  relating  to  or
affecting  creditors'  rights  generally,   or  the  availability  of  equitable
remedies.

                           13.2.2   The  execution  and delivery by Detershan of
this Agreement do not, and  compliance by Detershan  with the provisions  hereof
will not,  (A) conflict  with or result in a breach or default  under any of the
terms, conditions or provisions of any Contract to which Detershan is a party or
otherwise  bound, or to which any asset or property of Detershan is subject;  or
(B) violate any Law  applicable to  Detershan;  or (C) result in the creation or
imposition of any Lien on any asset of Detershan.

                  13.3     BROKERS.  Detershan  has not  retained  or  otherwise
engaged or employed any broker, finder or any other person, or paid or agreed to
pay any fee or commission to any agent,  broker,  finder or other person, for or
on account of acting as a finder or broker in connection  with this Agreement or
the transactions contemplated hereby.

                  13.4     NO  CONSENTS   REQUIRED.   There  are  no  approvals,
authorizations,  consents,  orders or other  actions  of, or filings  with,  any
Person that are required to be obtained or made by


                                       17
<PAGE>


Detershan in  connection  with the  execution  of, and the  consummation  of the
transactions contemplated under, this Agreement.

         14.      CONDUCT AND TRANSACTIONS DURING THE ESCROW PERIOD.

                  14.1     CONDUCT OF BUSINESS.  During the period commencing on
the date of  execution  of this  Agreement  and ending on the earlier of (i) one
year from the date of this  Agreement,  (ii) the  termination  of this Agreement
pursuant to its terms,  or (iii) the  termination of the Escrow  Agreement,  BDE
shall:

                           14.1.1   not  Transfer or agree to cause the Transfer
of the Membership Interests (other than as contemplated by this Agreement);

                           14.1.2   not  cause or  permit  Big  Seven  to, or to
propose to, (a) amend Big Seven's Organizational  Documents,  (b) split, combine
or reclassify Big Seven's Equity  Interests or issue or authorize or propose the
issuance of any other  securities in respect of, in lieu of, or in  substitution
for, the Equity Interests,  or declare,  set aside or make any dividend or other
distribution  payable in cash, stock or property,  or (c) directly or indirectly
redeem,  purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any of Big Seven's Equity Interests;

                           14.1.3   not  cause or  permit  Big  Seven to  issue,
deliver or sell any Equity Interests of Big Seven (other than as contemplated by
this Agreement);

                           14.1.4   not cause or  permit  Big Seven to (A) adopt
any employee  benefit plan, (B) amend any employee benefit plan in a manner that
increases  the  benefits  thereunder  or (C) make any  loans to any  Person in a
manner  which  would  expose M.  Toibb to any  potential  liability  or  damages
whatsoever;

                           14.1.5   not  cause or  permit  Big Seven to incur or
assume any  liabilities,  obligations  or  indebtedness  for  borrowed  money or
guarantee any such  liabilities,  obligations or  indebtedness in a manner which
would expose M. Toibb to any potential liability or damages whatsoever;

                           14.1.6   not cause or permit Big Seven to sell, lease
or otherwise dispose of, or agree to sell, lease or otherwise dispose of, any of
its  assets,  other than as  contemplated  by this  Agreement  or which would be
undertaken in a manner which would expose M. Toibb to any potential liability or
damages whatsoever;

                           14.1.7   not  cause or permit  Big  Seven to  permit,
allow or suffer any of its assets to be subject to any Liens;

                           14.1.8   not  cause or  permit  Big  Seven to make or
agree to make any capital  expenditures  in a manner which would expose M. Toibb
to any potential liability or damages whatsoever;

                           14.1.9   not cause or  permit  Big Seven to incur any
fixed or contingent obligation or enter into any agreement,  commitment or other
transaction  or  arrangement  (other


                                       18
<PAGE>


than this Agreement and the documents and arrangements contemplated hereby) in a
manner  which  would  expose M.  Toibb to any  potential  liability  or  damages
whatsoever;

                           14.1.10  not cause or permit  Big Seven to enter into
any agreement,  arrangement or undertaking with respect to any employee relating
to the  payment of any bonus,  profit-sharing  or  special  compensation  or any
increase in the  compensation  payable to an employee (other than as required by
law or  contract)  in a manner  which  would  expose M.  Toibb to any  potential
liability or damages whatsoever;

                           14.1.11  not  cause  or  permit  Big  Seven  to sell,
assign,  license or transfer or agree to sell, assign, license or transfer (with
or  without  consideration)  any of Big Seven IP or any  interest  therein  in a
manner  which  would  expose M.  Toibb to any  potential  liability  or  damages
whatsoever;

                           14.1.12  not cause or permit  Big Seven to enter into
any  agreement,  arrangement  or  undertaking  with  M.  Toibb  or any of  their
respective  Affiliates  in a manner which would expose M. Toibb to any potential
liability or damages whatsoever;

                           14.1.13  not  cause or permit  Big Seven to  maintain
its respective  books,  records and accounts in the usual,  regular and ordinary
manner.

                           14.1.14  not cause or permit Big Seven to breach,  in
any material respect, any of the Contracts.

                  14.2     INSPECTION OF RECORDS.  During the Escrow Period,  M.
Toibb shall cause Big Seven to allow the duly  authorized  officers,  attorneys,
accountants and other  representatives  of BDE access at all reasonable times to
the records and files, correspondence,  audits and properties, as well as to all
information in each case relating the business and affairs of Big Seven.
                  14.3     RESIGNATION.  M.  Toibb  agrees  to  resign  from all

manager,  officer  and  other  positions  M.  Toibb  has with Big  Seven,  which
resignations  shall take effective  concurrently with the execution and delivery
of this Agreement.

                  14.4     RELEASE.  Concurrent  with the execution and delivery
of this Agreement,  each of M. Toibb, Big Seven, BDE, Altnet and Detershan shall
deliver  an  executed  copy of the Mutual  General  Release  attached  hereto as
EXHIBIT  C (the  "GENERAL  RELEASE")  whereby:  (a)  M.  Toibb  irrevocably  and
unconditionally  releases BDE, Altnet, Detershan and Big Seven and each of their
respective officers,  directors,  employees, agents and representatives from any
and all causes of action, Claims, actions or other Liabilities, known or unknown
(other than those  arising  under this  Agreement  or the  agreements  which are
exhibits hereto),  that M. Toibb may have against such parties, (b) BDE, Altnet,
Big Seven and Detershan  irrevocably and  unconditionally  release M. Toibb from
any and all causes of action,  Claims,  actions or other  Liabilities,  known or
unknown (other than those arising under this  Agreement or the agreements  which
are exhibits hereto) that BDE,  Altnet,  or Detershan may have against M. Toibb,
and  (c) M.  Toibb,  Big  Seven,  BDE,  Altnet  and  Detershan  irrevocably  and
unconditionally  release Harris Toibb from any and all causes of action, Claims,
actions or other  Liabilities,  known or unknown (other than those arising under
this Agreement or the agreements  which are exhibits


                                       19
<PAGE>


hereto) that M. Toibb,  Big Seven,  BDE,  Altnet or  Detershan  may have against
Harris Toibb solely to the extent related, directly or indirectly, to Big Seven.

                  14.5     NON-COMPETITION   AGREEMENT.   Concurrent   with  the
execution  and  delivery of this  Agreement,  M. Toibb  shall  deliver to BDE an
executed copy of the Non-Competition Agreement.

                    M. Toibb  shall not cause or permit any Lien to be unpaid on
the Membership Interests during the Escrow Period.

         15.      FURTHER AGREEMENTS OF THE PARTIES.

                  15.1     CONFIDENTIALITY.

                           15.1.1   The parties hereto hereby acknowledge to and
agree with the other that any and all  information  which has been  disclosed by
one  to the  other,  its  directors,  employees,  consultants,  agents  and,  if
applicable,  equity holders during the discussions and  negotiations  leading to
the execution of this  Agreement,  and all information to be disclosed by one to
the other, its directors, employees,  consultants and agents and, if applicable,
equity  holders,  during the period  commencing on the date of execution of this
Agreement  through  the  earlier of the  Escrow  Period or  termination  of this
Agreement,  shall constitute  confidential  information and trade secrets of the
disclosing party, and as such are secret, confidential and unique and constitute
the exclusive  trade secrets and property of such party.  Such  information  has
been made known and available to the other party and its  respective  employees,
consultants and agents strictly in connection with the negotiation and execution
of this Agreement and the consummation of the transactions  provided for herein.
Each party hereby acknowledges and agrees that any use or disclosure of any such
confidential   information  or  trade  secrets,  other  than  pursuant  to  this
Agreement,  would be wrongful and would cause  irreparable  injury to the other.
Accordingly, each party hereby expressly agrees, for itself and on behalf of its
shareholders  and  directors,  if any,  and its  principal  officers,  managers,
employees, agents, consultants and representatives, that it and they will not at
any time prior to the date of this Agreement or at any time  thereafter,  use or
disclose,  other  than in  accordance  with the  terms  and  provisions  of this
Agreement,  any of such confidential  information or trade secrets. In addition,
M.  Toibb  agrees,  for  himself  and for his  Affiliates,  officers,  managers,
employees,  agents, consultants and representatives,  that such persons will not
at any time from and after the date of this  Agreement  use or  disclose,  other
than in accordance with this Agreement,  any such confidential information which
either (i) concerns BDE or its respective business or operations or (ii) relates
to Big Seven or its business.

                           15.1.2   Notwithstanding  anything  contained in this
SECTION 15.1 to the contrary, any of the parties hereto may use or disclose such
confidential  information  or secrets of the other without  restriction  if such
information   or  secrets  (i)  were  or  are  available  to  such  party  on  a
non-confidential basis from a source other than the other party, or (ii) were or
become  generally  available  to  the  public  (other  than  as a  result  of an
impermissible  disclosure by such party or its  Affiliates);  PROVIDED,  that if
either  party is  requested  or  required  (by oral  question,  interrogatories,
requests for information or documents,  subpoena or similar process) to disclose
any of such information or secrets of the other, such disclosure be made without
liability


                                       20
<PAGE>


hereunder  (although notice of such request or requirement shall be given to the
other party so that, if practicable, the other party may seek a protective order
against such disclosure).

                           15.1.3   Each party  acknowledges  that, in the event
of a violation by the other of the terms and  provisions  of this SECTION  15.1,
the remedies at law would not be adequate;  and accordingly,  in such event such
party may proceed to protect and enforce its rights under this SECTION 15.1 by a
suit in equity for specific performance and temporary, preliminary and permanent
injunctive  relief from  violation of any of the provisions of this SECTION 15.1
from any court of competent  jurisdiction  without the  necessity of proving the
amount of any actual damages to the party resulting from the breach.

