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

Exhibit 10.1
 
SECURITIES PURCHASE AGREEMENT

Dated as of January 30, 2015

by and between

4LICENSING CORPORATION

and

LESLIE G. RUDD LIVING TRUST

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

TABLE OF CONTENTS

   
Page
     
ARTICLE I.
PURCHASE AND SALE
1
         
1.1
The Shares and Warrants
1
         
1.2
The Issuance and Sale of the Shares and Warrants
1
         
1.3
Exemption from Registration
2
     
ARTICLE II.
THE CLOSING
3
         
2.1
Deliveries at the Closing
3
     
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3
         
3.1
Organization; Good Standing; Qualification and Power
3
         
3.2
Authorization
4
         
3.3
Noncontravention
4
         
3.4
Compliance with Laws; Organizational Documents
4
         
3.5
Capitalization of the Company
4
         
3.6
Intellectual Property
5
         
3.7
Material Agreements
5
         
3.8
Brokers
5
         
3.9
Financial Statements
5
         
3.10
No Consent or Approval Required
6
         
3.11
Changes
6
         
3.12
Absence of Undisclosed Liabilities
7
         
3.13
Insurance
7
         
3.14
Title to Assets, Properties and Rights
7
         
3.15
Taxes
8
         
3.16
Litigation and Other Proceedings
8
 
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
8
         
4.1
Experience; Accredited Investor Status
8
         
4.2
Company Information
8
         
4.3
Investment
9
         
4.4
Transfer Restrictions
9

 
-i-

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

TABLE OF CONTENTS
(continued)
 

 
Page
         
4.5
Brokers or Finders
9
         
4.6
Organization; Good Standing; Qualification and Power
9
         
4.7
Authorization
9
         
4.8
No Consent or Approval Required
9
     
ARTICLE V.
OTHER AGREEMENTS
10
         
5.1
Reservation of Common Stock
10
         
5.2
Right of First Offer
10
         
5.3
Board of Directors
10
         
5.4
Additional Rights
12
         
5.5
Existing Securities Purchase Agreement
12
     
ARTICLE VI.
MISCELLANEOUS
13
         
6.1
Expenses
13
         
6.2
No Third Party Beneficiaries
13
         
6.3
Complete Agreement
13
         
6.4
Successors and Assigns
13
         
6.5
Counterparts
13
         
6.6
Press Releases and Public Announcements
13
         
6.7
Notices
14
         
6.8
Confidentiality
15
         
6.9
Governing Law
15
         
6.10
Amendments and Waivers
15
         
6.11
Termination
16
         
6.12
Headings
16
         
6.13
Certain Definitions
16
         
6.14
Incorporation of Schedules and Exhibits
19
         
6.15
Rules of Construction
20
         
6.16
Severability
20
         
6.17
Loss of Warrant
20

 
-ii-

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

EXHIBITS

Exhibit A
Form of Warrant

SCHEDULES

1.2(c)
Purchase and Exercise Prices
3.5(a)(i)
Capitalization of the Company - Authorized Capital Stock (pre-Closing)
3.5(a)(ii)
Capitalization of the Company - Issued and Outstanding Capital Stock
(pre-Closing)
3.5(b)
Outstanding Warrants, Options, Rights, Agreements, etc.
3.11
Changes
3.14
Title to Assets, Properties and Rights

 
-iii-

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

SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”), is made as of January 30,
2015, by and between 4Licensing Corporation (the “Company”) and the Leslie G.
Rudd Living Trust (“Buyer”).

WHEREAS, the Company has authorized the sale to Buyer of the Initial Shares and
the Initial Warrants;

WHEREAS, Buyer wishes to purchase, and the Company wishes to issue and sell, the
Initial Shares and the Initial Warrants on the terms and subject to the
conditions set forth herein; and

WHEREAS, the Company has authorized the grant of an option (the “Option”) to the
Buyer to purchase the Option Shares and the Option Warrants and has authorized
the sale thereof to the Buyer upon the exercise of the Option.

NOW THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Buyer hereby agree as follows:
 
ARTICLE I.
 
PURCHASE AND SALE
 

1.1 The Shares and Warrants.

 
The Company has authorized the issuance and sale to Buyer of the Shares and the
Warrants.

1.2 The Issuance and Sale of the Shares and Warrants. 

 
(a)            The closing of the sale of the Initial Shares and the Initial
Warrants (the “Initial Closing”) shall take place at the offices of Jones Day,
901 Lakeside Avenue, Cleveland, Ohio, at 10:00 a.m., Cleveland, Ohio time, on
the date hereof or such other date(s) and time(s) as each of the Buyer and the
Company may agree (the “Initial Closing Date”).  At the Initial Closing, on the
terms and subject to the conditions contained herein, the Company shall issue,
sell and deliver to Buyer, and Buyer shall purchase and acquire from the
Company, the Initial Shares and the Initial Warrants, free and clear of any
Liens and with no restrictions on the transfer thereof (in each case other than
pursuant to the Transaction Documents and pursuant to the federal securities
laws). 
 

