16




                                     WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK
ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION
UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE
SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION
RULE 144.

                       WARRANT TO PURCHASE COMMON STOCK OF
                      BRILLIANT DIGITAL ENTERTAINMENT, INC.

                             (Subject to Adjustment)

NO. __                                                           July 16, 1998

THIS CERTIFIES THAT, for value received by Brilliant Digital Entertainment,
Inc., a Delaware corporation (the "Company") under clause 8 of the Software
Development Agreement entered into by the Company and Intel Corporation on July
14, 1998, Intel, or its permitted registered assigns ("HOLDER"), is entitled,
subject to the terms and conditions of this Warrant, at any time or from time to
time after the issuance date of this Warrant (the "EFFECTIVE Date"), and before
5:00 p.m. Pacific Time on the third anniversary of the Effective Date (the
"EXPIRATION DATE"), to purchase from the Company, three hundred thousand
(300,000) shares of Common Stock of the Company at a price per share of $4.00
(the "Purchase Price"). Both the number of shares of Common Stock purchasable
upon exercise of this Warrant and the Purchase Price are subject to adjustment
and change as provided herein. This Warrant Agreement confirms, sets forth in
long term and in its entirety, and supersedes an agreement between the Company
and Intel reached on July 10, 1998.

1.    CERTAIN DEFINITIONS.  As used in this Warrant the following terms shall
      have the following respective meanings:

1.1.  "FAIR MARKET VALUE" of a share of Common Stock as of a particular date
      shall mean:

      (a)         If traded on a securities exchange or the Nasdaq National
                  Market, the Fair Market Value shall be deemed to be the
                  average of the closing prices of the Common Stock of the
                  Company on such exchange or market over the five (5) trading
                  days ending immediately prior to the applicable date of
                  valuation;

      (b)         If actively traded over-the-counter, the Fair Market Value
                  shall be deemed to be the average of the closing bid prices
                  over the thirty (30)-day period ending immediately prior to
                  the applicable date of valuation; and

                                     Page 1
<PAGE>

      (c)         If there is no active public market, the Fair Market Value
                  shall be the value thereof, as agreed upon by the Company
                  and the Holder; provided, however, that if the Company and
                  the Holder cannot agree on such value, such value shall be
                  determined by an independent valuation firm experienced in
                  valuing businesses such as the Company and jointly selected
                  in good faith by the Company and the Holder. Fees and
                  expenses of the valuation firm shall be paid for by the
                  Company.

1.2.  "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
      1976, as amended.

1.3.  "REGISTERED HOLDER" shall mean any Holder in whose name this Warrant is
      registered upon the books and records maintained by the Company.

1.4.  "WARRANT" as used herein, shall include this Warrant and any warrant
      delivered in substitution or exchange therefor as provided herein.

1.5.  "COMMON STOCK" shall mean the Common Stock of the Company and any other
      securities at any time receivable or issuable upon exercise of this
      Warrant.

2.    EXERCISE OF WARRANT

2.1.  PAYMENT. Subject to compliance with the terms and conditions of this
      Warrant and applicable securities laws, this Warrant may be exercised, in
      whole or in part at any time or from time to time, on or before the
      Expiration Date by the delivery (including, without limitation, delivery
      by facsimile) of the form of Notice of Exercise attached hereto as EXHIBIT
      1 (the "Notice of Exercise"), duly executed by the Holder, at the
      principal office of the Company, and as soon as practicable after such
      date, surrendering

      (a)   this Warrant at the principal office of the Company, and

      (b)   payment, (i) in cash (by check) or by wire transfer, (ii) by
            cancellation by the Holder of indebtedness of the Company to the
            Holder; or (iii) by a combination of (i) and (ii), of an amount
            equal to the product obtained by multiplying the number of shares of
            Common Stock being purchased upon such exercise by the then
            effective Purchase Price (the "Exercise Amount"), except that if
            Holder is subject to HSR Act Restrictions (as defined in Section 2.4
            below), the Exercise Amount shall be paid to the Company within five
            (5) business days of the termination of all HSR Act Restrictions.

2.2.  NET ISSUE EXERCISE. In lieu of the payment methods set forth in Section
      2.1(b) above, the Holder may elect to exchange all or some of this Warrant
      for shares of Common Stock equal to the value of the amount of the Warrant
      being exchanged on the date of exchange. If Holder elects to exchange this
      Warrant as provided in this Section 2.2, Holder shall tender to the
      Company the Warrant for the amount being exchanged, along with written
      notice of Holder's election to exchange some


                                     Page 2
<PAGE>

      or all of the Warrant, and the Company shall issue to Holder the number of
      shares of the Common Stock computed using the following formula:

                 X =  Y (A-B)
                        -----
                          A
               Where X = the number of shares of Common Stock to be issued
                         to Holder.
                     Y = the number of shares of Common Stock purchasable
                         under the amount of the Warrant being exchanged (as
                         adjusted to the date of such calculation).
                     A = the Fair Market Value of one share of the Common
                         Stock.
                     B = Purchase Price (as adjusted to the date of such
                         calculation).

2.3.  "EASY SALE" EXERCISE. In lieu of the payment methods set forth in Section
      2.1(b) above, when permitted by law and applicable regulations (including
      Nasdaq and NASD rules), the Holder may pay the Purchase Price through a
      "same day sale" commitment from the Holder (and if applicable a
      broker-dealer that is a member of the National Association of Securities
      Dealers (an "NASD Dealer")), whereby the Holder irrevocably elects to
      exercise this Warrant and to sell a portion of the shares so purchased to
      pay the Purchase Price and the Holder (or, if applicable, the NASD Dealer)
      commits upon sale (or, in the case of the NASD Dealer, upon receipt) of
      such shares to forward the Purchase Price directly to the Company.

2.4.  STOCK CERTIFICATES; FRACTIONAL SHARES. As soon as practicable on or
      after the date of any exercise of this Warrant, the Company shall issue
      and deliver to the person or persons entitled to receive the same a
      certificate or certificates for the number of whole shares of Common Stock
      issuable upon such exercise, together with cash in lieu of any fraction of
      a share equal to such fraction of the current Fair Market Value of one
      whole share of Common Stock as of such date of exercise. No fractional
      shares or scrip representing fractional shares shall be issued upon an
      exercise of this Warrant.

2.5.  HSR ACT. The Company hereby acknowledges that exercise of this
      Warrant by Holder may subject the Company and/or the Holder to the filing
      requirements of the HSR Act and that Holder may be prevented from
      exercising this Warrant until the expiration or early termination of all
      waiting periods imposed by the HSR Act ("HSR Act Restrictions"). If on or
      before the Expiration Date Holder has sent the Notice of Exercise to
      Company and Holder has not been able to complete the exercise of this
      Warrant prior to the Expiration Date because of HSR Act Restrictions, the
      Holder shall be entitled to complete the process of exercising this
      Warrant in accordance with the procedures contained herein notwithstanding
      the fact that completion of the exercise of this Warrant would take place
      after the Expiration Date.