                  15.2     TAX  RETURNS  AND  PAYMENTS.  M. Toibb  shall  remain
liable  for and shall pay to the  applicable  Governmental  Authority  all Taxes
relating Big Seven and its operations which have accrued but remain unpaid as of
the date of this Agreement,  whether or not such Taxes are then due and payable,
and shall  prepare all Tax Returns of Big Seven,  if any,  for all periods up to
the date of this Agreement.  BDE shall be responsible for the preparation of all
Tax  Returns of Big Seven and for the  payment of any and all Taxes of Big Seven
from and after the date of this Agreement.

                  15.3     M. TOIBB ASSISTANCE. For a period of ninety (90) days
following  the  date of this  Agreement,  if and only to the  extent  reasonably
requested by BDE and BDE is not in default under this Agreement,  M. Toibb shall
assist  in the  transition  business  operations  of Big  Seven  to BDE  and its
personnel in a timely and professional manner, including, but not limited to (i)
notifying  clients,  customers,  business partners and employees of Big Seven of
BDE's acquisition of Big Seven; (ii) establishing business relationships between
BDE and  parties  to any  Contracts  of Big  Seven,  including  making  personal
introductions  through  in person  meetings;  and  (iii)  any  other  reasonable
requests of BDE to facilitate the transfer of Big Seven's business operations to
BDE.

                  15.4     EXPENSES.  M.  Toibb  shall  pay all of the costs and
expenses M. Toibb and Big Seven  incurred in connection  with this Agreement and
the consummation of the transactions  contemplated  hereby,  including,  without
limitation,  the fees and  expenses  of their  counsel,  accountants  and  other
professionals   (including  broker's  fees).   Notwithstanding  the  immediately
preceding sentence, on the date of this Agreement, BDE shall pay to M. Toibb the
amount of Fifty Thousand Dollars ($50,000),  in immediately available funds, and
not later than June 30, 2004, BDE shall pay to M. Toibb an additional  amount of
One Hundred Thousand Dollars ($100,000),  in immediately  available funds, which
may be utilized  for payment of M.  Toibb's  legal and other  professional  fees
incurred in connection with this Agreement and other agreements  between BDE and
the Company.  BDE shall pay all of its costs and expenses incurred in connection
with  this  Agreement  and the  consummation  of the  transactions  contemplated
hereby,  including,  without  limitation,  the fees and expenses of its counsel,
accountants and other professionals (including broker's fees).

                  15.5     REGISTRATION  RIGHTS.  All of the Common Stock issued
pursuant to the terms of this  Agreement  shall be  "REGISTRABLE  Securities" or
such other definition of securities  entitled to registration rights pursuant to
EXHIBIT D to this  Agreement.  M. Toibb shall be  entitled  to the  registration
rights set forth in EXHIBIT D with respect to such Common Stock.


                                       21
<PAGE>


         16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY.

                  16.1     SURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.   All
representations  and  warranties  made in this Agreement or made in any document
delivered  pursuant to this Agreement by or on behalf of any party shall survive
the  execution  and delivery of this  Agreement,  regardless of notice of or any
investigation or right of investigation  made prior to or after the date of this
Agreement by or on behalf of any party, and shall terminate and expire two years
following  the date of this  Agreement,  after  which  date they  shall be of no
further force or effect.

                  16.2     INDEMNIFICATION   BY  M.   TOIBB.   M.  Toibb   shall
indemnify,  save and hold harmless BDE, Detershan,  their respective  Affiliates
(including Big Seven following the  termination of the Escrow  Agreement and the
delivery by the Escrow  Holder to M. Toibb of the Common  Stock (or cash in lieu
thereof in accordance with the Escrow  Agreement)) and each of their  respective
officers,  directors,  employees, agents and representatives,  and each of their
successors   and  assigns   (individually,   a  "BDE   INDEMNIFIED   PARTY"  and
collectively, the "BDE INDEMNIFIED PARTIES") from and against any and all costs,
losses, claims, liabilities, fines, penalties, consequential damages (other than
lost  profits),  and  expenses  (including  interest  which  may be  imposed  in
connection  therewith and court costs and reasonable fees and  disbursements  of
counsel) ("DAMAGES") incurred in connection with, arising out of, resulting from
or incident to:

                           16.2.1   any  material  breach  of,  or any  material
inaccuracy in any of, the representations or warranties made by M. Toibb in this
Agreement,  any  exhibit  or  schedule  to this  Agreement  or any  certificate,
instrument  or  writing  delivered  in  connection  with  this  Agreement  or in
connection with any exhibit or schedule to this Agreement;

                           16.2.2   any material  default in any agreements made
by M. Toibb in this Agreement,  any exhibit or schedule to this Agreement or any
certificate,  instrument or writing  delivered in connection with this Agreement
or in connection with any exhibit or schedule to this Agreement;

                           16.2.3   all  liabilities  of or claims  against  BDE
Indemnified  Parties of any nature,  whether  accrued,  absolute,  contingent or
otherwise,  relating  to  any  employee,  sales  representative  or  independent
contractor of Big Seven whose  relationship  with Big Seven was terminated prior
to the date of this  Agreement and which  liabilities or claims are based on any
Contract,  or  alleged  Contract  between  Big  Seven and such  employee,  sales
representative or independent contractor, or any policy or alleged policy of Big
Seven  relating  to its  employees  (other  than  any  such  claims  of the  BDE
Indemnified Parties or their Affiliates);

                           16.2.4   any    Action,    compromise,    settlement,
assessment  or  judgment  arising  out of or  incidental  to any of the  matters
indemnified against in this SECTION 16.2; PROVIDED, HOWEVER, that M. Toibb shall
not be  obligated  to  indemnify  a BDE  Indemnified  Party  and  hold it or him
harmless  under this SECTION 16.2 with respect to any  settlement  of a claim to
which M.  Toibb has not  consented,  which  consent  shall not  unreasonably  be
withheld.  If, by reason of the claim of any third Person relating to any of the
matters subject to indemnification under this SECTION 16.2, a Lien,  attachment,
garnishment or execution is placed upon any of the


                                       22
<PAGE>


property or assets of any BDE Indemnified  Party, M. Toibb also shall,  promptly
upon demand,  furnish an indemnity bond satisfactory to BDE Indemnified Party to
obtain the prompt release of such lien, attachment, garnishment or execution.

                  16.3     INDEMNIFICATION  BY BDE.  BDE,  Altnet and  Detershan
shall jointly and severally indemnify,  save and hold harmless M. Toibb, and his
Affiliates  (including,  for these purposes, Mr. Harris Toibb) and each of their
respective officers, directors,  employees,  attorneys,  accountants, agents and
representatives,  and each of their successors and assigns (individually,  a "M.
TOIBB INDEMNIFIED PARTY" and collectively,  the "M. TOIBB INDEMNIFIED  PARTIES")
from and against any and all Damages  incurred in connection  with,  arising out
of, resulting from or incident to:

                           16.3.1   any  material  breach  of,  or any  material
inaccuracy in any of, the  representations  or warranties made by BDE, Altnet or
Detershan in this  Agreement,  any exhibit or schedule to this  Agreement or any
certificate,  instrument or writing  delivered in connection with this Agreement
or in connection with any exhibit or schedule to this Agreement;

                           16.3.2   any material  default in any agreements made
by BDE, Altnet or Detershan in this  Agreement,  any exhibit or schedule to this
Agreement or any certificate, instrument or writing delivered in connection with
this Agreement or in connection with any exhibit or schedule to this Agreement;

                           16.3.3   except to the  extent  attributable  to a M.
Toibb Indemnified Party, any acts, omissions or events relating to the operation
of the business of Big Seven after the date of this Agreement; or

                           16.3.4   any    Action,    compromise,    settlement,
assessment  or  judgment  arising  out of or  incidental  to any of the  matters
indemnified against in this SECTION 16.3; PROVIDED,  HOWEVER,  that none of BDE,
Altnet or Detershan shall be obligated to indemnify a M. Toibb Indemnified Party
and  hold it or him  harmless  under  this  SECTION  16.3  with  respect  to any
settlement  of a claim to which BDE has not  consented,  which consent shall not
unreasonably  be  withheld.  If, by  reason  of the  claim of any  third  Person
relating to any of the matters  subject to  indemnification  under this  SECTION
16.3,  a Lien,  attachment,  garnishment  or execution is placed upon any of the
property or assets of any M. Toibb Indemnified  Party, any or all of BDE, Altnet
or  Detershan,  as  required,  shall  also,  promptly  upon  demand,  furnish an
indemnity bond  satisfactory  to such M. Toibb  Indemnified  Party to obtain the
prompt release of such lien, attachment, garnishment or execution.

                  16.4     LIMITATION    ON    INDEMNIFICATION.    Neither   BDE
Indemnified  Parties  nor M. Toibb  Indemnified  Parties  shall be  entitled  to
recover  under  SECTIONS  16.2 or 16.3  unless  a Claim  for  Damages  has  been
delivered to the Indemnifying Party on or prior to the second anniversary of the
date of this Agreement.


                                       23
<PAGE>


                  16.5     NOTICE OF CLAIM.  If a claim for  Damages (a "CLAIM")
is to be made by a party entitled to indemnification  hereunder (an "INDEMNIFIED
PARTY")  against  the  indemnifying  party  (the  "INDEMNIFYING   PARTY"),   the
Indemnified   Party  shall  give  written  notice  (a  "CLAIM  NOTICE")  to  the
Indemnifying  Party,  which notice shall  specify  whether the Claim arises as a
result of a claim by a person  against  the  Indemnified  Party (a "THIRD  PARTY
CLAIM") or whether  the Claim  does not so arise (a "DIRECT  CLAIM"),  and shall
also specify (to the extent that the information is available) the factual basis
for the Claim and the amount of the Damages,  if known.  If the Claim is a Third
Party Claim,  the  Indemnified  Party shall  provide the Claim Notice as soon as
practicable after such party becomes aware of any fact, condition or event which
such  party  has  reason  to  believe  will  give  rise  to  Damages  for  which
indemnification  may be sought  under  SECTIONS  16.2 or 16.3.  If any Action is
filed against any  Indemnified  Party,  written notice thereof shall be given to
the  Indemnifying  Party as promptly as practicable  (and in any event within 15
calendar days after the service of the citation or summons).  The failure of any
Indemnified  Party to give timely  notice  hereunder  shall not affect rights to
indemnification hereunder,  except to the extent that the Indemnifying Party has
been damaged by such failure.