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

(b)         Each closing of the sale of any of the Option Shares and the Option
Warrants (the “Option Closing”), in the event Buyer shall have exercised the
Option, shall take place at the offices of Jones Day, 901 Lakeside Avenue,
Cleveland, Ohio, at 10:00 a.m., Cleveland, Ohio time, on such date(s) and
time(s) as each of the Buyer and the Company may agree (each, an “Option Closing
Date”).  At each Option Closing, on the terms and subject to the conditions
contained herein, the Company shall issue, sell and deliver to Buyer, and Buyer
shall purchase and acquire from the Company, the applicable number of Option
Shares and Option Warrants, free and clear of any Liens and with no restrictions
on the transfer thereof (in each case other than pursuant to the Transaction
Documents and pursuant to the federal securities laws), as shall be mutually
agreed upon by the Company and Buyer, provided that for every Option Share
purchased Buyer shall receive an Option Warrant to purchase one Option Share. 
Notwithstanding anything to the contrary in the foregoing, the Company shall not
be obligated to sell any Option Shares and Option Warrants to Buyer unless (i)
the Company is not in possession of any material non-public information
concerning the Company (“MNPI”) or (ii) the Company has conveyed the MNPI to
Buyer and Buyer has agreed to keep the MNPI confidential as provided in Section
6.8 and to not trade in the Company’s securities while in possession of MNPI.
 
(c)            The amounts payable by the Buyer to the Company for purchase of
the Initial Shares and the Option Shares (which includes the Initial Warrants
and the Option Warrants, as applicable) and the exercise price of the Initial
Warrants and Option Warrants pursuant to this Agreement are set forth in the
statement attached hereto as Schedule 1.2(c).
 
(d)            The Option shall expire on January 30, 2025 (the “Termination
Date”).
 

1.3 Exemption from Registration.

 
(a)            The Shares, the Warrants and the Warrant Shares (a) have not been
registered under the Securities Act of 1933, as amended (the “Securities Act”),
or any applicable state or other securities laws, (b) will be issued under an
exemption or exemptions from registration under the Securities Act and any
applicable state and other securities laws, and (c) will be restricted
securities (as that term is defined in Rule 144(a)(3) promulgated under the
Securities Act) and may not be resold unless such Shares, Warrants or Warrant
Shares, as applicable, are registered under the Securities Act and any
applicable state and other securities laws or an exemption from registration is
available. Notwithstanding anything to the contrary in the foregoing, transfers
shall be permitted in connection with the distribution of the assets of Buyer in
connection with the death of its settlor.
 
(b)            Accordingly, the certificate(s) evidencing the Shares and the
Warrant Shares shall, upon issuance, contain legends in substantially the
following form (in addition to any other legends required to be placed thereon
under applicable securities laws):
 
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY CIRCUMSTANCES BE SOLD,
TRANSFERRED,  OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY OTHER APPLICABLE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR APPLICABLE
SECURITIES LAWS.
 
- 2 -

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

ARTICLE II.
 
THE CLOSING
 

2.1 Deliveries at the Closing.

 
(a)            At the Initial Closing or any Option Closing, as the case may be,
the Company shall deliver to the Buyer:
 
(i)         the Initial Shares or, in the case of an Option Closing, the
applicable number of Option Shares, which may be in book-entry format;
 
(ii)        a Warrant registered in the name of Buyer representing the Initial
Warrants or the applicable number of Option Warrants, as the case may be;
 
(iii)       a certificate of good standing in respect of the Company issued by
the Secretary of State of the State of Delaware dated as of a date within five
Business Days of the Initial Closing Date or any Option Closing Date, as the
case may be; and
 
(v)        a receipt evidencing receipt by the Company of the funds transferred
pursuant to Section 2.1(b)(i).
 
(b)           At the Initial Closing or any Option Closing, as the case may be,
the Buyer shall deliver to the Company:
 
(i)         by bank wire transfer of immediately available funds to an account
designated in writing by the Company, an amount in cash equal to (A) the Initial
Shares or the Option Shares, as applicable, multiplied by (B) the purchase price
per unit as determined by reference to Schedule 1.2(c) hereto; and
 
(ii)        a receipt evidencing receipt by Buyer of (A) the Initial Shares or
the applicable number of Option Shares, as the case may be, and (B) a Warrant
registered in the name of Buyer representing the Initial Warrants or the Option
Warrants, as the case may be.
 
ARTICLE III.
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company hereby represents and warrants to Buyer as of the date hereof as
follows:
 

3.1 Organization; Good Standing; Qualification and Power.

 
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all requisite power and
authority to own, lease and operate its assets and to carry on its business as
presently being conducted, and is qualified to do business and is in good
standing in every jurisdiction in which the failure so to qualify or be in good
standing could reasonably be expected to have a Material Adverse Effect on the
Company.
 
- 3 -

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

3.2 Authorization.

 
(a)            The Company has all requisite power and authority to execute and
deliver the Transaction Documents and any and all instruments necessary or
appropriate in order to effectuate fully the terms of each such agreement and
all related transactions and to perform its obligations under each such
agreement.  This Agreement has been duly authorized by all necessary corporate
action of, and executed and delivered by, the Company.
 
(b)            The authorization, issuance, sale and delivery of the Shares and
the Warrants have been duly authorized by all necessary corporate action of the
Company and, when issued and delivered by the Company pursuant to this Agreement
against payment of the consideration provided for herein, will be validly
issued, fully paid and non-assessable.
 

