Exhibit 10.1

 

WARRANT EXERCISE AGREEMENT

 

This Warrant Exercise Agreement (this “Agreement”), dated as of February 9,
2017, is by and between Genius Brands International, Inc. a Nevada corporation
(the “Company”), and the undersigned holder (the “Holder”) of warrants to
purchase shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), issued by the Company, which warrant is exercisable until
November 3, 2020 at an exercise price (the “Exercise Price”) of $3.30 per share
(the “Original Warrant”).

 

WHEREAS, the Holder’s Original Warrant is exercisable into a number of shares of
Common Stock as set forth on such Holder’s signature page hereto (the “Warrant
Shares”);

 

WHEREAS, the Holder wishes to exercise such Original Warrant in full and,
immediately prior to such exercise and in consideration of the Holder’s exercise
of such Original Warrant, the Company has agreed to issue the Holder, in
addition to the shares of Common Stock to which such exercising Holder is
entitled, (i) a new warrant identical to the Original Warrants except that the
termination date of such warrants shall be five years after the Closing Date
(the “Reload Warrants”) and, (ii) depending on the number of Original Warrants
exercised by all holders of the Original Warrants in the aggregate as more fully
set forth in Section 2.1(b), a new warrant identical to the Original Warrants
except that (x) the exercise price of such warrant shall be "$[ ][1], subject to
adjustment hereunder", (y) such warrant shall not be exercisable for six months
and one day after the Closing Date (the "Initial Exercisability Date") and (z)
the termination date of such warrants shall be five years after the Initial
Exercisability Date (the “Market Price Warrants” and collectively with the
Reload Warrants, the “New Warrants”). The shares of Common Stock underlying the
New Warrants are referred to herein as the "New Warrant Shares" and collectively
with the New Warrants, the "Securities". The number of shares of Common Stock
underlying the Reload Warrants and Market Price Warrants issued with respect to
each exercised Original Warrant shall be as determined pursuant to Section
2.1(b), it being understood that Nasdaq rules prevent the Company from issuing
Reload Warrants exercisable for more than an aggregate of 801,728 shares of
Common Stock without first obtaining approval of its stockholders.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Holder and the Company agree as follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.1 Definitions. Capitalized terms not defined in this Agreement shall
have the meanings ascribed to such terms in the Warrant.

 

ARTICLE II

EXERCISE OF EXISTING WARRANTS

 

Section 2.1 Exercise of Warrants. (a) Subject to the conditions in Section 2.3
below, the Company and the Holder hereby agree that the Holder shall exercise
all of the Original Warrants at the current Exercise Price per share, for
aggregate cash proceeds to the Company in the amount set forth on the Holder’s
signature page hereto, pursuant to the terms of the Original Warrants. Holder
shall execute and deliver the aggregate cash exercise price for such Original
Warrants to the bank account set forth on the Company’s signature page hereto
within two business days after notice from the Company that the condition set
forth in Section 2.3 has been met and the Company shall deliver the Warrant
Shares to the Holder via the Depository Trust Company Deposit or Withdrawal at
Custodian system pursuant to the terms of the Original Warrants, but pursuant to
wire transfer instructions set forth on the Holder’s signature page hereto. The
date of the closing of the exercise of the Original Warrants shall be referred
to as the “Closing Date”.

 

 

__________________

[1] Insert exercise price equal to 105% of the market price on the date this
Agreement is signed as determined in compliance with applicable Nasdaq rules and
regulations.