                                     Page 3
<PAGE>

2.6.  PARTIAL EXERCISE; EFFECTIVE DATE OF EXERCISE. In case of any partial
      exercise of this Warrant, the Company shall cancel this Warrant upon
      surrender hereof and shall execute and deliver a new Warrant of like tenor
      and date for the balance of the shares of Common Stock purchasable
      hereunder. This Warrant shall be deemed to have been exercised immediately
      prior to the close of business on the date of its surrender for exercise
      as provided above. However, if Holder is subject to HSR Act filing
      requirements this Warrant shall be deemed to have been exercised on the
      date immediately following the date of the expiration of all HSR Act
      Restrictions. The person entitled to receive the shares of Common Stock
      issuable upon exercise of this Warrant shall be treated for all purposes
      as the holder of record of such shares as of the close of business on the
      date the Holder is deemed to have exercised this Warrant.

2.7.  VESTING.  The warrants shall vest fully upon issuance.

3.    VALID ISSUANCE:  TAXES.  All shares of Common Stock issued upon the
      exercise of this Warrant shall be validly issued, fully paid and
      non-assessable, and the Company shall pay all taxes and other
      governmental charges that may be imposed in respect of the issue or
      delivery thereof.  The Company shall not be required to pay any tax or
      other charge imposed in connection with any transfer involved in the
      issuance of any certificate for shares of Common Stock in any name
      other than that of the Registered Holder of this Warrant, and in such
      case the Company shall not be required to issue or deliver any stock
      certificate or security until such tax or other charge has been paid,
      or it has been established to the Company's reasonable satisfaction
      that no tax or other charge is due.

4.    ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
      Common Stock issuable upon exercise of this Warrant (or any shares of
      stock or other securities or property receivable or issuable upon exercise
      of this Warrant) and the Purchase Price are subject to adjustment upon
      occurrence of the following events:

4.1.  ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR COMBINATIONS OF
      SHARES. The Purchase Price of this Warrant shall be proportionally
      decreased and the number of shares of Common Stock issuable upon exercise
      of this Warrant (or any shares of stock or other securities at the time
      issuable upon exercise of this Warrant) shall be proportionally increased
      to reflect any stock split or subdivision of the Company's Common Stock.
      The Purchase Price of this Warrant shall be proportionally increased and
      the number of shares of Common Stock issuable upon exercise of this
      Warrant (or any shares of stock or other securities at the time issuable
      upon exercise of this Warrant) shall be proportionally decreased to
      reflect any combination of the Company's Common Stock.

4.2.  ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR OTHER
      SECURITIES OR PROPERTY. In case the Company shall make or issue, or shall
      fix a record date for the determination of eligible holders entitled to
      receive, a dividend or other distribution with respect to the Common Stock
      (or any shares of stock or other securities at the time issuable upon
      exercise of the Warrant) payable in (a) securities of the Company or (b)
      assets (excluding cash dividends paid or payable solely out of retained
      earnings), then, in each such case, the Holder of this Warrant on exercise
      hereof at any time after the consummation, effective date or record


                                     Page 4
<PAGE>

      date of such dividend or other distribution, shall receive, in addition to
      the shares of Common Stock (or such other stock or securities) issuable on
      such exercise prior to such date, and without the payment of additional
      consideration therefor, the securities or such other assets of the Company
      to which such Holder would have been entitled upon such date if such
      Holder had exercised this Warrant on the date hereof and had thereafter,
      during the period from the date hereof to and including the date of such
      exercise, retained such shares and all such additional securities or other
      assets distributed with respect to such shares as aforesaid during such
      period giving effect to all adjustments called for by this Section 4.

4.3.  RECLASSIFICATION. If the Company, by reclassification of securities
      or otherwise, shall change any of the securities as to which purchase
      rights under this Warrant exist into the same or a different number of
      securities of any other class or classes, this Warrant shall thereafter
      represent the right to acquire such number and kind of securities as would
      have been issuable as the result of such change with respect to the
      securities that were subject to the purchase rights under this Warrant
      immediately prior to such reclassification or other change, and the
      Purchase Price therefor shall be appropriately adjusted, all subject to
      further adjustment as provided in this Section 4. No adjustment shall be
      made pursuant to this Section 4.3 upon any conversion or redemption of the
      Common Stock which is the subject of Section 4.5.

4.4.  ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR CONSOLIDATION. In
      case of any capital reorganization of the capital stock of the Company
      (other than a combination, reclassification, exchange or subdivision of
      shares otherwise provided for herein), or any merger or consolidation of
      the Company with or into another corporation, or the sale of all or
      substantially all the assets of the Company then, and in each such case,
      as a part of such reorganization, merger, consolidation, sale or transfer,
      lawful provision shall be made so that the Holder of this Warrant shall
      thereafter be entitled to receive upon exercise of this Warrant, during
      the period specified herein and upon payment of the Purchase Price then in
      effect, the number of shares of stock or other securities or property of
      the successor corporation resulting from such reorganization, merger,
      consolidation, sale or transfer that a holder of the shares deliverable
      upon exercise of this Warrant would have been entitled to receive in such
      reorganization, consolidation, merger, sale or transfer if this Warrant
      had been exercised immediately before such reorganization, merger,
      consolidation, sale or transfer, all subject to further adjustment as
      provided in this Section 4. The foregoing provisions of this Section 4.4
      shall similarly apply to successive reorganizations, consolidations,
      mergers, sales and transfers and to the stock or securities of any other
      corporation that are at the time receivable upon the exercise of this
      Warrant. If the per-share consideration payable to the Holder hereof for
      shares in connection with any such transaction is in a form other than
      cash or marketable securities, then the value of such consideration shall
      be determined in good faith by the Company's Board of Directors. In all
      events, appropriate adjustment (as determined in


                                     Page 5
<PAGE>

      good faith by the Company's Board of Directors) shall be made in the
      application of the provisions of this Warrant with respect to the rights
      and interests of the Holder after the transaction, to the end that the
      provisions of this Warrant shall be applicable after that event, as near
      as reasonably may be, in relation to any shares or other property
      deliverable after that event upon exercise of this Warrant.

4.5.  CONVERSION OF COMMON STOCK. In case all or any portion of the
      authorized and outstanding shares of Common Stock of the Company are
      redeemed or converted or reclassified into other securities or property
      pursuant to the Company's Certificate of Incorporation or otherwise, or
      the Common Stock otherwise ceases to exist, then, in such case, the Holder
      of this Warrant, upon exercise hereof at any time after the date on which
      the Common Stock is so redeemed or converted, reclassified or ceases to
      exist (the "Termination Date"), shall receive, in lieu of the number of
      shares of Common Stock that would have been issuable upon such exercise
      immediately prior to the Termination Date, the securities or property that
      would have been received if this Warrant had been exercised in full and
      the Common Stock received thereupon had been simultaneously converted
      immediately prior to the Termination Date, all subject to further
      adjustment as provided in this Warrant. Additionally, the Purchase Price
      shall be immediately adjusted to equal the quotient obtained by dividing
      (x) the aggregate Purchase Price of the maximum number of shares of Common
      Stock for which this Warrant was exercisable immediately prior to the
      Termination Date by (y) the number of shares of Common Stock of the
      Company for which this Warrant is exercisable immediately after the
      Termination Date, all subject to further adjustment as provided herein.