3.3 Noncontravention.

 
The execution, delivery and performance by the Company of the Transaction
Documents and the consummation of the transactions contemplated thereby, have
not and will not (a) violate any provision of the Organizational Documents of
the Company, (b) violate any law to which the Company or any of its assets is
subject, (c) result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel any Contract to which the Company is a party or by which any of the
assets of the Company is bound or (d) result in the imposition of any Lien upon
any of the assets of the Company which, with respect to each of the foregoing
clauses, could reasonably be expected to have a Material Adverse Effect on the
Company.  Other than state blue sky securities filings, the filing of a Form D
with the Securities and Exchange Commission (the “SEC”), any securities filings
with foreign governments or agencies or any consents that have been obtained,
the Company has not been or is not required to give any notice to, make any
filing with, or obtain any authorization, consent or approval of any
Governmental Entity for the execution and delivery of the Transaction Documents.
 

3.4 Compliance with Laws; Organizational Documents.

 
The Company (a) has complied in all material respects with, and is in material
compliance with, all laws applicable to it and its business, and (b) has all
Permits used or necessary in the conduct of its business as presently conducted,
other than such Permits that, if not obtained, could not reasonably be expected
to have a Material Adverse Effect on the Company.  Such Permits are in full
force and effect, the Company has not received notice of any material violations
with respect to any thereof, and no material Proceeding is pending or, to the
Company’s knowledge, threatened to revoke or limit any thereof.
 

3.5 Capitalization of the Company.

 
(a)            Immediately prior to the Initial Closing, (i) the authorized
capital stock of the Company consisted of the classes and amounts set forth on
Schedule 3.5(a)(i), and (ii) the issued and outstanding capital stock of the
Company (separated by class and series) was as set forth on Schedule 3.5(a)(ii).
 
- 4 -

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

(b)          Except as contemplated by the Transaction Documents or as set forth
on Schedule 3.5(b), there are no (i) outstanding warrants, options, rights,
agreements, convertible securities or other commitments or instruments pursuant
to which the Company is or may become obligated to issue or sell any shares of
its capital stock or other securities or (ii) preemptive or similar rights to
purchase or otherwise acquire shares of the capital stock or other securities of
the Company pursuant to any provision of law, the Company’s Organizational
Documents or any Contract to which the Company, or to the Company’s knowledge,
any stockholder thereof, is a party.
 

3.6 Intellectual Property.

 
There is no pending or, to the Company’s knowledge, threatened, claim or
litigation against it asserting that the Company infringes upon or otherwise
violates any Intellectual Property Right of any Person (other than the Company
or Buyer).  No Proceedings in which the Company alleges that any Person is
infringing upon, or otherwise violating, any Intellectual Property Right owned
by the Company are pending, and none have been served by, instituted or asserted
by the Company, nor, to the Company’s knowledge, are any Proceedings threatened
alleging any such violation or infringement.
 

3.7 Material Agreements.

 
To the Company’s knowledge, (a) there is no material breach or default by any
party under any Contract to which the Company or any of its subsidiaries is a
party that is material to the Company’s business, operations, assets, financial
condition or operating results (each, a “Material Agreement”) and (b) each
Material Agreement is in full force and effect, constitutes the valid and
binding obligation of the respective parties thereto (assuming due execution by
the parties other than the Company or its subsidiaries, as applicable), and is
enforceable in accordance with its terms, except as enforceability thereof may
be limited by applicable bankruptcy, reorganization, insolvency or other laws
affecting creditors’ rights generally or by general principles of equity.
 

3.8 Brokers.

 
On behalf of the Company, there is no agent, broker, investment banker,
consultant, Person or firm that has acted on behalf, or under the authority of,
the Company or, to the Company’s knowledge, any of its stockholders, or will be
entitled to any fee or commission directly or indirectly from the Company or, to
the Company’s knowledge, any of its stockholders, in connection with any of the
transactions contemplated by this Agreement.
 

3.9 Financial Statements.

 
The Company has filed with the SEC its audited balance sheet as of December 31,
2013 (the “Statement Date”), and the audited statements of income and cash flows
for the year ending on the Statement Date (together, the “Audited Financial
Statements”) and the unaudited balance sheet and statements of income and cash
flows for the nine-month period ended September 30, 2014 (the “Interim Financial
Statements”).  The Audited Financial Statements, together with the notes
thereto, have been prepared in accordance with GAAP, consistently applied
throughout the periods indicated and present fairly, in all material respects,
the financial condition and position and results of operation of the Company as
of the Statement Date and for the period indicated.  The Interim Financial
Statements present fairly, in all material respects, the financial condition and
position and results of operations of the Company as of the date and for the
period indicated, and have been prepared in accordance with GAAP, except for the
absence of footnote disclosure and customary year-end adjustments.
 
- 5 -

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

3.10 No Consent or Approval Required.

 
No consent, approval or authorization of, or declaration to or filing with, any
Person is required by the Company for the valid authorization, execution and
delivery by the Company of the Transaction Documents or for the consummation of
the transactions contemplated hereby or thereby, other than (a) those consents,
approvals, authorizations, declarations or filings that have been obtained or
made, as the case may be, and (b) filings pursuant to federal or state
securities and any other applicable laws (all of which filings have been made by
the Company, other than those which are required to be made after the Initial
Closing or any Option Closing, as applicable, and which will be duly made in
accordance with time periods under applicable laws) in connection with the sale
of the Shares and the Warrants.
 