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(b) If 801,728 or fewer of the Original Warrants are exercised by all holders of
such Original Warrants, then each exercising Holder shall receive one Reload
Warrant for each Original Warrant exercised by such Holder and no Market Price
Warrants. If more than 801,728 Original Warrants are exercised in the aggregate,
then the number of shares of Common Stock underlying the Reload Warrants and
Market Price Warrants to be received by Holder shall be determined as follows:

 

The number of shares of Common Stock underlying the Reload Warrants to be
received by such Holder shall be determined by multiplying 801,728 by a
fraction, the numerator of which shall be the number of Original Warrants
exercised by such Holder and the denominator of which shall be the number of
Original Warrants exercised at the closing by all holders of Original Warrants.
The number of shares of Common Stock underlying the Market Price Warrants to be
received by Holder shall be determined first (a) by determining the total number
of shares of Common Stock underlying the Market Price Warrants to be issued to
all exercising holders of the Original Warrants, which number shall be
determined by subtracting 801,728 from the total number of Original Warrants
exercised by all holders thereof and then (b) multiplying the total number of
Market Price Warrants to be issued by a fraction, the numerator of which shall
be the number of Original Warrants exercised by Holder and the denominator of
which shall be the number of Original Warrants exercised at the closing by all
holders of Original Warrants.

 

Section 2.2 Issuance of New Warrants. Within 3 Trading Days of the Closing Date,
the Company shall deliver to the Holder the New Warrants to which such Holder is
entitled.

 

Section 2.3 Legends; Restricted Securities. (a) The Holder understands that the
New Warrants and the shares of Common Stock underlying New Warrants are not, and
will not be, registered under the Securities Act of 1933, as amended (the
“Securities Act”), or the securities laws of any state and, accordingly, each
certificate, if any, representing such securities shall bear a legend
substantially similar to the following:

 

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.”

 

(b)       Certificates evidencing shares of Common Stock underlying the New
Warrants shall not contain any legend (including the legend set forth in Section
2.3(a) hereof), (i) while a registration statement covering the resale of such
Common Stock is effective under the Securities Act, (ii) following any sale of
such Common Stock pursuant to Rule 144, (iii) if such Common Stock is eligible
for sale under Rule 144, without the requirement for the Company to be in
compliance with the current public information required under Rule 144 as to
such Common Stock and without volume or manner-of-sale restrictions, (iv) if
such Common Stock may be sold under Rule 144 and the Company is then in
compliance with the current public information required under Rule 144 as to
such Common Stock, or (v) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Securities and Exchange Commission
(the “Commission”)). The Company shall cause its counsel to issue a legal
opinion to the transfer agent promptly after the Delegend Date (as defined
below) if required by the Company and/or the transfer agent to effect the
removal of the legend hereunder, which opinion shall be in form and substance
reasonably acceptable to the Holder. If such Common Stock may be sold under Rule
144 without the requirement for the Company to be in compliance with the current
public information required under Rule 144 or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Common Stock shall be issued free of all legends. The Company agrees that
following the Delegend Date or at such time as such legend is no longer required
under this Section

 

 

 

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2.3(b), it will, no later than three (3) Trading Days following the delivery by
a Holder to the Company or the transfer agent of a certificate representing the
Common Stock underlying the New Warrants issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to such Holder a certificate representing such shares that is free from all
restrictive and other legends or, at the request of the Holder shall credit the
account of the Holder’s prime broker with the Depository Trust Company System as
directed by such Holder. The Company may not make any notation on its records or
give instructions to the transfer agent that enlarge the restrictions on
transfer set forth in this Section 2.3(b). “Delegend Date” means the earliest of
the date that (a) a registration statement with respect to the Common Stock has
been declared effective by the Commission or (b) all of the Common Stock has
been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 and without volume or manner-of-sale
restrictions or (c) following the six (6) month anniversary of (I) the Closing
Date if a New Warrant is exercised pursuant to a cashless exercise or (II) the
date of the related cash exercise of the New Warrants provided, in each case
that the holder of the New Warrants or the Common Stock, as the case may be, is
not an Affiliate of the Company, the Company is in compliance with the current
public information required under Rule 144 (“Current Public Information
Requirement”) and all such Common Stock may be sold pursuant to Rule 144 or an
exemption from registration under Section 4(a)(1) of the Securities Act without
volume or manner-of-sale restrictions; provided, further, however, that if the
Company fails to comply with the Current Public Information Requirement at any
time following the applicable six (6) month anniversary set forth above and the
one (1) year anniversary of the Closing Date, the Company shall promptly provide
notice to the Holder and the Holder undertakes not to sell such Common Stock
pursuant to Rule 144 until the Company notifies the Holder that it has regained
compliance with the Current Public Information Requirement; and provided
further, that if a delegending is in effect solely as the result of the
effectiveness of a registration statement covering the resale of any Common
Stock, the Holder undertakes not to sell any such Common Stock if the Holder is
notified or otherwise becomes aware that such registration statement has been
withdrawn or suspended, contains a material misstatement or omission or has
become stale. Each Holder, severally and not jointly with the other Holders,
agrees with the Company that such Holder will sell or transfer any New Warrants
or shares of Common Stock underlying New Warrants pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if such
securities are sold pursuant to a registration statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing any
such securities as set forth in this Section 2.3 or otherwise is predicated upon
the Company’s reliance upon this understanding.