                  16.6     DIRECT  CLAIMS.  With  respect to any  Direct  Claim,
following  receipt  of  the  Claim  Notice  from  the  Indemnified   Party,  the
Indemnifying Party shall have 30 days to make such investigation of the Claim as
is considered necessary or desirable. For the purpose of such investigation, the
Indemnified  Party shall make  available to the  Indemnifying  Party  sufficient
information   to   substantiate   the  Claim,   together  with  all  such  other
non-privileged  information as the Indemnifying Party may reasonably request. If
both parties  agree at or prior to the  expiration of such 30-day period (or any
mutually  agreed  upon  extension  thereof) to the  validity  and amount of such
Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the
full agreed upon amount of the Claim.  If the parties  have not so agreed to the
validity and/or amount of the Claim, then the Indemnifying Party may pursue such
Claim in any court located in Los Angeles, California.

                  16.7     THIRD  PARTY  CLAIMS.  With  respect to a Third Party
Claim, if after receipt of the Claim Notice the Indemnifying  Party acknowledges
in  writing  to the  Indemnified  Party  that the  Indemnifying  Party  shall be
obligated  under the terms of its indemnity  hereunder in  connection  with such
lawsuit or action, the Indemnifying Party shall be entitled,  if it so elects at
its  own  cost,  risk  and  expense,  (i) to take  control  of the  defense  and
investigation of such lawsuit or action,  (ii) to employ and engage attorneys of
its own choice,  but, in any event,  reasonably  acceptable  to the  Indemnified
Party,  to handle and defend the same unless the named parties to such action or
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified  Party and the Indemnified Party has been advised in writing
by  counsel  that  there may be one or more  legal  defenses  available  to such
Indemnified  Party that are different  from or additional to those  available to
the Indemnifying  Party, in which event the Indemnified Party shall be entitled,
at the Indemnifying  Party's cost, risk and expense,  to separate counsel of its
own choosing,  and (iii) to  compromise or settle such lawsuit or action,  which
compromise  or  settlement  shall be made only with the  written  consent of the
Indemnified Party, such consent not to be unreasonably withheld.

         If the  Indemnifying  Party  fails to assume the  defense of such Claim
within 30 calendar days after receipt of the Claim Notice, the indemnified party
against which such Claim has been asserted will (upon delivering  notice to such
effect to the Indemnifying Party)


                                       24
<PAGE>


have the right to undertake,  at the Indemnifying  Party's cost and expense, the
defense, compromise or settlement of such Claim on behalf of and for the account
and risk of the Indemnifying Party. If the Indemnified Party assumes the defense
of the Claim, the Indemnified Party will keep the Indemnifying  Party reasonably
informed of the progress of any such  defense,  compromise  or  settlement.  The
Indemnifying  Party shall be liable for any  settlement  of any action  effected
pursuant to and in accordance  with this SECTION 16.7 and for any final judgment
(subject to any right of appeal) and the Indemnifying  Party agrees to indemnify
and hold harmless an Indemnified Party from and against any Damages by reason of
such  settlement  or judgment.  If there is a dispute as to the  indemnification
obligations of any party under this SECTION 16.7, then the Indemnified Party may
bring an action  against  the  Indemnifying  Party in any court  located  in Los
Angeles, California.

         17.      MISCELLANEOUS.

                  17.1     NOTICES.  All  notices,  requests,  demands and other
communications (collectively,  "NOTICES") given pursuant to this Agreement shall
be in writing,  and shall be delivered by personal service,  courier,  facsimile
transmission  (which  must  be  confirmed)  or by  United  States  first  class,
registered or certified mail, postage prepaid, to the following addresses:

                           (i) if to BDE or Altnet, to:

                               Brilliant Digital Entertainment, Inc.
                               6355 Topanga Canyon Boulevard, Suite 520
                               Woodland Hills, California 91367
                               Facsimile No. (818) 615-0995
                               Attn:  Chief Executive Officer

                           (ii) if to Detershan, to:

                               Detershan Pty. Ltd.
                               P.O. Box 227
                               Vaucluse NSW 2030
                               Australia
                               Facsimile No. 011 612 9337 1406
                               Attn:  Mark Miller

                           (iii) if to M. Toibb, to:

                               Michael Toibb
                               1044 4th Street, #115
                               Santa Monica, CA 90403
                               Facsimile No. (310) 899-1218

Any Notice,  other than a Notice sent by registered or certified mail,  shall be
effective when received;  a Notice sent by registered or certified mail, postage
prepaid  return  receipt  requested,  shall be  effective on the earlier of when
received or the third day  following  deposit in the United


                                       25
<PAGE>


States  mails.  Any party may from time to time  change its  address for further
Notices hereunder by giving notice to the other parties in the manner prescribed
in this Section.

                  17.2     ENTIRE  AGREEMENT.  This Agreement  contains the sole
and entire agreement and understanding of the parties with respect to the entire
subject  matter  of  this  Agreement,   and  any  and  all  prior   discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter of this Agreement are hereby merged herein.

                  17.3     PUBLICITY. M. Toibb agrees that it shall not make any
press  release  or  other   announcements   with  respect  to  the  transactions
contemplated  hereby  without the express  written  consent of BDE. BDE shall be
entitled to make any press  release or other  announcements  with respect to the
transactions  contemplated  hereby in its  discretion  without  the  consent  or
approval of M. Toibb;  provided that BDE will consult with M. Toibb with respect
to, and will  provide M.  Toibb with a copy of, the  specific  terms of any such
proposed press release or  announcement by BDE or any of its Affiliates no fewer
than two (2) business days in advance of any such release or announcement.

                  17.4     ASSIGNMENT.  No party may assign this Agreement,  and
any attempted or purported assignment or any delegation of any party's duties or
obligations  arising under this  Agreement to any third party or entity shall be
deemed to be null and void, and shall constitute a material breach by such party
of its duties and obligations under this Agreement.

                  17.5     WAIVER AND AMENDMENT.  No provision of this Agreement
may be waived unless in writing signed by all the parties to this Agreement, and
waiver of any one provision of this Agreement shall not be deemed to be a waiver
of any  other  provision.  This  Agreement  may be  amended  only  by a  written
agreement executed by all of the parties to this Agreement.

                  17.6     GOVERNING  LAW.  This  Agreement  has  been  made and
entered into in the State of  California  and shall be  construed in  accordance
with the laws of the State of California without giving effect to the principles
of conflicts of law thereof.

                  17.7     SEVERABILITY.  Whenever  possible  each  provision of
this Agreement  shall be interpreted in such manner as to be effective and valid
under  applicable law, but if any provision of this Agreement shall be 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.

                  17.8     CAPTIONS.  The various captions of this Agreement are
for  reference  only and shall not be  considered  or referred  to in  resolving
questions of interpretation of this Agreement.

                  17.9     COUNTERPARTS.  This  Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.


                                       26
<PAGE>


                  17.10    COSTS  AND  ATTORNEYS'  FEES.  If any  action,  suit,
arbitration  or other  proceeding  is  instituted  to remedy,  prevent or obtain
relief from a default in the  performance  by any party to this Agreement of its
obligations under this Agreement, the prevailing party shall recover all of such
party's  attorneys'  fees  incurred  in  each  and  every  such  action,   suit,
arbitration  or other  proceeding,  including  any and all appeals or  petitions
therefrom. As used in this Section,  attorneys' fees shall be deemed to mean the
full and actual costs of any legal  services  actually  performed in  connection
with the matters  involved  calculated  on the basis of the usual fee charged by
the attorney  performing  such services and shall not be limited to  "reasonable
attorneys' fees" as defined in any statute or rule of court.

                  17.11    RIGHTS  CUMULATIVE.  No right  granted to the parties
under this  Agreement on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach,  and each and
every  right under this  Agreement,  or under any other  document or  instrument
delivered hereunder, or allowed by law or equity, shall be cumulative and may be
exercised from time to time.

                  17.12    JUDICIAL INTERPRETATION. Should any provision of this
Agreement   require  judicial   interpretation,   it  is  agreed  that  a  court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of  construction  that a document is to be construed  more strictly  against the
Person who itself or through its agent  prepared the same,  it being agreed that
all parties have participated in the preparation of this Agreement.

         18.      EVENTS OF DEFAULT AND REMEDIES.

                  18.1     EVENTS  OF  DEFAULT.  The  occurrence  of  any of the
following shall constitute an Event of Default under this Agreement:

                           18.1.1   any  material  breach  of,  or any  material
inaccuracy in any of, the  representations  or warranties made by BDE, Altnet or
Detershan in this  Agreement,  any exhibit or schedule to this  Agreement or any
certificate,  instrument or writing  delivered in connection with this Agreement
or in connection with any exhibit or schedule to this Agreement;

                           18.1.2   any material  default in any agreements made
by BDE, Altnet or Detershan in this  Agreement,  any exhibit or schedule to this
Agreement or any certificate, instrument or writing delivered in connection with
this Agreement or in connection with any exhibit or schedule to this Agreement;

                           18.1.3   any  material  breach  of,  or any  material
inaccuracy in any of the  representations  or warranties made by Big Seven or M.
Toibb in this  Agreement,  any  exhibit or  schedule  to this  Agreement  or any
certificate,  instrument,  or writing  delivered by either of them in connection
with this  Agreement  or in  connection  with any  exhibit or  schedule  to this
Agreement (in the case of Big Seven, through the date of this Agreement); or

                           18.1.4   any material  default in any agreements made
by Big Seven or M. Toibb in this  Agreement,  any  exhibit or  schedule  to this
Agreement or any certificate,  instrument or writing delivered by either of them
in connection  with this Agreement or in


                                       27
<PAGE>


connection  with any exhibit or schedule to this  Agreement  (in the case of Big
Seven, through the date of this Agreement).

                  18.2     REMEDIES.   Upon  the  occurrence  of  any  Event  of
Default:

                           18.2.1   described in SECTION 18.1.1 or 18.1.2 above,
then M Toibb and Big Seven  shall have all of the rights and  remedies  afforded
them under this  Agreement or any,  exhibit or schedule to this Agreement or any
certificate,  instrument or writing  delivered in connection with this Agreement
or in connection with any exhibit or schedule to this Agreement;

                           18.2.2   described in SECTION 18.1.1 or 18.1.2 above,
then Big  Seven and M.  Toibb  also  shall  have any and all  other  rights  and
remedies that such person may now or hereinafter possess at law, in equity or by
statute;  PROVIDED,  HOWEVER, that neither M. Toibb nor Big Seven shall have any
right  to  rescind,   unwind,  void  or  otherwise  terminate  or  cause  to  be
ineffective,  any of  the  provisions  relating  to the  settlement  of  claims,
including  but not  limited  to,  the  covenant  not to sue,  set  forth in this
Agreement and/or any of the provisions of the Mutual General Release;

                           18.2.3   described in SECTION 18.1.3 or 18.1.4 above,
then BDE,  Altnet  and  Detershan  shall  have all of the  rights  and  remedies
afforded them under this  Agreement or any exhibit or schedule to this Agreement
or any  certificate,  instrument or writing  delivered in  connection  with this
Agreement or in connection with any exhibit or schedule to this Agreement;

                           18.2.4   described in SECTION 18.1.3 or 18.1.4 above,
then BDE,  Altnet and  Detershan  also  shall have any and all other  rights and
remedies  that such persons now or  hereinafter  possess at law, in equity or by
statute;  PROVIDED,  HOWEVER,  that none of such persons shall have the right to
rescind, void, unwind, or otherwise terminate or cause to be ineffective, any of
the provisions  relating to the settlement of claims,  including but not limited
to the  covenant  not to sue,  set  forth in this  Agreement  and/or  any of the
provisions of the Mutual General Release.