5.    CERTIFICATE AS TO ADJUSTMENTS.  In each case of any adjustment in the
      Purchase Price, or number or type of shares issuable upon exercise of
      this Warrant, the Chief Financial Officer or Controller of the Company
      shall compute such adjustment in accordance with the terms of this
      Warrant and prepare a certificate setting forth such adjustment and
      showing in detail the facts upon which such adjustment is based,
      including a statement of the adjusted Purchase Price.  The Company
      shall promptly send (by facsimile and by either first class mail,
      postage prepaid or overnight delivery) a copy of each such certificate
      to the Holder.

6.    LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to
      the Company of the ownership of and the loss, theft, destruction or
      mutilation of this Warrant, and of indemnity reasonably satisfactory to
      it, and (in the case of mutilation) upon surrender and cancellation of
      this Warrant, the Company will execute and deliver in lieu thereof a new
      Warrant of like tenor as the lost, stolen, destroyed or mutilated Warrant.

7.    RESERVATION OF COMMON STOCK.  The Company hereby covenants that at all
      times there shall be reserved for issuance and delivery upon exercise
      of this Warrant such number of shares of Common Stock or other shares
      of capital stock of the Company as are from time to time issuable upon
      exercise of this Warrant and, from time to time, will take all steps
      necessary to amend its Certificate of Incorporation to provide
      sufficient reserves of shares of Common Stock issuable upon exercise of
      this Warrant.  All such shares shall be duly authorized, and when
      issued upon such exercise, shall be validly

                                     Page 6
<PAGE>

      issued, fully paid and non-assessable, free and clear of all liens,
      security interests, charges and other encumbrances or restrictions on sale
      and free and clear of all preemptive rights, except encumbrances or
      restrictions arising under federal or state securities laws. Issuance of
      this Warrant shall constitute full authority to the Company's Officers who
      are charged with the duty of executing stock certificates to execute and
      issue the necessary certificates for shares of Common Stock upon the
      exercise of this Warrant.

8.    TRANSFER AND EXCHANGE.  Subject to the terms and conditions of this
      Warrant and compliance with all applicable securities laws, this
      Warrant and all rights hereunder may be transferred to any Registered
      Holder's parent, subsidiary or affiliate, in whole or in part, on the
      books of the Company maintained for such purpose at the principal
      office of the Company referred to above, by the Registered Holder
      hereof in person, or by duly authorized attorney, upon surrender of
      this Warrant properly endorsed and upon payment of any necessary
      transfer tax or other governmental charge imposed upon such transfer.
      Upon any permitted partial transfer, the Company will issue and deliver
      to the Registered Holder a new Warrant or Warrants with respect to the
      shares of Common Stock not so transferred.  Each taker and holder of
      this Warrant, by taking or holding the same, consents and agrees that
      when this Warrant shall have been so endorsed, the person in possession
      of this Warrant may be treated by the Company, and all other persons
      dealing with this Warrant, as the absolute owner hereof for any purpose
      and as the person entitled to exercise the rights represented hereby,
      any notice to the contrary notwithstanding; provided, however that
      until a transfer of this Warrant is duly registered on the books of the
      Company, the Company may treat the Registered Holder hereof as the
      owner for all purposes.

9.    RESTRICTIONS ON TRANSFER.  The Holder, by acceptance hereof, agrees
      that, absent an effective registration statement filed with the
      Securities and Exchange Commission (the "SEC") under the Securities Act
      covering the disposition or sale of this Warrant or the Common Stock
      issued or issuable upon exercise hereof, as the case may be, and
      registration or qualification under applicable state securities laws,
      such Holder will not sell, transfer, pledge, or hypothecate any or all
      of this Warrant or such Common Stock, as the case may be, unless either
      (i) the Company has received an opinion of counsel, in form and
      substance reasonably satisfactory to the Company, to the effect that
      such registration is not required in connection with such disposition
      or (ii) the sale of such securities is made pursuant to SEC Rule 144.

10.   COMPLIANCE WITH SECURITIES LAWS.  By acceptance of this Warrant, the
      Holder hereby represents, warrants and covenants that any shares of
      stock purchased upon exercise of this Warrant shall be acquired for
      investment only and not with a view to, or for sale in connection with,
      any distribution thereof; that the Holder has had such opportunity as
      such Holder has deemed adequate to obtain from representatives of the
      Company such information as is necessary to permit the Holder to
      evaluate the merits and risks of its investment in the Company; that
      the Holder is able to bear the economic risk of holding such shares as
      may be acquired pursuant to the exercise of this Warrant for an
      indefinite period; that the Holder understands that the shares of stock
      acquired pursuant to the exercise of this Warrant will not be
      registered under the 1933 Act (unless otherwise required pursuant to
      exercise by the Holder of the registration rights, if any, granted to
      the Registered Holder) and will be "restricted securities" within the
      meaning of Rule 144 under the 1933 Act and that the exemption from
      registration under Rule 144 will not be

                                     Page 7
<PAGE>

      available for at least one (1) year from the date of exercise of this
      Warrant, subject to any special treatment by the SEC for exercise of this
      Warrant pursuant to Section 2.2, and even then will not be available
      unless a public market then exists for the stock, adequate information
      concerning the Company is then available to the public, and other terms
      and conditions of Rule 144 are complied with; and that all stock
      certificates representing shares of stock issued to the Holder upon
      exercise of this Warrant or upon conversion of such shares may have
      affixed thereto a legend substantially in the following form:

      THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE
      SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
      ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
      AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
      PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
      THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
      FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
      REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
      ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
      WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

11.   NO RIGHTS OR LIABILITIES AS STOCKHOLDERS.  This Warrant shall not
      entitle the Holder to any voting rights or other rights as a
      stockholder of the Company.  In the absence of affirmative action by
      such Holder to purchase Common Stock by exercise of this Warrant or
      Common Stock upon conversion thereof, no provisions of this Warrant,
      and no enumeration herein of the rights or privileges of the Holder
      hereof shall cause such Holder hereof to be a stockholder of the
      Company for any purpose.

12.   REGISTRATION RIGHTS. All shares of Common Stock issuable upon exercise of
      this Warrant shall be "Registrable Securities" or such other definition of
      securities entitled to registration rights pursuant to Exhibit 3 to this
      Warrant.