 

Section 2.4 Filing of Form 8-K and Amendment to Registration Statement. Prior to
5:00 pm ET on the Trading Day following the date hereof, the Company shall issue
a Current Report on Form 8-K, reasonably acceptable to the Holder disclosing the
material terms of the transactions contemplated hereby, which shall include this
Agreement (the “8-K Filing”). From and after the issuance of the 8-K Filing, the
Company represents to the Holder that it shall not be in possession of any
material, nonpublic information received from the Company, any of its
Subsidiaries or any of their respective officers, directors, employees or
agents, that is not disclosed in the 8-K Filing. In addition, effective upon the
filing of the 8-K Filing, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and the
Holder or any of its affiliates, on the other hand, shall terminate. The Company
shall not, and shall cause each of its Subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide the Holder
with any material, nonpublic information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written
consent of the Holder. To the extent that the Company, any of its Subsidiaries
or any of their respective officers, directors, employees or agents, delivers
any material, non-public information to the Holder without such Holder’s
consent, the Company hereby covenants and agrees that such Holder shall not have
any duty of confidentiality with respect to, or a duty not to trade on the basis
of, such material, non-public information. Such 8-K Filing shall be incorporated
by reference into the registration statement on Form S-3 (No. 333-208540) (the
“Registration Statement”), thereby updating the prospectus included therein.

 

 

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Section 3.1 Representations and Warranties of the Company. The Company hereby
makes the representations and warranties set forth below to the Holder that as
of the date of its execution of this Agreement:

 

(a) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of such Company and no further
action is required by such Company, its board of directors or its stockholders
in connection therewith. This Agreement has been duly executed by the Company
and, when delivered in accordance with the terms hereof will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(b) Organization. The Company is a duly organized and validly existing
corporation in good standing under the laws of the State of Nevada.

 

(c) Registration Statement. The Warrant Shares are registered for issuance and
resale by the Holder on the Registration Statement and the Company knows of no
reasons why such registration statement shall not remain available for the
issuance and resale of such Warrant Shares for the foreseeable future. The
Company shall use commercially reasonable efforts to keep the Registration
Statement effective and available for use by the Holder until all Warrant Shares
are sold by the Holder.

 

(d) No Conflicts. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Company’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.

 

(e) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by this Agreement, the Company confirms that neither
it nor any other Person acting on its behalf has provided any of Holder or their
agents or counsel with any information that it believes constitutes or might
constitute material, non-public information. The Company understands and
confirms that the Holder will rely on the foregoing representation in effecting
transactions in securities of the Company. All of the disclosure furnished by or
on behalf of the Company to the Holder regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated
hereby, including but not limited to the disclosure set forth in the SEC
Reports, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. As used herein, “SEC Reports” means all reports,
schedules, forms, statements and other documents required to be filed by the
Company with the Commission pursuant to the reporting requirements of the 1934
Act, including all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein.