                         [Signatures On Following Page]


                                       28
<PAGE>


         IN WITNESS WHEREOF, this Agreement has been made and entered into as of
the date and year first above written.

                                   BRILLIANT DIGITAL ENTERTAINMENT, INC.,
                                   a California corporation

                                   By:    /S/ KEVIN BERMEISTER
                                          --------------------------------------
                                          Kevin Bermeister
                                   Its:   President and Chief Executive Officer


                                   ALTNET, INC.,
                                   a Delaware corporation

                                   By:    /S/ KEVIN BERMEISTER
                                          --------------------------------------
                                          Kevin Bermeister
                                   Its:   President and Chief Executive Officer


                                   DETERSHAN PTY. LTD,
                                   an Australian company

                                   By:    /S/ MARK MILLER
                                          --------------------------------------
                                          Name: Mark Miller
                                   Its:   Director


                                   BIG SEVEN ENTERTAINMENT, LLC,
                                   a California limited liability company

                                   By:    /S/ MICHAEL TOIBB
                                          --------------------------------------
                                          Michael Toibb
                                   Its:   Manager


                                   /S/ MICHAEL TOIBB
                                   -----------------------
                                   MICHAEL TOIBB


                                      S-1
<PAGE>


                                    EXHIBIT A
                                       TO
                              SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

                            Dated as of June 16, 2004

                                ESCROW AGREEMENT

         THIS AGREEMENT ("Escrow  Agreement") is made and entered into as of the
16th day of June,  2004,  by and among  Michael  Toibb ("M.  Toibb"),  Big Seven
Entertainment  LLC ("Big  Seven")  (collectively  and  together  with M.  Toibb,
"Seller"),  and Brilliant  Digital  Entertainment  Inc.  ("BDE" or "Buyer") with
reference to that certain  Settlement  Agreement and mutual  Release dated as of
June 16, 2004 by and among BDE, Altnet, Inc., Detershan Pty. Ltd., Big Seven and
M.  Toibb  (the  "Settlement  Agreement"),  and Robert  Berger &  Associates,  a
California limited liability company ("Escrow Holder")." Capitalized terms which
are used herein and not defined herein shall have the meaning associated to such
terms as in the Settlement Agreement.

         WHEREAS,  Buyer and Seller have entered into the  Settlement  Agreement
dated as of June 16, 2004;

         WHEREAS, the Settlement Agreement provides for a deposit by M. Toibb of
all the  Membership  Interests of Big Seven (the "M. Toibb  Deposit") to be made
into an escrow  account with Escrow Holder  subject to transfer over to Buyer or
return to M. Toibb in accordance with the terms of this Escrow Agreement and the
Settlement Agreement; and

         WHEREAS,  the  Settlement  Agreement  provides  for a deposit by BDE of
6,666,667  shares of BDE  Common  Stock to be made into an escrow  account  with
Escrow  Holder  subject  to  transfer  over  to M.  Toibb  or  return  to BDE in
accordance with the terms of this Escrow Agreement and the Settlement  Agreement
in exchange for one million dollars  ($1,000,000) in cash at the election of BDE
(the "BDE Deposit") to be transferred over to M. Toibb.

         WHEREAS,  the parties have asked the Escrow  Holder to take custody and
control of the M. Toibb  Deposit  and the BDE  Deposit as an  independent  third
party such that Seller shall acquire no property  rights with respect to the BDE
Deposit and Buyer shall acquire no property  rights with respect to the M. Toibb
Deposit  thereto,  except  in  accordance  with  the  terms  of  the  Settlement
Agreement.

         NOW,  THEREFORE,  in  consideration  of  the  mutual  covenants  herein
contained  and other  valuable  considerations,  the receipt of which are hereby
acknowledged, the Parties hereto agree as follows:

         1.       ESCROW ESTABLISHED


                                   Exhibit A-1
<PAGE>


                  a.       Buyer shall  deposit  with Escrow  Holder Six Million
Six Hundred  Sixty Six Thousand Six Hundred  Sixty Seven  (6,666,667)  Shares of
Common  Stock  concurrent  with the  execution  of  delivery  of the  Settlement
Agreement,  which Common Stock shall be held by the Escrow holder subject to the
terms of this Escrow Agreement and the Settlement Agreement.  Such shares of BDE
Common Stock so deposited with Escrow Holder, are hereinafter referred to as the
"BDE Escrow Amount."

                  b.       Seller shall  deposit  with Escrow  Holder all of the
outstanding  Membership Interests in Big Seven concurrent with the execution and
delivery of the Settlement  Agreement,  which Membership Interests shall be held
subject to the terms of this Escrow Agreement and the Settlement Agreement. Such
Membership  Interests  so  deposited  with the  Escrow  Holder  are  hereinafter
referred to as the "M. Toibb Escrow Amount."

                  c.       The Escrow Holder hereby acknowledges  receipt of the
BDE Escrow Amount deposited by Buyer and the M. Toibb Escrow Amount deposited by
M.  Toibb  and  agrees to hold and  deliver  the same  subject  to the terms and
conditions of this Escrow Agreement.

                  d.       Seller and Buyer  hereby  irrevocably  authorize  the
Escrow Holder to hold,  transfer,  deliver and otherwise act with respect to the
Escrow Amount as provided in this Escrow Agreement.

         2.       ESCROW ACCOUNT

                  a.       The Escrow  Holder  shall hold the BDE Escrow  Amount
and the M. Toibb Escrow  Account in a financial  institution  (acceptable to BDE
and M. Toibb) safety deposit box in the name of Escrow Holder for the account of
BDE and M. Toibb, respectively, subject to the terms of this Escrow Agreement.

         3.       ESCROW TERMINATION

                  a.       Upon receipt by the Escrow  Holder of written  notice
from Buyer  (countersigned by Seller) of (i) the consummation of the sale of all
or  substantially  all of the  assets  of  Big  Seven  in  accordance  with  the
Settlement  Agreement;  (ii) the  consummation of a business  combination of Big
Seven and another  Person  (irrespective  of whether Big Seven is the  surviving
entity) in accordance with the Settlement  Agreement;  or (iii) the dissolution,
liquidation,  cessation of operations or  abandonment of the assets of Big Seven
within  one year of the date of the  Settlement  Agreement;  (collectively,  the
"Distribution  Notice"), the Escrow Holder shall turn over the BDE Escrow Amount
to Seller  and the M. Toibb  Escrow  Amount to Buyer and this  Escrow  Agreement
shall terminate.


                                   Exhibit A-2
<PAGE>


                  b.       In the event that the Escrow  Holder has not received
a  Distribution  Notice from  Seller by the close of  business  in Los  Angeles,
California  on the  date  which is one  year  from  the  date of the  Settlement
Agreement,  the Escrow Holder,  without the need for any further  instruction by
the parties,  and without fail (irrespective of any instructions to the contrary
by  either  of  the  parties(other   than  an  instruction  in  accordance  with
subparagraph  c. below) shall turn over the BDE Escrow Amount to Seller and this
M. Toibb Escrow Amount to Buyer. After such distributions, this Escrow Agreement
shall terminate

                  c.       This  Escrow   Agreement  shall  terminate  upon  the
receipt by the Escrow Holder of written  instructions  jointly executed by Buyer
and Seller,  which directs termination of this Escrow Agreement,  or directs the
disposition  of  the  BDE  Escrow  Amount  and  the M.  Toibb.  After  any  such
distributions, this Escrow Agreement shall terminate.

         4.       SUBSTITUTION OF BDE ESCROW AMOUNT

         At any time prior to  distribution of the BDE Escrow Amount to M. Toibb
by the Escrow Holder,  BDE may deposit with the Escrow Holder cash in the amount
of one million dollars  ($1,000,000) in exchange for the BDE Common Stock in the
possession of Escrow Holder and Escrow  Holder  immediately  shall return to BDE
the  shares of BDE Common  Stock  theretofore  held by Escrow  Holder as the BDE
Escrow Amount and such cash shall become the BDE Escrow Amount.

         5.       ESCROW FEES

         One half of the Escrow  fees and  estimated  expenses to be incurred by
Escrow Holder in connection with its acting in such capacity hereunder, shall be
paid by each of Buyer and Seller  upon  execution  and  delivery  of this Escrow
Agreement.  The remainder of the fees and costs of Escrow Holder,  if any, shall
be paid by Buyer and Seller prior to any  distribution of Escrow Amounts.  Buyer
and  Seller  shall be  jointly  and  severally  liable to Escrow  Holder for the
payment of such fees and expenses. The Escrow fees shall be $5,000.00.

         6.       MISCELLANEOUS

                  a.       Any  notice  or  other   communication   required  or
permitted  to be given  hereunder  shall be in  writing  and  shall be mailed by
registered mail,  return receipt  requested,  or hand delivered  against receipt
showing time of delivery,  if to Buyer or Seller,  to the addresses set forth in
the  Settlement  Agreement;  and, if to the Escrow  Holder,  to: Robert Berger &
Associates,  16501 Ventura Boulevard,  Encino, California 91436-2007,  telephone
(818-906-8300),  fax: (818-783 2737), or such other address as the parties shall
have furnished in writing in accordance with the provisions of this Section. Any
notice or other communication mailed by registered mail shall be deemed given at
the time of registration thereof.

                  b.       It is agreed that the duties of the Escrow Holder are
only  such as are  herein  specifically  provided,  and that it  shall  incur no
liability whatever except for negligence,  willful misconduct or failure to have
acted in good faith.

                  c.       The Escrow Holder shall be under no responsibility in
respect of any of the Escrow Amount  deposited with it other than  faithfully to
follow the terms  hereof.  The Escrow Holder shall not be required to defend any
legal proceedings  which may be instituted  against it in respect of the subject
matter hereof unless  required so to do by Buyer and Seller,  and,  except as to
proceedings  instituted  by Seller  or by  Buyer,  the  Escrow  Holder  shall be
indemnified  to its  satisfaction  against the cost and expense of such defense.
The Escrow Holder shall not be required to institute  legal  proceedings  of any
kind. It shall have no  responsibility  for the  genuineness  or validity of any
document or other item  deposited  with it, and it shall be fully  protected  in
acting in  accordance  with any  written  instructions  given it  hereunder  and
believed by it to have been signed by the proper parties.