13.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
      represents and warrants to Holder that:

13.1. DUE AUTHORIZATION; CONSENTS. All corporate action on the part of the
      Company, its officers, directors and shareholders necessary for (a) the
      authorization, execution and delivery of, and the performance of all
      obligations of the Company under, this Warrant, and (b) the authorization,
      issuance, reservation for issuance and delivery of all of the Common Stock
      issuable upon exercise of this Warrant, has been duly taken. This Warrant
      constitutes a valid and binding obligation of the Company enforceable in
      accordance with its terms, subject, as to enforcement of remedies, to
      applicable bankruptcy, insolvency, moratorium, reorganization and similar
      laws affecting creditors' rights generally and to general equitable
      principles. All consents, approvals and authorizations of, and
      registrations, qualifications and filings with, any federal or state
      governmental agency, authority or body, or any third party, required in
      connection with the execution, delivery

                                     Page 8
<PAGE>


and performance of this Warrant
      and the consummation of the transactions contemplated hereby and thereby
      have been obtained.

13.2. ORGANIZATION. The Company 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 to own, lease and operate its property
      and to carry on its business as now being conducted and as currently
      proposed to be conducted.

13.3. SEC REPORTS; FINANCIAL STATEMENTS.

      (a)   The Company has duly filed with the SEC the Company's annual report
            on Form 10-K for the year ended December 31, 1998 (the "Brilliant
            Digital Entertainment, Inc. SEC Reports"). As of their respective
            filing dates, the Brilliant Digital Entertainment, Inc. SEC Reports
            complied in all material respects with the requirements of the
            Securities Exchange Act of 1934, as amended, and none of the SEC
            Documents contained any untrue statement of a material fact or
            omitted to state a material fact required to be stated therein or
            necessary to make the statements made therein, in light of the
            circumstances in which they were made, not misleading, except to the
            extent corrected by a subsequently filed document with the SEC.

      (b)   Each of the consolidated financial statements (including, in each
            case, any related notes) contained in the Brilliant Digital
            Entertainment, Inc. SEC Reports complied as to form in all material
            respects with the applicable published rules and regulations of the
            SEC with respect thereto, was prepared in accordance with generally
            accepted accounting principles applied on a consistent basis
            throughout the periods involved (except as may be indicated in the
            notes to such financial statements or, in the case of unaudited
            statements, as permitted for by Form 10-Q) and presented fairly, in
            all material respects, the consolidated financial position of the
            Company and its subsidiaries as at the respective dates and the
            consolidated results of its operations and cash flows for the
            periods indicated, except that the unaudited interim financial
            statements are subject to normal and recurring year-end adjustments
            which are not expected to be material in amount.

13.4. VALID ISSUANCE OF STOCK. The outstanding shares of the capital stock of
      the Company are duly and validly issued, fully paid and non-assessable,
      and such shares, and all outstanding options and other securities of the
      Company, have been issued in full compliance with the registration and
      prospectus delivery requirements of the Securities Act and the
      registration and qualification requirements of all applicable state
      securities laws, or in compliance with applicable exemptions therefrom,
      and all other provisions of applicable federal and state securities laws,
      including without limitation, anti-fraud provisions.

13.5. GOVERNMENTAL CONSENTS. All consents, approvals, orders, authorizations or
      registrations, qualifications, declarations or filings with any federal or
      state governmental authority on the part of the Company required in
      connection with
                                     Page 9
<PAGE>

      the consummation of the transactions contemplated herein shall have been
      obtained prior to and be effective as of the Effective Date.

14.   NOTICES. Except as may be otherwise provided herein, all notices,
      requests, waivers and other communications made pursuant to this Agreement
      shall be in writing and shall be conclusively deemed to have been duly
      given (a) when hand delivered to the other party; (b) when received when
      sent by facsimile at the address and number set forth below; (c) three
      business days after deposit in the U.S. mail with first class or certified
      mail receipt requested postage prepaid and addressed to the other party as
      set forth below; or (d) the next business day after deposit with a
      national overnight delivery service, postage prepaid, addressed to the
      parties as set forth below with next-business-day delivery guaranteed,
      provided that the sending party receives a confirmation of delivery from
      the delivery service provider.

      To Holder:                      To the Company:
      Intel Corporation               Brilliant Digital Entertainment, Inc.
      2200 Mission College Blvd.      6355 Topanga Canyon Blvd.  Suite 120
      Santa Clara, CA 95052           Woodland Hills, CA  91367
      Attn:  Treasurer                Attn: Chief Financial Officer
      Fax Number: (408) 765-6038      Fax Number:   (818) 615-0995

      With copies to:                 With copies to:
      Intel Corporation               Brilliant Digital Entertainment, Inc.
      2200 Mission College Blvd.      6355 Topanga Canyon Blvd.  Suite 120
      Santa Clara, CA 95052           Woodland Hills, CA  91367
      Attn:  General Counsel          Attn: Chief Executive Officer
      Fax Number: (408)765-1859       Fax Number:  (818) 615-0995


      Each person making a communication hereunder by facsimile shall promptly
      confirm by telephone to the person to whom such communication was
      addressed each communication made by it by facsimile pursuant hereto but
      the absence of such confirmation shall not affect the validity of any such
      communication. A party may change or supplement the addresses given above,
      or designate additional addresses, for purposes of this Section 14 by
      giving the other party written notice of the new address in the manner set
      forth above.

15.   HEADINGS. The headings in this Warrant are for purposes of convenience in
      reference only, and shall not be deemed to constitute a part hereof.

16.   LAW GOVERNING. This Warrant shall be construed and enforced in accordance
      with, and governed by, the laws of the State of California.

17.   NO IMPAIRMENT.  The Company will not, by amendment of its Certificate
      of Incorporation or bylaws, or through reorganization, consolidation,
      merger, dissolution, issue or sale of securities, sale of assets or any
      other voluntary action, avoid or seek to avoid the observance or
      performance of any of the terms of this Warrant, but will at all times
      in good faith assist in the carrying out of all such terms and in the
      taking of all such action as may be necessary or appropriate in order
      to protect the rights of the Registered Holder of this Warrant against
      impairment.  Without limiting the generality of the foregoing, the
      Company (a) will not increase the par value of any shares of stock
      issuable upon the exercise of this Warrant above the amount payable
      therefor upon such exercise, and (b) will take all such action as may
      be necessary or appropriate in order that the

                                    Page 10
<PAGE>


      Company may validly and legally issue fully paid and non-assessable
      shares of Common Stock upon exercise of this Warrant.

18.   NOTICES OF RECORD DATE. In case:

18.1. the Company shall take a record of the holders of its Common Stock (or
      other stock or securities at the time receivable upon the exercise of this
      Warrant), for the purpose of entitling them to receive any dividend or
      other distribution, or any right to subscribe for or purchase any shares
      of stock of any class or any other securities or to receive any other
      right; or

18.2. of any consolidation or merger of the Company with or into another
      corporation, any capital reorganization of the Company, any
      reclassification of the Capital Stock of the Company, or any conveyance of
      all or substantially all of the assets of the Company to another
      corporation in which holders of the Company's stock are to receive stock,
      securities or property of another corporation; or

18.3. of any voluntary dissolution, liquidation or winding-up of the Company; or

18.4. of any redemption or conversion of all outstanding Common Stock;

      then, and in each such case, the Company will mail or cause to be mailed
      to the Registered Holder of this Warrant a notice specifying, as the case
      may be, (i) the date on which a record is to be taken for the purpose of
      such dividend, distribution or right, or (ii) the date on which such
      reorganization, reclassification, consolidation, merger, conveyance,
      dissolution, liquidation, winding-up, redemption or conversion is to take
      place, and the time, if any is to be fixed, as of which the holders of
      record of Common Stock or (such stock or securities as at the time are
      receivable upon the exercise of this Warrant), shall be entitled to
      exchange their shares of Common Stock (or such other stock or securities),
      for securities or other property deliverable upon such reorganization,
      reclassification, consolidation, merger, conveyance, dissolution,
      liquidation or winding-up. The Company shall use all reasonable efforts to
      ensure such notice shall be delivered at least thirty (30) days prior to
      the date therein specified.