 

 

 

 

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(f) Issuance of Securities. The issuance of the New Warrants are duly authorized
and, upon issuance in accordance with the terms of this Agreement, the New
Warrants shall be validly issued and free from all preemptive or similar rights
(except for those which have been validly waived prior to the date hereof),
taxes, liens and charges and other encumbrances with respect to the issue
thereof. As of the Closing Date, a number of shares of Common Stock shall have
been duly authorized and reserved for issuance which equals or exceeds the
maximum number of Warrant Shares issuable upon exercise of the New Warrants
(without taking into account any limitations on the exercise of the New Warrants
set forth therein). Upon exercise of the New Warrants in accordance with the New
Warrants, the Warrant Shares when issued will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Assuming the accuracy of each of the representations and warranties set forth in
Section 3.2 of this Agreement, the offer and issuance by the Company of the New
Warrants is exempt from registration under the 1933 Act.

 

(g) No General Solicitation. Neither the Company, nor any of its Subsidiaries or
affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the New Warrants.

 

(h) No Integrated Offering. None of the Company, its Subsidiaries or any of
their affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance of any of the New Warrants or the shares of Common Stock underlying the
New Warrants (collectively, the “Securities”) under the 1933 Act, whether
through integration with prior offerings or otherwise, or cause this offering of
the Securities to require approval of shareholders of the Company for purposes
of the 1933 Act or any applicable shareholder approval provisions, including,
without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated for quotation. None of the Company, its Subsidiaries, their
affiliates nor any Person acting on their behalf will take any action or steps
that would require registration of the issuance of any of the Securities under
the 1933 Act or cause the offering of any of the Securities to be integrated
with other offerings for purposes of any such applicable shareholder approval
provisions.

 

(i) No Disqualification Events. With respect to Securities to be offered and
sold hereunder in reliance on Rule 506(b) under the 1933 Act ("Regulation D
Securities"), none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of
the Company's outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
1933 Act) connected with the Company in any capacity at the time of sale (each,
an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject
to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a "Disqualification Event"), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Buyers a copy of any disclosures provided thereunder.

 

Section 3.2 Representations and Warranties of the Holder. The Holder hereby
makes the representations and warranties set forth below to the Company that as
of the date of its execution of this Agreement:

 

(a) Due Authorization. The Holder represents and warrants that (i) the execution
and delivery of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
action on its behalf and (ii) this Agreement has been duly executed and
delivered by the Holder and constitutes the valid and binding obligation of the
Holder, enforceable against it in accordance with its terms.

 

(b) No Conflicts. The execution, delivery and performance of this Agreement by
the Holder and the consummation by the Holder of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of the
Holder’s organizational or charter documents, or (ii) conflict with or result in
a violation of any agreement, law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
which would interfere with the ability of the Holder to perform its obligations
under this Agreement.

 

 

 

 

 

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(c) Access to Information. The Holder acknowledges that it has had the
opportunity to review this Agreement and the SEC Reports and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the exercise of the Existing Warrants and the merits and risks of
investing in the Warrant Shares; (ii) access to information about the Company
and its financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment; and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. The Holder acknowledges and agrees that neither Chardan Capital
Markets, LLC (the “Advisor”) nor any Affiliate of the Advisor has provided the
Holder with any information or advice with respect to the Securities nor is such
information or advice necessary or desired. Neither the Advisor nor any
Affiliate has made or makes any representation as to the Company or the quality
of the securities issued and issuable hereunder and the Advisor and any
Affiliate may have acquired non-public information with respect to the Company
which the Holder agrees need not be provided to it. In connection with the
issuance of the securities hereunder to the Holder, neither the Advisor nor any
of its Affiliates has acted as a financial advisor or fiduciary to the Holder.

 

(d) Holder Status. The Holder is an “accredited investor” as defined in Rule 501
under the Securities Act.

 

(e) Knowledge. The Holder, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Warrant Shares, and has so evaluated the merits
and risks of such investment. The Holder is able to bear the economic risk of an
investment in the Warrant Shares and, at the present time, is able to afford a
complete loss of such investment.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1 Leak-Out Restrictions.