                                  Exhibit A-3
<PAGE>


                  d.       No amendment or modification of this Escrow Agreement
or waiver of its terms shall  affect the rights or duties of the Escrow  Holder,
unless written  notice  thereof,  executed by Buyer and Seller,  shall have been
timely  given to the Escrow  Holder,  and to the extent such amount  modifies or
amends the  compensation  or standard of care of the Escrow  Holder,  the Escrow
Holder has consented to such  modification  or  amendment.  If the Escrow Holder
does not so consent, Buyer and Seller shall agree upon a Successor Escrow Holder
who shall have all the rights and obligations of the Escrow Holder hereunder.

                  e.       The Escrow Holder shall have no responsibility except
as to the  performance  of its  express  duties as set forth  hereunder,  and no
additional duties shall be inferred or implied.

                  f.       The  Escrow  Holder  shall not be liable for any good
faith action or omission in reliance upon the advice of its counsel.

                  g.       The Escrow  Holder is not  required to take notice of
any other  agreements  or  documents,  except with respect to  modifications  or
amendments under paragraph 6 hereof.

                  h.       Buyer  and  Seller,   jointly  and  severally   shall
indemnify  the Escrow  Holder for,  and to hold it harmless  against,  any loss,
liability or expense  incurred  without  negligence,  willful  misconduct or bad
faith on the part of the Escrow Holder, and arising out of or in connection with
the acceptance or administration of this Escrow Holder.

                  i.       This Escrow Agreement is being delivered in the State
of  California,  and shall be governed by and construed in  accordance  with the
laws of the State of  California,  without giving effect to its conflict of laws
rules.  It shall be binding upon and inure to the benefit of the parties  hereto
and  their  respective   successors,   assigns,   heirs,   executors  and  legal
representatives.

         IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed under seal and delivered as of the date first written above.

                                   Brilliant Digital Entertainment, Inc.,
                                   a Delaware corporation


                                   By:    /S/ KEVIN BERMEISTER
                                          --------------------------------------
                                   Name:  Kevin Bermeister
                                   Title: President and CEO



                                   Big Seven Entertainment, LLC,
                                   a California limited liability corporation,


                                   By:    /S/ MICHAEL TOIBB
                                          --------------------------------------
                                   Name:  Michael Toibb
                                   Title: Manager


                                  Exhibit A-4
<PAGE>


                                          Michael Toibb

                                          /S/ MICHAEL TOIBB
                                          --------------------------------------
                                          ESCROW HOLDER


                                   Robert L. Berger & Associates LLC
                                   a California limited liability company

                                   By:    /S/ ROBERT L. BERGER
                                          --------------------------------------
                                   Name:  Robert L. Berger
                                   Title: President


                                  Exhibit A-5
<PAGE>


                                   EXHIBIT B
                                       TO
                              SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

                            Dated as of June 16, 2004


                            NON-COMPETITION AGREEMENT

         This  Non-Competition  Agreement (this  "AGREEMENT") is made as of June
16, 2004, by and between BRILLIANT DIGITAL ENTERTAINMENT, a Delaware corporation
("BDE"), and MICHAEL TOIBB, an individual ("M. TOIBB").

                                    RECITALS

         A. M. Toibb is the sole member and manager of Big Seven  Entertainment,
LLC, a California limited liability company ("BIG Seven").  BDE and M. Toibb are
parties to that certain Settlement Agreement and Mutual Release,  dated June 16,
2004 (the "SAMR"),  which SAMR provides for the  settlement of all of the claims
of the parties  thereto and the purchase by BDE of all of M.  Toibb's  ownership
interest in Big Seven. All capitalized terms not herein defined have the meaning
set forth in the SAMR.

         B. M. Toibb has, in  consideration of BDE entering into the SAMR, which
would not have been  entered  into by BDE if M. Toibb was  unwilling  to execute
this  Agreement,  agreed to execute this  Agreement and perform his  obligations
hereunder.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements contained herein, and subject to the conditions set forth herein, the
parties agree as follows:

         1.       DEFINITIONS.

                  "ADULT   CONTENT"   means   any   films,   videos,   software,
photographs, images, sound recordings, audiovisual works, video games, websites,
or any other media now known or hereafter  devised  which  contains  scenes of a
graphic sexual nature typically rated as "NC-17,"  "unedited," "x," "xxx" or its
equivalent.

                  "ONLINE ADULT ENTERTAINMENT  INDUSTRY" means the distribution,
advertising,  promotion,  transmittal,  public display,  marketing, sales or any
other means or method of Exploitation  of Adult Content  through  electronic and
digitized  delivery  systems now known or hereafter  devised,  including but not
limited  to  cable,  satellite,  broadband,  Internet,  direct-order  television
advertising, and wireless delivery systems.

                  "PERSON" shall mean an individual, corporation, trust, estate,
partnership, joint venture, association, limited liability company, governmental
bureau or other entity.


                                  Exhibit B-1
<PAGE>


                  "SUBSIDIARY"  of any  Person  shall  mean any  entity of which
securities or other ownership  interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are owned directly or indirectly by such Person. For purposes of this Agreement,
Big Seven shall be a "Subsidiary" of BDE following the date of this Agreement.

         2.       NON-COMPETITION.  During the term  hereof,  M. Toibb will not,
directly or indirectly,  whether individually or as a member, officer, director,
investor,  stockholder,  employee  or  consultant  of any  Person,  (i)  engage,
anywhere in the United  States of  America,  in the Online  Adult  Entertainment
Industry,  or (ii) induce or attempt to induce (A) any employee of BDE or any of
its  Subsidiaries,  to leave  the  employ  of BDE or any such  Subsidiary  to be
employed, directly or indirectly, by M. Toibb or any affiliate of M. Toibb or in
any way interfere  adversely and unlawfully  with the  relationship  between any
such employee and BDE or such  Subsidiary,  as the case may be, (B) any employee
of BDE or any of its Subsidiaries to work for, render services or provide advice
to or supply  confidential  business  information or trade secrets of BDE or any
such Subsidiary to any third person, firm or corporation in which M. Toibb has a
direct or indirect  ownership  or  contractual  interest,  or (C) any  customer,
supplier,  licensee,  licensor or other  business  relation of BDE or any of its
Subsidiaries  to cease doing business with BDE or any such  Subsidiary or in any
way  interfere  unlawfully  with the  relationship  between  any such  customer,
supplier,  licensee,  licensor or other  business  relation  and BDE or any such
Subsidiary,  as the case may be. The  ownership  by M. Toibb of four  percent or
less of the outstanding capital stock of any corporation engaged in any business
which  competes  with  BDE  or  any of its  Subsidiaries  in  the  Online  Adult
Entertainment Industry,  where the capital stock of the corporation is listed on
a national  securities exchange or actively quoted on the Nasdaq National Market
or Nasdaq SmallCap  Market,  shall not be deemed a violation by M. Toibb of this
Agreement, PROVIDED that M. Toibb is not an officer, director or employee of, or
a consultant to, such corporation.

         3.       CONSIDERATION.   As   consideration   for  the  covenants  and
agreements of M. Toibb contained herein,  BDE has agreed to execute the SAMR. M.
Toibb  acknowledges that BDE has been materially  induced to enter into the SAMR
in reliance on M. Toibb's  execution of this  Agreement,  such execution of this
Agreement  being a condition  precedent to BDE's  obligation to  consummate  the
SAMR.

         4.       TERM  AND  TERMINATION.  The  term  of  this  Agreement  shall
commence on the date hereof and shall  terminate  on the second  anniversary  of
such date.

         5.       INJUNCTIVE  RELIEF AND OTHER REMEDIES UPON BREACH BY M. TOIBB.
M. Toibb  acknowledges  and agrees that (i) the provisions of this Agreement are
reasonable and necessary to protect the legitimate interests of BDE, and (ii) in
the  event  of  any  breach  by M.  Toibb  of any of M.  Toibb's  covenants  and
agreements   contained  herein,   BDE  would  encounter  extreme  difficulty  in
attempting to prove the actual  amount of damages  suffered by it as a result of
such  breach,  BDE would not have an  adequate  remedy at law in such event and,
therefore,  in addition  to any other  remedy it may have at law or in equity in
the event of any such breach, BDE shall be entitled to seek and receive specific
performance  and temporary,  preliminary  and permanent  injunctive  relief from
violation of any of the provisions of this Agreement from any court of


                                  Exhibit B-2
<PAGE>


competent jurisdiction without the necessity of proving the amount of any actual
damages to it resulting from such breach.

         6.       MISCELLANEOUS.

                  6.1      NOTICES.  All  notices,  requests,  demands and other
communications (collectively,  "NOTICES") given pursuant to this Agreement shall
be in writing,  and shall be delivered by personal service,  courier,  facsimile
transmission  (which  must  be  confirmed)  or by  United  States  first  class,
registered or certified mail, postage prepaid, to the following addresses:

                           (i) if to BDE, to:

                            Brilliant Digital Entertainment, Inc.
                            6355 Topanga Canyon Boulevard, Suite 520
                            Woodland Hills, CA 91367
                            Facsimile No.:  (818) 615-0995
                            Attn:  Chief Financial Officer

                           (ii) if to M. Toibb, to:

                            Michael Toibb
                            1044 4th Street, #115
                            Santa Monica, CA 90403
                            Facsimile No. (310) 899-1218

Any Notice,  other than a Notice sent by registered or certified mail,  shall be
effective when received;  a Notice sent by registered or certified mail, postage
prepaid  return  receipt  requested,  shall be  effective on the earlier of when
received or the third day  following  deposit in the United  States  mails.  Any
party may from time to time change its address for further Notices  hereunder by
giving notice to the other parties in the manner prescribed in this Section.

                  6.2      ENTIRE  AGREEMENT.  This Agreement,  the SAMR and the
exhibits  and  schedules  thereto  contain  the sole and  entire  agreement  and
understanding  of the parties with respect to the entire  subject matter of this
Agreement,  and any and all prior  discussions,  negotiations,  commitments  and
understandings, whether oral or otherwise, related to the subject matter of this
Agreement are hereby merged herein.

                  6.3      ASSIGNMENT.  This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties  hereto and
their  respective  heirs,  successors  and permitted  assigns,  but neither this
Agreement nor any of the rights,  interests or  obligations  hereunder  shall be
assigned by M. Toibb.

                  6.4      WAIVER AND AMENDMENT.  No provision of this Agreement
may be waived unless in writing signed by all the parties to this Agreement, and
waiver of any one provision of this Agreement shall not be deemed to be a waiver
of any  other  provision.  This  Agreement  may be  amended  only  by a  written
agreement executed by all of the parties to this Agreement.