3.11 Changes.

 
Except as set forth in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2013 or Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2014 or as set forth on Schedule 3.11, since December
31, 2013, there has not been:
 
(a)            Any change in or effect on the assets, Liabilities, financial
condition or operations of the Company from that reflected in the Interim
Financial Statements, other than changes in the ordinary course of business,
none of which individually or in the aggregate has had or could reasonably be
expected to have a Material Adverse Effect on the Company;
 
(b)            Any waiver by the Company of a material right of the Company or a
material debt owed to the Company;
 
(c)            Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
 
(d)           Any debt, obligation or liability incurred, assumed or guaranteed
by the Company, except those for immaterial amounts and for current Liabilities
incurred in the ordinary course of business;
 
(e)            Any sale, assignment, license or transfer of ownership of any
Intellectual Property Rights, other than in the ordinary course of business;
 
(f)             Any change in any Material Agreement which has had or could
reasonably be expected to have a Material Adverse Effect on the Company; or
 
- 6 -

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

 (g)           Any other event or condition of any character that, either
individually or cumulatively, has had or could reasonably be expected to have a
Material Adverse Effect on the Company.
 

3.12 Absence of Undisclosed Liabilities.

 
The Company has no material Liabilities, except (a) to the extent reflected or
reserved against on the balance sheet included in the Interim Financial
Statements or disclosed in the Audited Financial Statements and (b) Liabilities
arising in the ordinary course of business consistent with past practice since
December 31, 2013.  There are no material loss contingencies (as such term is
used in Statement of Financial Accounting Standards No. 5, or any successor
thereto, issued by the Financial Accounting Standards Board) of or affecting the
Company which are required to be disclosed or for which adequate provision was
required to be made on the balance sheet included in the Interim Financial
Statements or in the Audited Financial Statements which have not been disclosed
or for which adequate provision has not been made on the balance sheet included
in the Interim Financial Statements or in the Audited Financial Statements or in
the notes thereto.
 

3.13 Insurance.

 
The Company maintains adequate insurance covering the risks of the Company, if
any, of such types and in such amounts and with such deductibles as are
customary for other companies engaged in similar lines of business.  All
insurance held by the Company is in full force and effect and is issued by
insurers of recognized responsibility.
 

3.14 Title to Assets, Properties and Rights.

 
The Company has good and marketable title (or a valid leasehold interest or
license) to all of the assets (whether real, personal or mixed) reflected as
being owned (or leased or licensed) by the Company on the balance sheet included
in the Interim Financial Statements (except for those assets subsequently
disposed of in the ordinary course of business for fair value), free and clear
of all Liens, except for (a) those Liens set forth on Schedule 3.14; (b) Liens
for current Taxes, assessments and other governmental charges not yet due and
payable and for which adequate reserves have been established on the books of
the Company; (c) easements, covenants, conditions and restrictions (whether or
not of record) as to which no material violation or encroachment exists or, if
such violation or encroachment exists, as to which the cure of such violation or
encroachment would not materially interfere with the conduct of the Company’s
business as presently conducted; (d) any zoning or other governmentally
established restrictions or encumbrances; (e) worker’s or unemployment
compensation Liens arising in the ordinary course of business; (f) mechanic’s,
materialman’s, supplier’s, vendor’s or similar Liens arising in the ordinary
course of business securing amounts which are not delinquent; and (g) those
Liens that do not, individually or cumulatively, have or could reasonably be
expected to have a Material Adverse Effect on the Company.
 
- 7 -

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

3.15 Taxes.

 
The Company has timely filed all material tax returns that are required to be
filed, and has paid all Taxes as shown on such returns and on all assessments
received by it to the extent that such Taxes have become due, except to the
extent the Company is contesting any such assessment in good faith.  All such
returns were true and correct in all material respects. The Company has not
received notice of any material tax deficiency proposed or assessed against it,
and has not executed any waiver of any statute of limitations on the assessment
or collection of any Tax that has not yet expired.  None of the Company’s tax
returns is currently being audited by governmental authorities, and no taxing
authority has notified (or threatened) the Company, orally or in writing, that
such taxing authority will or may audit any such return.  The Company has
complied with all requirements of the Internal Revenue Code of 1986, as amended
(the “Code”), U.S. Treasury regulations and any state, local or foreign law
relating to the payment and withholding of Taxes relating to the Company, and to
the Company’s knowledge, the Company has, within the time and in the manner
prescribed by applicable law, paid over to the proper taxing authorities all
amounts required to be so withheld and paid over relating to the Company. The
charges, reserves and accruals on the books of the Company in respect of Taxes
and other governmental charges are adequate.
 

3.16 Litigation and Other Proceedings.

 
There are no Proceedings pending or, to the Company’s knowledge, threatened
against the Company, whether at law or in equity, whether civil or criminal in
nature, that could reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on the Company.
 
ARTICLE IV.
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer represents and warrants to the Company as follows:
 

4.1 Experience; Accredited Investor Status.

 
Buyer (a) is an accredited investor as that term is defined in Rule 501 of
Regulation D promulgated under the Securities Act and, by virtue of its
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company, (b) is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to
protect its own interests, and (c) has the financial ability to bear the
economic risk of its investment in the Company.
 