19.   SEVERABILITY. If any term, provision, covenant or restriction of this
      Warrant is held by a court of competent jurisdiction to be invalid, void
      or unenforceable, the remainder of the terms, provisions, covenants and
      restrictions of this Warrant shall remain in full force and effect and
      shall in no way be affected, impaired or invalidated.

20.   COUNTERPARTS. For the convenience of the parties, any number of
      counterparts of this Warrant may be executed by the parties hereto and
      each such executed counterpart shall be, and shall be deemed to be, an
      original instrument.

21.   NO INCONSISTENT AGREEMENTS.  The Company will not on or after the date
      of this Warrant enter into any agreement with respect to its securities
      which is inconsistent with the rights granted to the Holders of this
      Warrant or otherwise conflicts with the provisions hereof.  The rights
      granted to the Holders hereunder do not in any way conflict with and
      are not inconsistent with the rights granted to holders of the
      Company's securities under any other agreements, except rights that
      have been waived.


                                    Page 11
<PAGE>


22.   SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
      Saturday, Sunday or legal holiday, the Expiration Date shall automatically
      be extended until 5:00 p.m. the next business day.

23.   CONFIDENTIALITY.  Confidential or proprietary information disclosed by
      either party under this Agreement, as well as the terms of this
      Agreement and Holder's investment in the Company (subject to Section 24
      below), shall be considered confidential information (the "CONFIDENTIAL
      INFORMATION") and shall not be disclosed by the Company or Holder to

22.   SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a
      Saturday, Sunday or legal holiday, the Expiration Date shall automatically
      be extended until 5:00 p.m. the next business day.

23.   CONFIDENTIALITY.  Confidential or proprietary information disclosed by
      either party under this Agreement, as well as the terms of this
      Agreement and Holder's investment in the Company (subject to Section 24
      below), shall be considered confidential information (the "CONFIDENTIAL
      INFORMATION") and shall not be disclosed by the Company or Holder to
      any third party.  The Company or Holder shall immediately notify the
      other party of any information that comes to its attention which might
      indicate that there has been a loss of confidentiality with respect to
      the Confidential Information.  In the event that the Company or Holder
      is requested or becomes legally compelled (by statute or regulation or
      by oral questions, interrogatories, request for information or
      documents, subpoena, criminal or civil investigative demand or similar
      process, including without limitation, in connection with any public or
      private offering of the Company's capital stock) to disclose any of the
      Confidential Information, such party (the "DISCLOSING PARTY") shall
      provide the other party (the "NON-DISCLOSING PARTY") with prompt
      written notice of that fact so that the other party may seek (with the
      cooperation and reasonable efforts of the Disclosing Party) a
      protective order, confidential treatment or other appropriate remedy.
      In such event, the Disclosing Party shall furnish only that portion of
      the Confidential Information which is legally required and shall
      exercise reasonable efforts to obtain reliable assurance that
      confidential treatment will be accorded the Confidential Information to
      the extent reasonably requested by the Non-Disclosing Party.  The
      provisions of this Section 23 shall be in addition to, and not in
      substitution for, the provisions of any separate nondisclosure
      agreement executed by the parties hereto with respect to the
      transaction contemplated hereby.

24.   PUBLIC ANNOUNCEMENTS.  Notwithstanding the provisions of Section 23
      above, from and after the Closing, the Company may disclose the
      existence of this Agreement and Holder's investment in the Company
      solely to the Company's investors, investment bankers, lenders,
      accountants, legal counsel, business partners, and bona fide
      prospective investors, employees, lenders and business partners, in
      each case only where such persons or entities have executed appropriate
      nondisclosure agreements with the Company.  The Company shall not issue
      any press release or make any other announcement to the general public
      or in any professional or trade publication regarding Holder, this
      Agreement or any of the terms hereof without the prior written consent
      of Holder, which consent may be withheld at the sole discretion of
      Holder.  Notwithstanding the foregoing, Holder may disclose its
      investment in the Company and the terms thereof to third parties or to
      the public at its discretion, and the Company shall have the right to
      disclose to third parties any such information disclosed by Holder in a
      press release or other public announcement.  If the Company or Holder
      determines that any disclosure not otherwise authorized by this
      Agreement is required by law or regulation, then the provisions of
      Section 23 regarding disclosure of Confidential Information by a
      Disclosing Party shall govern.

25.   DISPUTE RESOLUTION.  The parties agree to negotiate in good faith to
      resolve any dispute between them regarding this Warrant. If the
      negotiations do not resolve the dispute to the reasonable satisfaction
      of both parties, then each party shall nominate one senior officer of
      the rank of Vice President or higher as its representative. These

                                    Page 12
<PAGE>

      representatives shall, within thirty (30) days of a written request by
      either party to call such a meeting, meet in person and alone (except for
      one assistant for each party) and shall attempt in good faith to resolve
      the dispute. If the disputes cannot be resolved by such senior managers in
      such meeting, the parties agree that they shall, if requested in writing
      by either party, meet within thirty (30) days after such written
      notification for one day with an impartial mediator and consider dispute
      resolution alternatives other than litigation. If an alternative method of
      dispute resolution is not agreed upon within thirty (30) days after the
      one day mediation, either party may begin litigation proceedings. This
      procedure shall be a prerequisite before taking any additional action
      hereunder.


                                    Page 13
<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Effective Date.

Intel Corporation                        Brilliant Digital Entertainment, Inc.

/s/ TONY GOSDEN                          /s/ MICHAEL OZEN
--------------------------------------   -------------------------------------
By                                       By

Tony Gosden                              Michael Ozen
--------------------------------------   -------------------------------------
Printed Name                             Printed Name

Assistant Treasurer                      Chief Financial Officer
--------------------------------------   -------------------------------------
Title                                    Title


              SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK




                                    Page 14
<PAGE>



                                    EXHIBIT 1
                               NOTICE OF EXERCISE
                    (To be executed upon exercise of Warrant)

Brilliant Digital Entertainment, Inc.

The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities Brilliant Digital Entertainment, Inc., as provided for therein,
and (check the applicable box):

[ ]   tenders herewith payment of the exercise price in full in the form of cash
      or a certified or official bank check in same-day funds in the amount of
      $____________ for _________ such securities.


[ ]   Elects the [Net Issue Exercise][Easy Sale Exercise] option pursuant to
      Section 2.2 or 2.3 of the Warrant, and accordingly requests delivery of a
      net of ______________ of such securities.

Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):


Name:
           --------------------------------------------------------------------

Address:
           --------------------------------------------------------------------

Signature:
           --------------------------------------------------------------------

Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee appearing in
the assignment form below.

If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.




                                    Page 15
<PAGE>



                                    EXHIBIT 2
                                   ASSIGNMENT
         (To be executed only upon assignment of Warrant Certificate)

For value received, hereby sells, assigns and transfers unto
____________________________ the within Warrant Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:

-------------------------------------------------------------------------------

  NAME(S) OF ASSIGNEE(S)            ADDRESS                # OF WARRANTS


-------------------------------------------------------------------------------


-------------------------------------------------------------------------------


-------------------------------------------------------------------------------


-------------------------------------------------------------------------------


-------------------------------------------------------------------------------


-------------------------------------------------------------------------------

And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.

           --------------------------------------------------------------------

Dated:
           --------------------------------------------------------------------

Signature:
           --------------------------------------------------------------------

Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever; signature(s) must be guaranteed by an eligible
guarantor institution (banks, stock brokers, savings and loan associations and
credit unions with membership in an approved signature guarantee medallion
program) pursuant to Securities and Exchange Commission Rule 17Ad-15.



                                    Page 16
<PAGE>

26

                                    EXHIBIT 3

1.    REGISTRATION RIGHTS.


      1.1 DEFINITIONS. For purposes of this Section 1:

            (a)   REGISTRATION. The terms "REGISTER," "REGISTERED," and
                  "REGISTRATION" refer to a registration effected by preparing
                  and filing a registration statement in compliance with the
                  Securities Act of 1933, as amended, (the "SECURITIES ACT"),
                  and the declaration or ordering of effectiveness of such
                  registration statement

            (b)   REGISTRABLE SECURITIES.  The term "REGISTRABLE SECURITIES"
                  means:  (1) any Common Stock of the Company issued or to be
                  issued upon exercise of the Warrant and (2) any shares of
                  Common Stock of the Company 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, any shares of Common Stock described in
                  clause (1) of this subsection (b).  Notwithstanding the
                  foregoing, "Registrable Securities" shall exclude any
                  Registrable Securities sold by a person in a transaction in
                  which rights under this Section 1 are not assigned in
                  accordance with this Agreement or any Registrable
                  Securities sold in a public offering, whether sold pursuant
                  to Rule 144 promulgated under the Securities Act, or in a
                  registered offering, or otherwise.

            (c)   REGISTRABLE SECURITIES THEN OUTSTANDING. The number of shares
                  of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall mean the
                  number of shares of Common Stock of the Company that are
                  Registrable Securities and (l) are then issued and outstanding
                  or (2) are then issuable pursuant to an exercise of the
                  Warrant or pursuant to conversion of securities issuable
                  pursuant to an exercise of the Warrant.

            (d)   HOLDER. For purposes of this Section 1, the term "HOLDER"
                  means any person owning of record Registrable Securities that
                  have not been sold to the public or pursuant to Rule 144
                  promulgated under the Securities Act or any permitted assignee
                  of record of such Registrable Securities to whom rights under
                  this Section 1 have been duly assigned in accordance with this
                  Agreement.

            (e)   FORM S-3. The term "FORM S-3" means such form under the
                  Securities Act as is in effect on the date hereof or any
                  successor registration form under the Securities Act
                  subsequently adopted by the SEC which permits inclusion or
                  incorporation of substantial information by reference to other
                  documents filed by the Company with the SEC.


                                    Page 17
<PAGE>


            (f)   SEC. The term "SEC" or "COMMISSION" means the U.S. Securities
                  and Exchange Commission.

      1.2   [INTENTIONALLY OMITTED].

      1.3   PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
            Registrable Securities in writing at least thirty (30) days prior to
            filing any registration statement under the Securities Act for
            purposes of effecting a public offering of securities of the Company
            (including, but not limited to, registration statements relating to
            secondary offerings of securities of the Company, but EXCLUDING
            registration statements relating to any registration under Section
            1.4 of this Agreement or to any employee benefit plan or a corporate
            reorganization) and will afford each such Holder an opportunity to
            include in such registration statement all or any part of the
            Registrable Securities then held by such Holder. Each Holder
            desiring to include in any such registration statement all or any
            part of the Registrable Securities held by such Holder shall within
            twenty (20) days after receipt of the above-described notice from
            the Company, so notify the Company in writing, and in such notice
            shall inform the Company of the number of Registrable Securities
            such Holder wishes to include in such registration statement. If a
            Holder decides not to include all of its Registrable Securities in
            any registration statement thereafter filed by the Company, such
            Holder 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 the Company with respect
            to offerings of its securities, all upon the terms and conditions
            set forth herein.

            (a)   UNDERWRITING.  If a registration statement under which the
                  Company gives notice under this Section 1.3 is for an
                  underwritten offering, then the Company shall so advise the
                  Holders of Registrable Securities.  In such event, the
                  right of any such Holder's Registrable Securities to be
                  included in a registration pursuant to this Section 1.3
                  shall be conditioned upon such Holder's participation in
                  such underwriting and the inclusion of such Holder's
                  Registrable Securities in the underwriting to the extent
                  provided herein.  All Holders proposing to distribute their
                  Registrable Securities through such underwriting shall
                  enter into an underwriting agreement in customary form with
                  the managing underwriter or underwriters selected for such
                  underwriting (including a market stand-off agreement of up
                  to 180 days if required by such underwriters).
                  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 Company shall include
                  in such offering (i) first, all the securities the Company
                  proposes to register for its own account, and (ii) second,
                  Holder's Registrable Securities and other shares of Common
                  Stock of the Company requested to be included by other
                  investors having written registration rights agreements
                  with the Company respecting such shares ("Other Registrable
                  Securities"), with Holder and each such investor proposing
                  to sell such shares participating in such registration on a
                  pro rata basis, such participation to be based upon the


                                    Page 18
<PAGE>


                  number of shares of Registrable Securities and Other
                  Registrable Securities then held by the Holder and each such
                  investor, respectively; PROVIDED, HOWEVER, that the right of
                  the underwriters to exclude shares (including Registrable
                  Securities) from the registration and underwriting as
                  described above shall be restricted so that all shares that
                  are not Registrable Securities or Other Registrable Securities
                  and are held by any other person, including, without
                  limitation, any person who is an employee, officer or director
                  of the Company (or any subsidiary of the Company) shall first
                  be excluded from such registration and underwriting before any
                  Registrable Securities and Other Registrable Securities are so
                  excluded. If any Holder disapproves of the terms of any such
                  underwriting, such Holder may elect to withdraw therefrom by
                  written notice to the Company and the underwriter(s),
                  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. For any
                  Holder that is a partnership, the Holder and the partners and
                  retired partners of such Holder, or the estates and family
                  members of any such partners and retired partners and any
                  trusts for the benefit of any of the foregoing persons, and
                  for any Holder that is a corporation, the Holder and all
                  corporations that are affiliates of such Holder, shall be
                  deemed to be a single "Holder," and any pro rata reduction
                  with respect to such "Holder" shall be based upon the
                  aggregate amount of shares carrying registration rights owned
                  by all entities and individuals included in such "Holder," as
                  defined in this sentence.