                                  Exhibit B-3
<PAGE>


                  6.5      GOVERNING LAW. This  Agreement  shall be construed in
accordance with the laws of the State of California without giving effect to the
principles of conflicts of law thereof.

                  6.6      SEVERABILITY.  Whenever  possible  each  provision of
this Agreement  shall be interpreted in such manner as to be effective and valid
under  applicable law, but if any provision of this Agreement shall be 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.

                  6.7      CAPTIONS.  The various captions of this Agreement are
for  reference  only and shall not be  considered  or referred  to in  resolving
questions of interpretation of this Agreement.

                  6.8      COUNTERPARTS.  This  Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

                  6.9      COSTS  AND   ATTORNEYS'   FEES.   If  any  Action  is
instituted to remedy, prevent or obtain relief from a default in the performance
by any party to this  Agreement of its  obligations  under this  Agreement,  the
prevailing  party shall recover its reasonable  attorneys' fees incurred in each
and every such Action,  including,  without  limitation,  any and all appeals or
petitions therefrom.

                  6.10     RIGHTS  CUMULATIVE.  No right  granted to the parties
under this  Agreement on default or breach is intended to be in full or complete
satisfaction of any damages arising out of such default or breach,  and each and
every  right under this  Agreement,  or under any other  document or  instrument
delivered hereunder, or allowed by law or equity, shall be cumulative and may be
exercised from time to time.


                                  Exhibit B-4
<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first set forth above.

                                   BRILLIANT DIGITAL ENTERTAINMENT, INC.,
                                   a Delaware corporation

                                   By:    /S/ KEVIN BERMEISTER
                                          --------------------------------------
                                          Kevin Bermeister
                                   Its:   President and Chief Executive Officer


                                   /S/ MICHAEL TOIBB
                                   ----------------------
                                   Michael Toibb


                                  Exhibit B-5
<PAGE>


                                    EXHIBIT C
                                       TO
                              SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

                            Dated as of June 16, 2004


                             MUTUAL GENERAL RELEASE

         This Mutual General Release (this "AGREEMENT") is made and entered into
as of June 16,  2004,  by and among  BRILLIANT  DIGITAL  ENTERTAINMENT,  INC., a
Delaware   corporation   ("BDE"),   ALTNET  INC.,  a  Delaware  corporation  and
majority-owned subsidiary of BDE ("Altnet"),  DETERSHAN PTY. LTD., an Australian
company  ("DETERSHAN"),  BIG SEVEN  ENTERTAINMENT,  LLC,  a  California  limited
liability company ("BIG SEVEN"), and MICHAEL TOIBB, an individual ("M. TOIBB").

                                    RECITALS

         A.       BDE, Altnet,  Detershan, Big Seven and M. Toibb are parties to
that certain Settlement  Agreement and Mutual Release,  dated June 16, 2004 (the
"SAMR"),  which  SAMR  provides  for the  settlement  of claims by and among the
parties,  through the execution and delivery of this Mutual General  Release and
as part thereof of the purchase by BDE of all of M. Toibb's  ownership  interest
in Big Seven.  All  capitalized  terms not herein  defined  have the meaning set
forth in the SAMR.

         B.       The execution and delivery of this Agreement by the Parties is
an obligation of each of the parties under the SAMR.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
agreements contained herein, and subject to the conditions set forth herein, the
parties agree as follows:

         1.       RELEASE BY BDE, ALTNET, DETERSHAN AND BIG SEVEN OF M. TOIBB.

                  1.1      BDE, Altnet,  Detershan and Big Seven, for themselves
and for their respective  subsidiaries,  offices,  directors,  employees,  legal
representatives,  agents,  successors-in-interest  and assigns,  irrevocably and
unconditionally   releases  and  forever  discharges  M.  Toibb  and  his  legal
representatives,  agents, successors-in-interest and assigns (none of which, for
the purpose of  clarity,  includes  Mr. and Mrs.  Harris  Toibb)  (each a "TOIBB
PARTY" and collectively,  the "TOIBB  PARTIES"),  and each of them, from any and
all causes of action,  claims,  actions,  rights,  judgments,  attorneys'  fees,
obligations,  damages, demands,  accountings or liabilities of whatever kind and
character,  whether now known or unknown, suspected or unsuspected,  existing as
of the date hereof (collectively, "CLAIMS"), which any of BDE, Altnet, Detershan
or Big Seven  have or may have  against  any of the Toibb  Parties,  and each of
them,  other than Claims  arising under or with respect to the SAMR or any other
agreement which is an exhibit to the SAMR.


                                  Exhibit C-1
<PAGE>


                  1.2      Each of BDE,  Altnet,  Detershan and Big Seven agrees
that each Toibb Party is a direct  beneficiary with respect to each provision of
this  Agreement  applicable  to such Toibb Party and may  enforce  each of these
provisions.

                  1.3      Each  of  BDE,   Altnet,   Detershan  and  Big  Seven
represents  and  warrants  to the Toibb  Parties  that it has not  assigned  nor
subrogated  any of said rights,  claims and causes of action  referenced in this
Section  1, or  authorized  any other  person  or entity to assert  any of these
claims on its behalf.

                  1.4      Each of BDE,  Altnet,  Detershan and Big Seven agrees
and  covenants  never to file a  lawsuit,  arbitration  proceeding  or any other
administrative  proceeding  against  any Toibb  Party for any  causes of action,
claims, actions, rights, judgments,  obligations,  damages, demands, accountings
or  liabilities  of whatever kind and character  released and discharged by such
party pursuant to this Agreement.

         2.       RELEASE BY M. TOIBB OF BDE, ALTNET, DETERSHAN AND BIG SEVEN.

                  2.1      M.   Toibb,   for   himself   and   for   his   legal
representatives,  agents,  successors-in-interest  and assigns,  irrevocably and
unconditionally  releases and forever discharges BDE, Altnet,  Detershan and Big
Seven,  and  each  of  their  respective  subsidiaries,   employees,  directors,
officers,   successors-in-interest   and   assigns   (each  a  "BDE  PARTY"  and
collectively,  the "BDE  PARTIES"),  and each of them,  from any and all  Claims
which M. Toibb has or may have against BDE Parties, and each of them, other than
(a) Claims  arising under or with respect to the SAMR or any agreement  which is
an exhibit to the SAMR,  and (b) Claims  arising  from his  ownership  of equity
securities of BDE or him being a stockholder of BDE.

                  2.2      M.  Toibb  agrees  that  each  BDE  Party is a direct
beneficiary with respect to each provision of this Agreement  applicable to such
BDE Party and may enforce each of these provisions.

                  2.3      M. Toibb  represents and warrants to BDE Parties that
it has not assigned  nor  subrogated  any of said  rights,  claims and causes of
action referenced in this Section 2, or authorized any other person or entity to
assert any of these claims on its behalf.

                  2.4      M.  Toibb  agrees  and  covenants  never  to  file  a
lawsuit,  arbitration proceeding or any other administrative  proceeding against
any BDE Party for any  causes of action,  claims,  actions,  rights,  judgments,
obligations,  damages, demands,  accountings or liabilities of whatever kind and
character released and discharged by M. Toibb pursuant to this Agreement.

         3.       RELEASE OF H. TOIBB.

                  3.1      BDE, Altnet,  Detershan,  Big Seven and M. Toibb, for
themselves and for their respective subsidiaries, offices, directors, employees,
legal representatives,  agents,  successors-in-interest and assigns, irrevocably
and  unconditionally  releases and forever  discharges Mr. and Mrs. Harris Toibb
and his legal representatives,  agents, successors-in-interest and assigns (each
a "HARRIS PARTY" and collectively, the "HARRIS PARTIES"), and each of them, from
any and all Claims which any of BDE,  Altnet,  Detershan,  Big Seven or M. Toibb
have or


                                  Exhibit C-2
<PAGE>


may have  against  any of the Harris  Parties,  and each of them,  SOLELY to the
extent such Claims relate,  directly or indirectly,  to Big Seven's  business or
operations  or  actions  taken  by any  Harris  Party  in  connection  with  the
negotiation and execution of the SAMR.

                  3.2      Each of BDE,  Altnet,  Detershan,  Big  Seven  and M.
Toibb agrees that each Harris Party is a direct beneficiary with respect to each
provision of this Agreement applicable to such Harris Party and may enforce each
of these provisions.

                  3.3      Each of BDE,  Altnet,  Detershan,  Big  Seven  and M.
Toibb represents and warrants to the Harris Parties that it has not assigned nor
subrogated  any of said rights,  claims and causes of action  referenced in this
Section  3, or  authorized  any other  person  or entity to assert  any of these
claims on its behalf.

                  3.4      Each of BDE,  Altnet,  Detershan,  Big  Seven  and M.
Toibb agrees and covenants  never to file a lawsuit,  arbitration  proceeding or
any other  administrative  proceeding against any Harris Party for any causes of
action, claims,  actions,  rights,  judgments,  obligations,  damages,  demands,
accountings  or  liabilities  of  whatever  kind  and  character   released  and
discharged by such party pursuant to this Agreement.

         4.       MUTUAL RELEASE.  It is the intention of each of the parties to
this Agreement that this Agreement shall be effective as a full and final accord
and  satisfaction  and release of all of the claims and  judgments  specifically
released pursuant to SECTIONS 1, 2 and 3 of this Agreement.  Each of the parties
hereby  acknowledges that it has read and is familiar with California Civil Code
Section 1542 which states as follows:

         "A  GENERAL  RELEASE  DOES NOT  EXTEND  TO  CLAIMS  WHICH  THE
         CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
         TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE
         MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."

         Each of the parties  does hereby  expressly  waive and  relinquish  all
rights and benefits which it has or may have under California Civil Code Section
1542 (or any similar law of any other country, state, territory or jurisdiction)
to the fullest  extent that it may lawfully  waive such rights and benefits.  In
connection with the waiver and  relinquishment set forth in this SECTION 4, each
of the  parties  acknowledges  that it is aware that it may  hereafter  discover
facts in  addition  to and/or  different  from those now known or believed to be
true  with  respect  to  the  subject  matter  of  this   Agreement,   but  that
notwithstanding  that fact, it is their  respective  intention  hereby to fully,
finally,  and  forever  release  all of the  claims  released  herein,  known or
unknown,  suspected or unsuspected,  which now exist, may in the future exist or
heretofore  have existed  between each  respective  party,  on the one hand, and
those parties,  persons and entities  granted releases by it, on the other hand,
and that in  furtherance of such  intention,  the releases given herein shall be
and  remain  in  effect  as full  and  complete  releases,  notwithstanding  the
discovery or existence of any such additional or different facts.