4.2 Company Information.

 
Buyer has been provided access to all information regarding the business and
financial condition of the Company, its expected plans for future business
activities, material contracts, intellectual property, and the merits and risks
of its purchase of the Shares and Warrants, which Buyer has requested or
otherwise needs to evaluate an investment in the Shares and the Warrants.  Buyer
has had an opportunity to discuss the Company’s business, management and
financial affairs with directors, officers and management of the Company and has
had the opportunity to review the Company’s operations and facilities.  Buyer
has also had the opportunity to ask questions of and receive answers from, the
Company and its management regarding the terms and conditions of this investment
and all such questions have been answered to Buyer’s satisfaction.
 
- 8 -

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

4.3 Investment.

 
Buyer has not been formed solely for the purpose of making this investment and
is acquiring the Shares and the Warrants for investment for its own account, not
as a nominee or agent, and not with the view to, or for resale in connection
with, any distribution of any part thereof.  Buyer understands that the Shares,
the Warrants and the Warrant Shares have not been registered under the
Securities Act or applicable state and other securities laws and are being
issued by reason of a specific exemption from the registration provisions of the
Securities Act and applicable state and other securities laws, the availability
of which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of Buyer’s representations as expressed
herein.
 

4.4 Transfer Restrictions.

 
Buyer acknowledges and understands that (a) transfers of the Shares, the
Warrants and the Warrant Shares are subject to transfer restrictions contained
in the Transaction Documents and under the federal securities laws and (b) it
must bear the economic risk of this investment for an indefinite period of time
because the Shares, the Warrants and the Warrant Shares must be held
indefinitely unless subsequently registered under the Securities Act and
applicable state and other securities laws or unless an exemption from such
registration is available.
 

4.5 Brokers or Finders.

 
Buyer has not retained any investment banker, broker or finder in connection
with the purchase of the Shares or the Warrants.
 

4.6 Organization; Good Standing; Qualification and Power.

 
Buyer is a revocable living trust duly organized and validly existing under the
laws of its state of formation and has all requisite power and authority to own,
lease and operate its assets and to carry on its operations as presently being
conducted.
 

4.7 Authorization.

Buyer has all requisite power and authority to execute and deliver the
Transaction Documents and any and all instruments necessary or appropriate in
order to effectuate fully the terms of each such agreement and all related
transactions and to perform its obligations under each such agreement.  Each of
the Transaction Documents has been duly authorized by all necessary limited
liability company action of, and executed and delivered by, Buyer.
 

4.8 No Consent or Approval Required.

 
No consent, approval or authorization of, or declaration to or filing with, any
Person shall be required by Buyer for the valid authorization, execution and
delivery by Buyer of the Transaction Documents or for the consummation of the
transactions contemplated hereby or thereby other than those consents,
approvals, authorizations, declarations or filings which have been obtained or
made, as the case may be.
 
- 9 -

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

ARTICLE V.
 
OTHER AGREEMENTS
 

5.1 Reservation of Common Stock.

 
As of the date hereof, the Company has reserved and the Company shall continue
to reserve and keep available at all times, free of preemptive rights, a
sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue the Warrant Shares pursuant to any exercise of the Warrants
issued pursuant to Section 1.2.

5.2 Right of First Offer

 
So long as Buyer satisfies the Ownership Condition, except in the case of
Excluded Stock, if the Company proposes to issue or sell shares of Common Stock
(including securities convertible into or exchangeable for Common Stock), then
the Company shall, no later than 30 days prior to the consummation of such
issuance or sale, give written notice to Buyer of such proposed issuance or
sale.  Such notice shall describe the proposed issuance or sale, identify the
proposed purchaser or purchasers, and contain an offer to Buyer to sell to
Buyer, at the same price and for the same consideration to be paid by the
proposed purchaser or purchasers, that number of shares of Common Stock (or
shares or aggregate principal amount, as applicable, of securities convertible
into or exchangeable for Common Stock) in an amount up to Buyer’s pro rata
portion of such Common Stock included in such issuance.  Buyer’s pro rata
portion shall be the percentage that the Common Stock beneficially owned by
Buyer on a fully-diluted basis (which assumes full exercise and conversion of
the Warrants) bears to the outstanding Common Stock on a fully-diluted basis. 
If Buyer fails to accept such offer by written notice within 15 days after its
receipt of the Company’s notice by specifying that number of shares of Common
Stock (or shares or aggregate principal amount, as applicable, of securities
convertible into or exchangeable for Common Stock) up to its pro rata portion
that it desires to purchase, the Company may proceed with such proposed
issuance, free of any right on the part of such Buyer under this Section 5.2 in
respect thereof.
 