            (b)   EXPENSES.  All expenses incurred in connection with a
                  registration pursuant to this Section 1.3 (excluding
                  underwriters' and brokers' discounts and commissions
                  relating to shares sold by the Holders and legal fees of
                  counsel for the Holders), including, without limitation all
                  federal and "blue sky" registration, filing and
                  qualification fees, printers' and accounting fees, and fees
                  and disbursements of counsel for the Company, shall be
                  borne by the Company.

            (c)   NO LIMIT ON REGISTRATIONS. Except as otherwise provided
                  herein, there shall be no limit on the number of times the
                  Holders may request registration of Registrable Securities
                  under this Section 1.3.

      1.4   FORM S-3 REGISTRATION. In case the Company shall at any time after
            the first anniversary of the date hereof receive from any Holder or
            Holders of a majority of all Registrable Securities then outstanding
            a written request or requests that the Company effect a registration
            on Form S-3 and any related qualification or compliance with respect
            to all or a part of the Registrable Securities owned by such Holder
            or Holders, then the Company will:

            (a)   NOTICE. Promptly give written notice of the proposed
                  registration and the Holder's or Holders' request therefor,
                  and any related qualification or compliance, to all other
                  Holders of Registrable Securities; and


                                    Page 19
<PAGE>


            (b)   REGISTRATION. As soon as practicable, effect such registration
                  and all such qualifications and compliances as may be so
                  requested and as would permit or facilitate the sale and
                  distribution of all or such portion of such Holders or
                  Holders' Registrable Securities as are specified in such
                  request, together with all or such portion of the Registrable
                  Securities of any other Holder or Holders joining in such
                  request as are specified in a written request given within
                  twenty (20) days after the Company provides the notice
                  contemplated by Section 1.4(a); provided, HOWEVER, that the
                  Company shall not be obligated to effect any such
                  registration, qualification or compliance pursuant to this
                  Section 1.4:

                  (1)   if Form S-3 is not available for such offering by the
                        Holders:

                  (2)   if the Holders, together with the holders of any other
                        securities of the Company entitled to inclusion in such
                        registration, propose to sell Registrable Securities and
                        such other securities (if any) at an aggregate price to
                        the public of less than $1,000,000;

                  (3)   if the Company shall furnish to the Holders a
                        certificate signed by the President or Chief Executive
                        Officer of the Company stating that in the good faith
                        judgment of the Board of Directors of the Company, it
                        would be materially detrimental to the Company and its
                        shareholders for such Form S-3 Registration to be
                        effected at such time, in which event the Company shall
                        have the right to defer the filing of the Form S-3
                        registration statement no more than once during any
                        twelve month period for a period of not more than ninety
                        (90) days after receipt of the request of the Holder or
                        Holders under this Section 1.4;

                  (4)   if the Company has, within the six (6) month period
                        preceding the date of such request, already effected a
                        registration under the Securities Act other than a
                        registration from which the Registrable Securities of
                        Holders have been excluded (with respect to all or any
                        portion of the Registrable Securities the Holders
                        requested be included in such registration) pursuant to
                        the provisions of Section 1.3(a); or

                  (5)   in any particular jurisdiction in which the Company
                        would be required to qualify to do business or to
                        execute a general consent to service of process in
                        effecting such registration, qualification or
                        compliance.

            (c)   EXPENSES.  The Company shall pay all expenses incurred in
                  connection with each registration requested pursuant to
                  this Section 1.4, (excluding underwriters' or brokers'
                  discounts and commissions relating to shares sold by the
                  Holders and legal fees of counsel for the Holders and
                  excluding expenses required to be paid by a Holder pursuant
                  to Section 1.5(g) below), including without limitation
                  federal and "blue sky" registration,


                                    Page 20
<PAGE>


filing and
                  qualification fees, printers' and accounting fees, and fees
                  and disbursements of counsel.

            (d)   DEFERRAL. Notwithstanding the foregoing, if the Company shall
                  furnish to Holders requesting the filing of a registration
                  statement pursuant to this Section 1.4, a certificate signed
                  by the President or Chief Executive Officer of the Company
                  stating that in the good faith judgment of the Board, it would
                  be materially detrimental to the Company and its stockholders
                  for such registration statement to be filed, then the Company
                  shall have the right to defer such filing for a period of not
                  more than ninety (90) days after receipt of the request of the
                  initiating Holders; PROVIDED, HOWEVER, that the Company may
                  not utilize this right more than once in any twelve (12) month
                  period.

            (e)   NO LIMIT ON REGISTRATIONS. Except as otherwise provided
                  herein, there shall be no limit on the number of times the
                  Holders may request registration of Registrable Securities
                  under this Section 1.4.

      1.5   OBLIGATIONS OF THE COMPANY. Whenever required to effect the
            registration of any Registrable Securities under this Agreement the
            Company shall, as expeditiously as reasonably possible:

            (a)   REGISTRATION STATEMENT. Prepare and file with the SEC a
                  registration statement with respect to such Registrable
                  Securities and use its best efforts to cause such registration
                  statement to become effective, PROVIDED, HOWEVER, that the
                  Company shall not be required to keep any such registration
                  statement effective for more than ninety (90) days.

            (b)   AMENDMENTS AND SUPPLEMENTS. 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 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.

            (c)   PROSPECTUSES. Furnish to the Holders 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 them that are included in such registration.

            (d)   BLUE SKY.  Use its best 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 the
                  Holders, provided that the Company 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.

            (e)   UNDERWRITING. In the event of any underwritten public
                  offering, enter into and perform its obligations under an
                  underwriting agreement in usual

                                    Page 21
<PAGE>

                  and customary form, with the managing underwriter(s) of such
                  offering. Each Holder participating in such underwriting shall
                  also enter into and perform its obligations under such an
                  agreement.

            (f)   NOTIFICATION. Notify each Holder of Registrable Securities
                  covered by such registration statement 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.

            (g)   OPINION AND COMFORT LETTER.  Furnish, at the request of any
                  Holder requesting registration of Registrable Securities,
                  on the date that such Registrable Securities are delivered
                  to the underwriters for sale, if such securities are being
                  sold through underwriters, (i) an opinion, dated as of such
                  date, of the counsel representing the Company for the
                  purposes of such registration, in form and substance as is
                  customarily given to underwriters in an underwritten public
                  offering and reasonably satisfactory to a majority in
                  interest of the Holders requesting registration, addressed
                  to the underwriters, if any, and to the Holders requesting
                  registration of Registrable Securities and (ii) a "comfort"
                  letter dated as of such date, from the independent
                  certified public accountants of the Company, in form and
                  substance as is customarily given by independent certified
                  public accountants to underwriters in an underwritten
                  public offering and reasonably satisfactory to a majority
                  in interest of the Holders requesting registration,
                  addressed to the underwriters, if any, and to the Holders
                  requesting registration of Registrable Securities.  If such
                  securities are not being sold through underwriters, then
                  the Company shall furnish, at the request and at the sole
                  expense of any Holder requesting registration of
                  Registrable Securities, on the date that the registration
                  statement with respect to such securities becomes
                  effective, an opinion, dated as of such date, of the
                  counsel representing the Company for the purposes of such
                  registration, in form and substance as is customarily given
                  to underwriters in an underwritten public offering and
                  reasonably satisfactory to a majority in interest of the
                  Holders requesting registration, addressed to the
                  underwriters, if any, and to the Holders requesting
                  registration of Registrable Securities.