                                  Exhibit C-3
<PAGE>


         5.       MISCELLANEOUS.

                  5.1      NOTICES.  All  notices,  requests,  demands and other
communications (collectively,  "NOTICES") given pursuant to this Agreement shall
be in writing,  and shall be delivered by personal service,  courier,  facsimile
transmission  (which  must  be  confirmed)  or by  United  States  first  class,
registered or certified mail, postage prepaid, to the following addresses:

                     (i) if to any BDE Party other than Detershan, to:

                         Brilliant Digital Entertainment, Inc.
                         6355 Topanga Canyon Boulevard, Suite 520
                         Woodland Hills, California  91367
                         Facsimile No. (818) 615-0995
                         Attn:  Chief Executive Officer

                     (ii) if to Detershan, to:

                         Detershan Pty. Ltd.
                         P.O. Box 227
                         Vaucluse NSW 2030
                         Australia
                         Facsimile No. 011 612 9337 1406
                         Attn:  Mark Miller

                     (iii) if to any Toibb Party, to:

                         Michael Toibb
                         1044 4th Street, #115
                         Santa Monica, CA 90403
                         Facsimile No. (310) 899-1218

Any Notice,  other than a Notice sent by registered or certified mail,  shall be
effective when received;  a Notice sent by registered or certified mail, postage
prepaid  return  receipt  requested,  shall be  effective on the earlier of when
received or the third day  following  deposit in the United  States  mails.  Any
party may from time to time change its address for further Notices  hereunder by
giving notice to the other parties in the manner prescribed in this Section.

                  5.2      ENTIRE  AGREEMENT.  This Agreement  contains the sole
and entire agreement and understanding of the parties with respect to the entire
subject  matter  of  this  Agreement,   and  any  and  all  prior   discussions,
negotiations, commitments and understandings, whether oral or otherwise, related
to the subject matter of this Agreement are hereby merged herein.

                  5.3      ASSIGNMENT.  No party may assign this Agreement,  and
any attempted or purported assignment or any delegation of any party's duties or
obligations  arising under this  Agreement to any third party or entity shall be
deemed to be null and void, and shall constitute a material breach by such party
of its duties and obligations under this Agreement.


                                  Exhibit C-4
<PAGE>


                  5.4      WAIVER AND AMENDMENT.  No provision of this Agreement
may be waived unless in writing signed by all the parties to this Agreement, and
waiver of any one provision of this Agreement shall not be deemed to be a waiver
of any  other  provision.  This  Agreement  may be  amended  only  by a  written
agreement executed by all of the parties to this Agreement.

                  5.5      GOVERNING LAW; JURISDICTION.  This Agreement has been
made and  entered  into in the State of  California  and shall be  construed  in
accordance with the laws of the State of California without giving effect to the
principles of conflicts of law thereof.

                  5.6      SEVERABILITY.  Whenever  possible  each  provision of
this Agreement  shall be interpreted in such manner as to be effective and valid
under  applicable law, but if any provision of this Agreement shall be 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.

                  5.7      CAPTIONS.  The various captions of this Agreement are
for  reference  only and shall not be  considered  or referred  to in  resolving
questions of interpretation of this Agreement.

                  5.8      COUNTERPARTS.  This  Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.

                  5.9      COSTS  AND  ATTORNEYS'  FEES.  If any  action,  suit,
arbitration  or other  proceeding  is  instituted  to remedy,  prevent or obtain
relief from a default in the  performance  by any party to this Agreement of its
obligations under this Agreement, the prevailing party shall recover all of such
party's  attorneys'  fees  incurred  in  each  and  every  such  action,   suit,
arbitration  or other  proceeding,  including  any and all appeals or  petitions
therefrom. As used in this Section,  attorneys' fees shall be deemed to mean the
full and actual costs of any legal  services  actually  performed in  connection
with the matters  involved  calculated  on the basis of the usual fee charged by
the attorney  performing  such services and shall not be limited to  "reasonable
attorneys' fees" as defined in any statute or rule of court.

                  5.10     JUDICIAL INTERPRETATION. Should any provision of this
Agreement   require  judicial   interpretation,   it  is  agreed  that  a  court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of  construction  that a document is to be construed  more strictly  against the
Person who itself or through its agent  prepared the same,  it being agreed that
all parties have participated in the preparation of this Agreement.

                         (Signatures On Following Page)


                                  Exhibit C-5
<PAGE>


         IN WITNESS WHEREOF, this Agreement has been made and entered into as of
the date and year first above written.

                                   BRILLIANT DIGITAL ENTERTAINMENT, INC.,
                                   a Delaware corporation

                                   By:    /S/ KEVIN BERMEISTER
                                          -------------------------------------
                                   Name:  Kevin Bermeister
                                   Its:   President and Chief Executive Officer


                                   ALTNET INC.,
                                   a Delaware corporation

                                   By:    /S/ KEVIN BERMEISTER
                                          -------------------------------------
                                   Name:  Kevin Bermeister
                                   Its:   President and Chief Executive Officer


                                   DETERSHAN PTY. LTD.,
                                   an Australian company

                                   By:    /S/ MARK MILLER
                                          --------------------------------------
                                   Name:  Mark Miller
                                   Its:   Director


                                   BIG SEVEN ENTERTAINMENT, LLC,
                                   a California limited liability company


                                   By:    /S/ MICHAEL TOIBB
                                          --------------------------------------
                                   Name:  Michael Toibb
                                   Its:   Manager


                                          MICHAEL TOIBB

                                          /S/ MICHAEL TOIBB
                                          --------------------------------------
                                          Michael Toibb


                                  Exhibit C-6
<PAGE>


                                    EXHIBIT D
                                       TO
                              SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

                            Dated as of June 16, 2004


                               REGISTRATION RIGHTS

         1.       DEFINITIONS. Undefined capitalized terms in this EXHIBIT C are
defined in the Settlement Agreement and Mutual Release. The following terms have
the indicated meanings:

         "BOARD OF  DIRECTORS"  means the Board of  Directors of BDE or any duly
constituted  committee of that Board which has been  delegated  the authority to
take the specific action in question.

         "ELIGIBLE  OFFERING"  means any public  offering of Common Stock by BDE
other than: (i) any  registration  relating  solely to the sale of securities to
participants in a Common Stock plan, (ii) any registration relating to corporate
reorganization  or  other  transaction  under  Rule 145 of the  Act,  (iii)  any
registration  on any form  (other  than Form  S-1,  S-2 or S-3)  which  does not
include  substantially  the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities, and
(iv) any  registration in which the only Common Stock being registered is Common
Stock  issuable  upon  conversion  of  debt  securities  which  are  also  being
registered.

         "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as amended,
and the rules and  regulations  of the SEC (or any other  federal  agency at the
time administering the Securities Exchange Act of 1934, as amended)  promulgated
thereunder.

         "BDE"  means  Brilliant   Digital   Entertainment,   Inc.,  a  Delaware
corporation.

         "REGISTER,"  "REGISTERED," and  "REGISTRATION"  refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance  with the Act, and the  declaration or ordering of  effectiveness  of
such registration statement or document by the SEC.

         "REGISTRABLE  SECURITIES" means (i) the Common Stock issued to M. Toibb
pursuant  to the terms of the  Agreement,  (ii) any Common  Stock  issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend  or other  distribution  with  respect  to, or in
exchange for or in replacement of the shares  referenced in (i) above, and (iii)
any Common Stock issued by way of a stock split of the shares  referenced in (i)
or (ii) above.

         "SEC" means the Securities and Exchange Commission.

         2.       PIGGYBACK  REGISTRATIONS.  From  and  after  the  date  of the
Agreement,  BDE shall notify M. Toibb in writing at least twenty (20) days prior
to filing any  registration  statement  under the Securities Act for purposes of
effecting an Eligible Offering, and will afford M. Toibb


                                  Exhibit D-1
<PAGE>


an opportunity to include in such registration  statement all or any part of the
Registrable  Securities then held by M. Toibb. If M. Toibb desires to include in
any such registration statement all or any part of the Registrable Securities he
holds, M. Toibb shall, within ten (10) days after receipt of the above-described
notice from BDE, so notify BDE in writing,  and in such notice  shall inform BDE
of the  number of  Registrable  Securities  M.  Toibb  wishes to include in such
registration  statement.  If  M.  Toibb  decides  not  to  include  all  of  his
Registrable Securities in any registration statement thereafter filed by BDE, M.
Toibb shall  nevertheless  continue to have the right to include any Registrable
Securities in any subsequent  registration statement or registration  statements
as may be filed by BDE with respect to offerings of its securities, all upon the
terms and conditions set forth herein.

         3.       UNDERWRITING.  If a  registration  statement  under  which BDE
gives notice under SECTION 2 of this EXHIBIT C is for an underwritten  offering,
then BDE  shall so advise  M.  Toibb.  In such  event,  the right of M.  Toibb's
Registrable Securities to be included in a registration pursuant to SECTION 2 of
this  EXHIBIT  C shall be  conditioned  upon M.  Toibb's  participation  in such
underwriting  and the  inclusion of M.  Toibb's  Registrable  Securities  in the
underwriting  to the  extent  provided  herein.  If M.  Toibb  is  proposing  to
distribute his Registrable Securities through such underwriting,  M. Toibb shall
enter  into an  underwriting  agreement  in  customary  form  with the  managing
underwriter or underwriter(s)  selected for such  underwriting.  Notwithstanding
any  other  provision  of  this  Agreement,   if  the  managing   underwriter(s)
determine(s)  in good faith that marketing  factors  require a limitation of the
number  of shares  to be  underwritten,  then the  managing  underwriter(s)  may
exclude shares (including Registrable  Securities) from the registration and the
underwriting,  and the number of shares that may be included in the registration
and the underwriting shall be allocated, first, to BDE, second to the holders of
any  other  registration  rights  granted  by BDE  prior  to the  date  of  this
Agreement,  and third, to M. Toibb. If M. Toibb  disapproves of the terms of any
such underwriting, M. Toibb may elect to withdraw therefrom by written notice to
BDE and the underwriter,  delivered at least ten (10) business days prior to the
effective  date  of  the  registration  statement.  Any  Registrable  Securities
excluded or withdrawn  from such  underwriting  shall be excluded and  withdrawn
from the registration.

         4.       EXPENSES.  BDE shall pay all expenses  incurred in  connection
with  a  registration  pursuant  to  SECTION  2 of  this  EXHIBIT  C  (excluding
underwriters'  or  brokers'  discounts  and  commissions),   including,  without
limitation  all  federal and "blue sky"  registration  and  qualification  fees,
printers' and accounting fees, and fees and disbursements of counsel for BDE and
the fees and disbursements of special counsel for M. Toibb.