5.3 Board of Directors.

 
 (a)           (i)        Immediately following the Initial Closing and for so
long as Buyer satisfies the Ownership Condition, Buyer shall have the right to
nominate one member of the Board (an “Investor Director”) at every annual
meeting of the stockholders of the Company in which directors are generally
elected, including, without limitation, at every adjournment or postponement
thereof, and on any action approval by written consent of the stockholders of
the Company relating to the election of directors generally (in each case, a
“Director Election”);
 
(ii)        Immediately following the first Option Closing, and so long as Buyer
beneficially owns at least 20% of the outstanding shares of Common Stock on a
fully-diluted basis, Buyer shall have the right to nominate an additional
Investor Director in every Director Election so long as the Board consists of
five directors; and
- 10 -

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

(iii)       In the event that the size of the Board is increased such that it
consists of more than five directors and so long as Buyer beneficially owns at
least 20% of the outstanding shares of Common Stock on a fully-diluted basis,
Buyer shall also have the right to nominate a pro rata share of the additional
directors (any such director also being referred to herein as an Investor
Director) in every Director Election;
 
 (b)           The following procedures shall be followed with respect to the
nomination of any Investor Director pursuant to Section 5.3(a):
 
(i)         For purposes of whether Buyer has a right to nominate Investor
Directors pursuant to Section 5.3(a), Buyer’s ownership of the shares of Common
Stock will be measured as of the record date for such annual meeting or written
consent;
 
(ii)        No later than February 28 of each year, Buyer shall provide the
Company with its nominees for the Investor Directors, along with any other
information reasonably requested by the Company to evaluate the suitability of
such candidates for directorship, including, without limitation, the information
specified in the Organizational Documents of the Company, as then in effect.
With respect to any such nominee, Buyer shall use its best efforts to ensure
that any such nominee satisfies all stated criteria and guidelines for director
nominees of the Company.  The Company shall be entitled to rely on any written
direction from Buyer regarding such nominees without further action by the
Company;
 
(iii)       If the Board or any authorized committee thereof approves of Buyer’s
nominees for Investor Directors, the Board shall recommend that the stockholders
of the Company vote to elect such Investor Directors at the next annual meeting
of stockholders at which directors of the Company will be generally elected;
 
(iv)       If the Board or any authorized committee thereof raises a reasonable
objection to one or more of Buyer’s nominees for Investor Directors, then Buyer
and the Board shall use their reasonable efforts to agree on the nominees for
Investor Directors, and if Buyer and the Board cannot agree on the nominees on
or before the tenth calendar day prior to the proposed filing of the Company’s
annual proxy statement in preliminary or definitive form, as applicable, then
such nominee(s) for Investor Director shall not be nominated by the Company at
such annual meeting;
 
(v)        Notwithstanding anything to the contrary in this Agreement and
without any further action by the Company, Buyer’s right to nominate any Person
to the Board shall automatically terminate, and be of no further force and
effect, on the date that Buyer fails to satisfy the Ownership Condition and any
other ownership requirements specified in Section 5.3(a).  Buyer shall promptly,
but in any case within five days, provide notice to the Company upon Buyer
ceasing to meet the Ownership Condition or any other ownership requirements;
 
(vi)      Each of the Investor Directors, upon appointment or election to the
Board, will be governed by the same protections and obligations as all other
directors of the Company, including, without limitation, protections and
obligations regarding customary liability insurance for directors and officers,
confidentiality, conflicts of interests, fiduciary duties, trading and
disclosure policies, director evaluation process, director code of ethics,
director stock ownership guidelines, stock trading and pre-approval policies,
and other governance matters; and
 
- 11 -

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

(vii)     Commencing on the election or appointment of Buyer’s nominees as
Investor Directors in accordance with this Agreement and thereafter for so long
as at least one Investor Director is serving as a member of the Board, Buyer
will: (i) with respect to the Company or the Common Stock, not make, engage or
in any way participate in, directly or indirectly, any “solicitation” (as such
term is used in the proxy rules of the SEC) of proxies or consents (whether or
not relating to the election or removal of directors), (ii) except as provided
for in this Agreement, not seek, alone or in concert with others, election or
appointment to, or representation on, or nominate or propose the nomination of
any candidate to, the Board, (iii) not initiate, propose or otherwise “solicit”
(as such term is used in the proxy rules of the SEC) stockholders of the Company
for the approval of stockholder proposals made to the Company whether made
pursuant to Rule 14a-8 or Rule 14a-4 under the Securities Exchange Act of 1934
or otherwise, or cause or encourage or attempt to cause or encourage any other
Person to initiate any such stockholder proposal, regardless of its purpose, or
(iv) cause all Common Stock beneficially owned by Buyer as to which it is
entitled to vote at any meeting of stockholders or by written consent to be
voted in favor of the election of each member of any slate of directors
recommended by the Board that includes Buyer’s nominees; provided, that each
Investor Director on the Board shall have voted in favor of such slate of
director nominees.
 

5.4 Additional Rights.

 
For so long as Buyer satisfies the Ownership Condition, the Company shall (A)
deliver to Buyer (i) unaudited quarterly (with respect to the first three
quarters of the fiscal year) financial statements of the Company within 45 days
after the end of each month, with comparisons to prior years and to the budget
for that month and (ii) audited annual financial statements of the Company,
together with management’s discussion and analysis within 120 days after the end
of each fiscal year; provided, however, that these rights shall not be effective
during such times as the Company is required to file reports with the SEC under
Section 13 or 15 of the Securities Exchange Act of 1934; (B) upon reasonable
notice to the Company and subject to the confidentiality provisions of Section
6.8, on Business Days during normal business hours Buyer shall be entitled
reasonable access to the books and records of the Company;  (C) deliver to the
Board annual management projections and budgets prior to the start of each
fiscal year, which Buyer may request from management and, if such request is
made, management of the Company shall deliver such materials to Buyer within a
reasonable time following such request; (D) notify the Buyer as soon as
reasonably practicable of any material litigation and or governmental
proceedings/investigations involving the Company; and (E) require that its key
employees and consultants execute confidentiality agreements concerning
proprietary information of the Company, such parties thereto and the subject
matters thereof to be reasonably determined by the Company and the Buyer.
 