 

(a)                For a period commencing on the date hereof and ending ninety
(90) days after the Closing Date (the “Leak-Out Period”), the Holder agrees, on
behalf of itself and each affiliate (as defined in Rule 405 under the Securities
Act) of such Holder which (x) had knowledge of the transactions contemplated
hereby, (y) has or shares discretion relating to such Holder’s investments or
trading or information concerning such Holder’s investments, including in
respect of the securities issuable hereunder, or (z) is subject to such Holder’s
review or input concerning such affiliate’s investments or trading
(collectively, “Trading Affiliates”), not to sell, dispose or otherwise
transfer, directly or indirectly, (including, without limitation, any sales,
short sales, swaps or any derivative transactions that would be equivalent to
any sales or short positions) shares of Common Stock on any Trading Day during
the Leak-Out Period; provided, however, that these trading restrictions shall
not apply to any sale, disposal or other transfer at a price at or greater than
$5.00 per share (as appropriately adjusted for any stock split, reverse stock
split, stock dividend or other reclassification or combination of the Common
Stock occurring after the date hereof). As used herein, “Trading Day” means a
day on which the principal Trading Market is open for trading and “Trading
Market” means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE MKT, the
NASDAQ Stock Market, the New York Stock Exchange, OTCQB or OTCQX (or any
successors to any of the foregoing). To assist the Company in assuring
compliance by the Holder and its Trading Affiliates with the provisions of this
Section 4.1(a), the Company may from time to time, deliver a written request
(which may be by email) at any time during the Leak-Out Period requesting that
the Holder provide (i) trading records of any direct or indirect sales of Common
Stock (as contemplated above) by the Holder and its Trading Affiliates during
the period beginning on the date hereof and ending on the earlier of (x) the
date of such request and (y) the end of the Leak-Out Period or (ii) records
showing the number of shares of Common Stock held by the Holder and its Trading
Affiliates as of the earlier of (x) the date of such request and (y) the end of
the Leak-Out Period. Upon receipt of any such request, the Holder shall provide
such information no later than three Trading Days after the date of the
applicable request. Notwithstanding anything to the contrary, the Company may
not make more than five requests for information pursuant to this Section
4.1(a); provided, that any request made to a Trading Affiliate of the Holder
shall count as a request made to the Holder.

 

 

 

 

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(b)                The Company hereby represents and warrants as of the date
hereof and covenants and agrees from and after the date hereof that none of the
terms offered to any other holder of Original Warrants (each, an "Other Holder")
with respect to any restrictions on the sale of Common Stock substantially in
the form of this Agreement (or any amendment, modification, waiver or release
thereof) (each a “Settlement Document”), is or will be more favorable to such
Other Holder than those of the Holder and this Agreement. If, and whenever on or
after the date hereof, the Company enters into a Settlement Document, then (i)
the Company shall provide notice thereof to the Holder promptly following the
occurrence thereof and (ii) the terms and conditions of this Agreement shall be,
without any further action by the Holder or the Company, automatically amended
and modified in an economically and legally equivalent manner such that the
Holder shall receive the benefit of the more favorable terms and/or conditions
(as the case may be) set forth in such Settlement Document, provided that upon
written notice to the Company at any time the Holder may elect not to accept the
benefit of any such amended or modified term or condition, in which event the
term or condition contained in this Agreement shall apply to the Holder as it
was in effect immediately prior to such amendment or modification as if such
amendment or modification never occurred with respect to the Holder. The
provisions of this paragraph shall apply similarly and equally to each
Settlement Document.

 

Section 4.2 Subsequent Equity Sales.

 

(a)               From the date hereof until 90 days after the Closing Date,
neither the Company nor any subsidiary shall issue, enter into any agreement to
issue or announce the issuance or proposed issuance of any shares of Common
Stock or Common Stock Equivalents. As used herein “Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would entitle the
holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Stock.

 

(b)               From the date hereof until such time as no Purchaser holds any
of the New Warrants, the Company shall be prohibited from effecting or entering
into an agreement to effect any issuance by the Company or any of its
subsidiaries of Common Stock or Common Stock Equivalents (or a combination of
units thereof) involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells any
debt or equity securities that are convertible into, exchangeable or exercisable
for, or include the right to receive additional shares of Common Stock either
(A) at a conversion price, exercise price or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue securities at a
future determined price, provided that nothing herein shall prevent the Company
from entering into agreements providing for customary price-only adjustment full
ratchet, half ratchet or weighted average anti-dilution provisions or customary
price and share adjustment weighted average anti-dilution provisions. Any
Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to
collect damages. The provisions of this Section 4.2(b) may be waived or amended
by the Company and holders of the New Warrants then outstanding representing a
majority in the interest of all such New Warrants.