         5.       BDE'S   OBLIGATIONS.   Whenever   required   to   effect   the
registration of any Registrable  Securities  under this Exhibit C, BDE shall, as
expeditiously as reasonably possible:

                  5.1      prepare   and  file  with  the  SEC  a   registration
statement with respect to such  Registrable  Securities and use its commercially
reasonable  efforts to cause such  registration  statement to become  effective,
PROVIDED,  HOWEVER, that BDE shall not be required to keep any such registration
statement effective for more than ninety (90) days;

                  5.2      prepare  and file  with the SEC such  amendments  and
supplements to such registration statement and the prospectus used in connection
with such registration statement as


                                  Exhibit D-2
<PAGE>


may be  necessary  to comply  with the  provisions  of the  Securities  Act with
respect  to the  disposition  of all  securities  covered  by such  registration
statement;

                  5.3      furnish  to M.  Toibb  such  number  of  copies  of a
prospectus,   including  a  preliminary  prospectus,   in  conformity  with  the
requirements  of the  Securities  Act,  and  such  other  documents  as they may
reasonably  request in order to facilitate the  disposition  of the  Registrable
Securities owned by M. Toibb that are included in such registration;

                  5.4      use all  reasonable  efforts to register  and qualify
the  securities  covered  by  such  registration   statement  under  such  other
securities  or blue  sky  laws of such  jurisdictions  as  shall  be  reasonably
requested by a majority in interest of M. Toibb,  provided that BDE shall not be
required in  connection  therewith  or as a  condition  thereto to qualify to do
business  or to file a general  consent to service of process in any such states
or jurisdictions;

                  5.5      in the  event of any  underwritten  public  offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering;

                  5.6      at such time as M. Toibb's Registrable Securities are
covered  by such  registration  statement,  notify  M.  Toibb at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the  happening of any event as a result of which the  prospectus  included in
such registration  statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated  therein
or necessary to make the  statements  therein not misleading in the light of the
circumstances then existing,  and at the request of a majority in interest of M.
Toibb prepare and file an amendment to any such prospectus as may be necessary;

                  5.7      cause all Registrable Securities registered hereunder
to be listed on each securities  exchange on which similar  securities issued by
BDE are then listed;

                  5.8      provide a transfer  agent and  registrar for all such
Registrable  Securities  not later than the effective  date of the  Registration
Statement; and

                  5.9      in the  event  of the  issuance  of  any  stop  order
suspending  the  effectiveness  of a  registration  statement,  or of any  order
suspending or  preventing  the use of any related  prospectus or suspending  the
qualification of any securities included in the registration  statement for sale
in any jurisdiction,  use its commercially reasonable efforts promptly to obtain
the withdrawal of such order.

         6.       M. TOIBB'S OBLIGATIONS.

                  6.1      It shall be a condition  precedent to the obligations
of BDE to take any action  pursuant to SECTION 2 of this EXHIBIT C that M. Toibb
shall furnish to BDE such  information  regarding such M. Toibb, the Registrable
Securities  held by M.  Toibb and the  intended  method of  disposition  of such
securities,  as shall be  required  to timely  effect  the  registration  of its
Registrable Securities.


                                  Exhibit D-3
<PAGE>


                  6.2      M. Toibb agrees that upon  receipt of written  notice
of a Blackout Period from the Chief  Executive  Officer or Chairman of the Board
of Directors,  M. Toibb will not offer or sell Registrable  Securities or engage
in any transaction  involving or relating to Registrable  Securities  during the
time  period set forth in such  notice  (such  Blackout  Period not to exceed 30
days) and will not  disclose  the  contents  of such notice  until the  Blackout
Period has ended.  For purposes of this  SECTION 6 of this EXHIBIT C:  "BLACKOUT
PERIOD" shall mean the  occurrence of a material event which may be, in the good
faith opinion of the Board of Directors,  materially  adverse to BDE's financial
condition,  business or operations  or may require a disclosure  which is not in
BDE's best interest in light of the existence of (A) any material acquisition or
financing  activity  involving BDE, including a proposed public offering of debt
or equity securities,  (B) an undisclosed  material event, the public disclosure
of which  would  have a  material  adverse  effect  on BDE,  and (C) a  proposed
material transaction involving BDE and a material portion of its assets.

         7.       DELAY OF  REGISTRATION.  M. Toibb  shall not have any right to
obtain  or seek  an  injunction  restraining  or  otherwise  delaying  any  such
registration as the result of any  controversy  that might arise with respect to
the interpretation or implementation of this EXHIBIT C.

         8.       INDEMNIFICATION.  In the event any Registrable  Securities are
included in a registration statement under this EXHIBIT C:

                  8.1      BY BDE.  To the  extent  permitted  by law,  BDE will
indemnify  and hold  harmless  M.  Toibb,  any  underwriter  (as  defined in the
Securities  Act) for M. Toibb and each person,  if any, who controls M. Toibb or
M. Toibb's  underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses,  claims,  damages, or liabilities (joint or several) to
which they may become  subject  under the  Securities  Act,  the Exchange Act or
other  federal  or state  law,  insofar  as such  losses,  claims,  damages,  or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
of  the  following   statements,   omissions  or  violations   (collectively   a
"VIOLATION"):

                           8.1.1    any  untrue   statement  or  alleged  untrue
statement of a material fact contained in such registration statement, including
any  preliminary  prospectus  or  final  prospectus  contained  therein  or  any
amendments or supplements thereto;

                           8.1.2    omission   or  alleged   omission  to  state
therein a material fact required to be stated therein,  or necessary to make the
statements therein not misleading; or

                           8.1.3    violation or alleged violation by BDE of the
Securities  Act, the Exchange  Act, any federal or state  securities  law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state  securities law in connection with the offering covered by such
registration statement;

and BDE will reimburse M. Toibb or his underwriter or controlling person for any
legal or other expenses reasonably incurred by them, as incurred,  in connection
with  investigating  or defending  any such loss,  claim,  damage,  liability or
action;  PROVIDED,  HOWEVER,  that the  indemnity  agreement  contained  in this
SECTION  8.1.  shall not apply to amounts paid in  settlement  of any such loss,
claim,  damage,  liability or action if such settlement is effected  without the
consent of BDE


                                  Exhibit D-4
<PAGE>


(which consent shall not be unreasonably  withheld),  nor shall BDE be liable in
any such  case for any such  loss,  claim,  damage,  liability  or action to the
extent  that it  arises  out of or is based  upon a  Violation  which  occurs in
reliance upon and in conformity with written information furnished expressly for
use in  connection  with such  registration  M. Toibb,  his  underwriter  or any
controlling person of M. Toibb.

         9.       BY M.  TOIBB.  To the extent  permitted  by law, M. Toibb will
indemnify and hold harmless BDE, each of its directors, each of its officers who
have signed the registration  statement,  each person,  if any, who controls BDE
within the  meaning of the  Securities  Act,  or any  underwriter,  against  any
losses,  claims,  damages or liabilities  (joint or several) to which BDE or any
such director,  officer,  controlling  person, or underwriter may become subject
under the  Securities  Act,  the  Exchange  Act or other  federal  or state law,
insofar as such losses,  claims,  damages or liabilities  (or actions in respect
thereto)  arise  out of or are  based  upon any  Violation,  in each case to the
extent (and only to the extent) that such Violation  occurs in reliance upon and
in conformity with written  information  furnished by M. Toibb expressly for use
in connection with such  registration;  and M. Toibb will reimburse any legal or
other  expenses  reasonably  incurred  by  BDE or any  such  director,  officer,
controlling person, or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action;  PROVIDED,  HOWEVER, that the
indemnity  agreement  contained  in this  SECTION 8.2 shall not apply to amounts
paid in settlement of any such loss, claim, damage,  liability or action if such
settlement is effected without the consent of M. Toibb,  which consent shall not
be unreasonably  withheld;  and PROVIDED FURTHER, that the total amounts payable
in  indemnity  by M. Toibb under this  SECTION  8.2 in respect of any  Violation
shall  not  exceed  the net  proceeds  received  by M.  Toibb in the  registered
offering out of which such Violation arises.

         10.      NOTICE.  Promptly after receipt by an indemnified  party under
this  SECTION 8 of notice  of the  commencement  of any  action  (including  any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made  against any  indemnifying  party under this SECTION 8, deliver to
the  indemnifying  party a written  notice of the  commencement  thereof and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,   to  assume  the  defense  thereof  with  counsel  mutually
satisfactory to the parties; provided,  HOWEVER, that an indemnified party shall
have the right to retain its own counsel,  with the fees and expenses to be paid
by the indemnifying  party, if  representation  of such indemnified party by the
counsel retained by the indemnifying  party would be inappropriate due to actual
or potential  conflict of interests between such indemnified party and any other
party  represented  by such counsel in such  proceeding.  The failure to deliver
written  notice  to the  indemnifying  party  within  a  reasonable  time of the
commencement  of any such action,  if  prejudicial to its ability to defend such
action,   shall  relieve  such  indemnifying  party  of  any  liability  to  the
indemnified  party under this SECTION 8, but the omission so to deliver  written
notice to the  indemnifying  party will not relieve it of any liability  that it
may have to any indemnified party otherwise than under this SECTION 8.

         11.      DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity
agreements  of BDE and M. Toibb are subject to the  condition  that,  insofar as
they relate to any Violation made in a preliminary  prospectus but eliminated or
remedied  in the  amended  prospectus  on  file  with  the SEC at the  time  the
registration  statement in question becomes effective or the amended


                                  Exhibit D-5
<PAGE>


prospectus  filed  with  the  SEC  pursuant  to  SEC  Rule  424(b)  (the  "FINAL
PROSPECTUS"),  such  indemnity  agreement  shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified  party
and was not  furnished to the person  asserting  the loss,  liability,  claim or
damage at or prior to the time such action is required by the Securities Act.

         12.      SURVIVAL.  The  obligations  of BDE and M.  Toibb  under  this
SECTION 8 shall survive the completion of any offering of Registrable Securities
in a registration statement.

         13.      SETTLEMENT.  No indemnified  party, in the defense of any such
claim or litigation,  shall,  except with the consent of each indemnified party,
consent to entry of any  judgment  or enter into any  settlement  which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such  indemnified  party of a release  from all  liability in respect to such
claim or litigation.

         14.      ASSIGNMENT OF REGISTRATION  RIGHTS. The rights to cause BDE to
register Registrable  Securities pursuant to SECTION 2 may not be assigned by M.
Toibb.

         15.      TERMINATION  OF  REGISTRATION  RIGHTS.  M. Toibb  shall not be
entitled to exercise any right  provided in this EXHIBIT C hereof  subsequent to
the  time at  which  all  Registrable  Securities  held  by M.  Toibb  (and  any
Affiliates of M. Toibb with whom M. Toibb must aggregate  their sales under Rule
144) can be sold in any three month period  without  registration  in compliance
with Rule 144 of the Act.


                                  Exhibit D-6