5.5 Existing Securities Purchase Agreement.

 
The Company shall comply with its obligations under Section 5.4 of that certain
Securities Purchase Agreement, dated as of March 25, 2014, by and among
4Licensing Corporation, Cleveland Capital, L.P., Prescott Group Aggressive Small
Cap Masterfund, GP and the Guarantors listed on Annex I thereto.
 
- 12 -

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

ARTICLE VI.
 
MISCELLANEOUS
 

6.1 Expenses.

 
Each party will pay its own expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation, any
broker fees, expenses of financial advisors, financial sponsors, legal counsel
or other advisors.
 

6.2 No Third Party Beneficiaries.

 
Except as expressly provided herein, this Agreement shall not confer any rights
or remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns, personal representatives, heirs and estates,
as the case may be.
 

6.3 Complete Agreement.

 
This Agreement, together with the other Transaction Documents constitute the
entire agreement among the parties hereto with respect to the transactions
contemplated hereby and supersede any prior understandings, agreements or
representations by or among such parties, written or oral, that may have related
in any way to the purchase and sale of the Shares and the Warrants.
 

6.4 Successors and Assigns.

 
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.  None of the
parties hereto shall be permitted to assign its rights or obligations hereunder
without the prior written consent of the other parties hereto; provided,
however, that the Company may assign or otherwise transfer all of its rights and
obligations under this Agreement without the prior written consent of Buyer to
its successor in interest in connection with a sale of all or substantially all
of its business or assets, whether by merger, sale of stock, sale of assets or
otherwise.
 

6.5 Counterparts.

 
This Agreement may be executed in any number of counterparts, each such
counterpart which shall be deemed to be an original instrument and all of which
counterparts together shall constitute one instrument.
 

6.6 Press Releases and Public Announcements.

 
The parties will agree upon the timing and content of any initial press release,
or other public communications relating to this Agreement and the transactions
contemplated herein.
 
- 13 -

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

(a)            Except to the extent already disclosed in any initial press
release or other public communication, no public announcement concerning the
existence or the terms of this Agreement or concerning the transactions
described herein shall be made, either directly or indirectly, by any of the
parties hereto without such party first obtaining the approval of the other
parties and agreement upon the nature, text, and timing of such announcement,
which approval and agreement shall not be unreasonably withheld; provided,
however, that nothing in this Section 6.6(a) shall be deemed to prohibit any
party from making any disclosure which its counsel deems necessary or advisable
in order to satisfy such party’s disclosure obligations imposed by law.
 
(b)           The party desiring to make any such public announcement shall
provide the other parties with a written copy of the proposed announcement in
sufficient time prior to public release to allow such other parties to comment
upon such announcement, prior to public release.'
 

6.7 Notices.

 
All notices, requests, demands, claims and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally, via electronic mail, by facsimile, sent by nationally recognized
overnight courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the appropriate party at the address, email
address or facsimile number, as applicable, set forth below (or at such other
address for such party as shall be specified by like notice):

If to the Company, to:

4Licensing Corporation
767 Third Avenue
New York, New York 10017
Telephone:  (646) 822-4258
Facsimile:  (212) 754-5481
Email:  BFoster@4LicensingCorp.com
Attention:  Bruce R. Foster

With a copy to:

Jones Day
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Telephone:  (216) 586-7103
Facsimile:  (216) 579-0212
Email:  mjsolecki@jonesday.com
Attention:  Michael J. Solecki, Esq.
 
- 14 -

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

If to Buyer, to:

Leslie G. Rudd Living Trust
2416 E. 37th St. N.
Wichita, Kansas 67219
Telephone:  (316) 847-4847
Email:         Darrell.Swank@lrico.com
Attention:   Darrell Swank

All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by email or facsimile, (A) when delivered prior to
5:00 p.m. (New York time) on a Business Day or (B) if delivered after 5:00 p.m.
on a Business Day or on a day that is not a Business Day, one Business Day after
delivery, (iii) in the case of delivery by nationally recognized overnight
courier, on the second Business Day following the date when sent, and (iv) in
the case of mailing, on the fifth Business Day following such mailing.
 

6.8 Confidentiality.

 
Buyer shall, and shall cause its officers, directors, employees, agents,
affiliates and its affiliate’s officers, directors, employees and agents to,
hold confidential and not use in any manner detrimental to the Company all
information they may have or obtain pursuant to their rights under this
Agreement concerning the Company and its assets, business, operations, or
prospects (collectively, “Confidential Information”); provided, however, that
the foregoing shall not apply to (a) information that is or becomes generally
available to the public other than as a result of the improper disclosure by
Buyer or any of its affiliates or its or its affiliates’ employees, agents,
accountants, legal counsel or other representatives, (b) information that is or
becomes available to Buyer or any of its employees, agents, accountants, legal
counsel, or other representatives on a nonconfidential basis prior to its
disclosure by the Company or its employees, agents, accountants, legal counsel
or other representatives, (c) information that is required to be disclosed by
Buyer or any of its affiliates or its or its affiliates’ employees, agents,
accountants, legal counsel, or other representatives as a result of any
applicable law, rule, or regulation of any governmental authority or stock
exchange and (d) any information that is reasonably required to be disclosed by
Buyer in order to enforce its rights pursuant to this Agreement.
 