 

(c)               Notwithstanding the foregoing, this Section 4.2 shall not
apply in respect of an Exempt Issuance, except that no Variable Rate Transaction
shall be an Exempt Issuance. As set used herein “Exempt Issuance” means the
issuance of (a) shares of Common Stock or options to employees, independent
contractors, vendors, officers or directors of the Company pursuant to any stock
or option or similar plan duly adopted for such purpose, by a majority of the
non-employee members of the Board of Directors or a majority of the members of a
committee of non-employee directors established for such purpose for services
rendered to the Company including but not limited to the Company’s 2015
Incentive Plan, Amended 2015 Incentive Plan and Vendor Stock Issuance Plan, (b)
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities (other
than in connection with stock splits or combinations) or to extend the term of
such securities, and (c) securities issued pursuant to acquisitions, strategic
transactions or a transaction with vendors or other non-affiliated business
partners approved by a majority of the disinterested directors of the Company,
provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities;
provided, however, that any securities issued to independent contractors,
venders or non-affiliated business partners shall only be considered to be
Exempt Issuances to the extent they are issued as "restricted securities" (as
defined in Rule 144).

 

 

 

 

 

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Section 4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be made by email to the
email address of Holders set forth on Holders’ signature page.

 

Section 4.4 Survival. All warranties and representations (as of the date such
warranties and representations were made) made herein or in any certificate or
other instrument delivered by it or on its behalf under this Agreement shall be
considered to have been relied upon by the parties hereto and shall survive the
issuance of the Warrants. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties;
provided however that no party may assign this Agreement or the obligations and
rights of such party hereunder without the prior written consent of the other
parties hereto.

 

Section 4.5 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

 

Section 4.6 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

Section 4.7 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined pursuant to
the Governing Law provision of the Warrant.

 

Section 4.8 Entire Agreement. The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

Section 4.9 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

Section 4.10 Fees and Expenses. Except as expressly set forth herein, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Warrant Shares.

 

 

 

 

 

 

 

 

 

 8 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Warrant Exercise
Agreement as of the date first written above.

 

 

COMPANY:

 

 

GENIUS BRANDS INTERNATIONAL, INC.

 

 

By:  _______________________________

Name:   ____________________________

Title:  ______________________________

 

  

Bank Account and Wire Instructions

 

Bank Name: U.S. Bank     Bank Address: 633 W. Fifth Street   29th Floor   Los
Angeles, CA 90071   213-615-6625     ABA No. XXXXXXXX     A/C No. XXXXXXXX

 

Beneficiary name and address:

 

Genius Brands International, Inc.

DBA A Squared Entertainment, LLC

301 N. Canon Drive #305

Beverly Hills, CA 90210

 

 

 

 

 

 

 

 

 

 

 9 

 

 

[PURCHASER SIGNATURE PAGES TO GENIUS BRANDS INTERNATIONAL

WARRANT EXERCISE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

      Name of Holder:  
 

      Signature of Authorized Signatory of Holder:  
 

      Name of Authorized Signatory:  
 

      Title of Authorized Signatory:  
 

      Email Address of Holder:  
 

      Number of  Warrants Held:  
 

      Number of  Warrants to be exercised:  
 

      Aggregate Exercise Price of  Warrants to be Exercised:  
 
          Warrant Shares underlying  Warrants:  
                                                               

DWAC Instructions for Warrant Shares to be issued upon exercise of Existing
Warrants:_________________

 

 

Number of New Warrants to be issued to Holder:                             

  Address for Delivery of New Shares for Holder:
_______________________________________________

 

 

 

 

 

 

 

 

 

 

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