      1.6   FURNISH INFORMATION. It shall be a condition precedent to the
            obligations of the Company to take any action pursuant to Sections
            1.3 or 1.4 that the selling Holders shall furnish to the Company
            such information regarding themselves, the Registrable Securities
            held by them, and the intended method of disposition of such
            securities as shall be required to timely effect the Registration of
            their Registrable Securities.


                                    Page 22
<PAGE>


      1.7   INDEMNIFICATION. In the event any Registrable Securities are
            included in a registration statement under Sections 1.3 or 1.4:

            (a)   BY THE COMPANY. To the extent permitted by law; the Company
                  will indemnify and hold harmless each Holder, the partners,
                  officers and directors of each Holder, any underwriter (as
                  determined in the Securities Act) for such Holder and each
                  person, if any, who controls such Holder or underwriter within
                  the meaning of the Securities Act or the Securities Exchange
                  Act of 1934, as amended, (the "1934 Act"), against any losses,
                  claims, damages, or Liabilities (joint or several) to which
                  they may become subject under the Securities Act, the 1934 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"):

                  (i)   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;

                  (ii)  the omission or alleged omission to state therein a
                        material fact required to be stated therein, or
                        necessary to make the statements therein not misleading,
                        or

                  (iii) any violation or alleged violation by the Company of the
                        Securities Act, the 1934 Act, any federal or state
                        securities law or any rule or regulation promulgated
                        under the Securities Act, the 1934 Act or any federal or
                        state securities law in connection with the offering
                        covered by such registration statement;

                  and the Company will reimburse each such Holder, partner,
                  officer or director, 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
                  subsection 1.7(a) 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
                  the Company (which consent shall not be unreasonably
                  withheld), nor shall the Company 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 by such Holder, partner, officer, director,
                  underwriter or controlling person of such Holder.

            (b)   BY SELLING HOLDERS.  To the extent permitted by law, each
                  selling Holder will indemnify and hold harmless the
                  Company, each of its directors, each of its officers who
                  have signed the registration statement, each person, if
                  any, who controls the Company within the meaning of the
                  Securities Act,


                                    Page 23
<PAGE>


                  any underwriter and any other Holder selling securities under
                  such registration statement or any of such other Holder's
                  partners, directors or officers or any person who controls
                  such Holder within the meaning of the Securities Act or the
                  1934 Act, against any losses, claims, damages or liabilities
                  (joint or several) to which the Company or any such director,
                  officer, controlling person, underwriter or other such Holder,
                  partner or director, officer or controlling person of such
                  other Holder may become subject under the Securities Act, the
                  1934 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 such Holder expressly for use
                  in connection with such registration; and each such Holder
                  will reimburse any legal or other expenses reasonably incurred
                  by the Company or any such director, officer, controlling
                  person, underwriter or other Holder, partner, officer,
                  director or controlling person of such other Holder in
                  connection with investigating or defending any such loss,
                  claim, damage, liability or action: PROVIDED, HOWEVER, that
                  the indemnity agreement contained in this subsection 1.7(b)
                  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 the Holder, which consent
                  shall not be unreasonably withheld; and PROVIDED, FURTHER,
                  that the total amounts payable in indemnity by a Holder under
                  this Section 1.7(b) in respect of any Violation shall not
                  exceed the net proceeds received by such Holder in the
                  registered offering out of which such Violation arises.

            (c)   NOTICE.  Promptly after receipt by an indemnified party
                  under this Section 1.7 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 1.7, 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
                  shall relieve such indemnifying party of liability to the
                  indemnified party under this Section 1.7 to the extent the
                  indemnifying party is prejudiced as a result thereof, but
                  the omission so to deliver written notice to the
                  indemnified party will not relieve it of any liability that
                  it may have to any indemnified party otherwise than under
                  this Section 1.7.

                                    Page 24
<PAGE>


            (d)   DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity
                  agreements of the Company and Holders 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 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 timely 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.

            (e)   CONTRIBUTION.  In order to provide for just and equitable
                  contribution to joint liability under the Securities Act in
                  any case in which either (i) any Holder exercising rights
                  under this Agreement, or any controlling person of any such
                  Holder, makes a claim for indemnification pursuant to this
                  Section 1.7 but it is judicially determined (by the entry
                  of a final judgment or decree by a court of competent
                  jurisdiction and the expiration of time to appeal or the
                  denial of the last right of appeal) that such
                  indemnification may not be enforced in such case
                  notwithstanding the fact that this Section 1.7 provides for
                  indemnification in such case, or (ii) contribution under
                  the Securities Act may be required on the part of any such
                  selling Holder or any such controlling person in
                  circumstances for which indemnification is provided under
                  this Section 1.7; then, and in each such case, the Company
                  and such Holder will contribute to the aggregate losses,
                  claims, damages or liabilities to which they may be subject
                  (after contribution from others) in such proportion so that
                  such Holder is responsible for the portion represented by
                  the percentage that the public offering price of its
                  Registrable Securities offered by and sold under the
                  registration statement bears to the public offering price
                  of all securities offered by and sold under such
                  registration statement, and the Company and other selling
                  Holders are responsible for the remaining portion;
                  provided, HOWEVER, that, in any such case: (A) no such
                  Holder will be required to contribute any amount in excess
                  of the public offering price of all such Registrable
                  Securities offered and sold by such Holder pursuant to such
                  registration statement; and (B) no person or entity guilty
                  of fraudulent misrepresentation (within the meaning of
                  Section 11(f) of the Securities Act) will be entitled to
                  contribution from any person or entity who was not guilty
                  of such fraudulent misrepresentation.

            (f)   SURVIVAL. The obligations of the Company and Holders under
                  this Section 1.7 shall survive until the fifth anniversary of
                  the completion of any offering of Registrable Securities in a
                  registration statement, regardless of the expiration of any
                  statutes of limitation or extensions of such statutes.

      1.8   TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have no
            obligations pursuant to Sections 1.3 and 1.4 with respect to any
            Registrable


                                    Page 25
<PAGE>

            Securities proposed to be sold by a Holder in a registration
            pursuant to Section 1.3 or 1.4 more than seven (7) years after the
            date of this Agreement, or, if, in the opinion of counsel to the
            Company, all such Registrable Securities proposed to be sold by a
            Holder may then be sold under Rule 144 in one transaction without
            exceeding the volume limitations thereunder.

                                    Page 26