6.9 Governing Law.

 
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without giving effect to the principles of conflict of
laws thereof.
 

6.10 Amendments and Waivers.

 
This Agreement may be amended or modified and the terms and conditions hereof
may be waived, only by a written instrument signed by the Company and Buyer or,
in the case of a waiver, the party or parties hereto waiving compliance.  No
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder, nor any
single or partial exercise of any right, power or privilege hereunder, preclude
any other or other exercise thereof hereunder.  The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
any party hereto may otherwise have at law or in equity.
 
- 15 -

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

6.11 Termination.

 
This Agreement may be terminated by a written instrument signed by the Company
and Buyer.
 

6.12 Headings.

 
The captions to the several Articles and Sections hereof are not a part of this
Agreement, but are included merely for convenience of reference only and shall
not affect its meaning or interpretation.
 

6.13 Certain Definitions. 

 
“$” or “dollar” means U.S. dollars.
 
“Agreement” has the meaning set forth in the preamble to this Agreement.
 
“Audited Financial Statements” has the meaning set forth in Section 3.9 of this
Agreement.
 
“Board” means the Board of Directors of the Company.
 
“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
 
“Buyer” has the meaning set forth in the preamble of this Agreement.
 
 “Code” has the meaning set forth in Section 3.15 of this Agreement.
 
“Common Stock” means the shares of common stock of the Company, par value $0.01
per share.
 
“Company” has the meaning set forth in the preamble to this Agreement.
 
“Confidential Information” has the meaning set forth in Section 6.8 of this
Agreement.
 
“Contract” means any loan or credit agreement, note, bond, mortgage, indenture,
lease, sublease, purchase order, instrument, permit, concession, franchise,
license, commitment, contract, subcontract or other agreement, in each case,
whether written or oral.
 
“Director Election” has the meaning set forth in Section 5.3(a)(i) of this
Agreement.
 
- 16 -

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

“Excluded Stock” means (a) the Warrant Shares, and the shares of Common Stock
issuable upon exercise of those certain warrants to purchase Common Stock for
$0.98 per share (as such exercise price may be adjusted from time to time in
accordance with the terms of such warrants) issued on March 25, 2014 and any
additional warrants (and the shares of Common Stock issuable upon exercise of
such warrants) issuable pursuant to the Securities Purchase Agreement, dated as
of March 25, 2014, by and among 4Licensing Corporation, Cleveland Capital, L.P.,
Prescott Group Aggressive Small Cap Masterfund, GP and the Guarantors listed on
Annex I thereto; (b) shares of Common Stock, or options or other equity awards
for shares of Common Stock, issued or issuable pursuant to equity compensation
plans, stock purchase plans or other compensation arrangements for officers,
directors and other employees of the Company and its subsidiaries; (c) shares of
Common Stock issued or issuable upon the conversion or exchange of any security
of the Company or its subsidiaries convertible into or exchangeable for Common
Stock outstanding on the date hereof; (d) shares of Common Stock issued or
issuable upon the conversion or exchange of any security of the Company or its
subsidiaries issued to an unaffiliated  third party or group of third parties in
connection with any bona fide merger, acquisition, business combination or joint
venture; (e) shares of Common Stock issued or issuable upon the conversion or
exchange of any security of the Company or its subsidiaries offered by the
Company to the public pursuant to a registration statement filed under the
Securities Act; (f) shares of Common Stock or other securities convertible or
exchangeable for Common Stock issued as a stock dividend; and (g) such
additional number of shares of Common Stock as may become issuable upon the
exercise of any of the securities referred to in the foregoing clauses (a)
through (f) by reason of adjustments required pursuant to anti-dilution
provisions applicable to such secu­rities in order to reflect any subdivision or
combination of Common Stock, by reclassification or otherwise, or any dividend
on Common Stock payable in Common Stock.

“GAAP” means U.S. generally accepted accounting principles.
 
“Governmental Entity” means any domestic or foreign federal, state, municipal,
or other governmental department, commission, board, bureau, agency or
instrumentality, or any court or tribunal.
 
“Initial Closing” has the meaning set forth in Section 1.2(a) of this Agreement.
 
“Initial Closing Date” has the meaning set forth in Section 1.2(a) of this
Agreement.
 
“Initial Shares” means 769,231 shares of Common Stock.
 
“Initial Warrants” means Common Stock purchase warrants, in substantially the
form attached as Exhibit A, and any warrant or warrants delivered in exchange or
replacement therefor, to purchase 1,538,462 shares of Common Stock.
 
“Intellectual Property Rights” means all of the following or their substantial
equivalent or counterpart in any jurisdiction around the world: (i) patents,
patent applications and invention and patent disclosures; (ii) trademarks,
service marks, trade dress, trade names, corporate names, logos and Internet
domain names; (iii) copyrights, software, and source code and copyrightable
works; (iv) registrations and applications for any registration for any of the
foregoing; and (v) trade secrets, know-how, confidential information, inventions
and discoveries.
 
- 17 -

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

“Interim Financial Statements” has the meaning set forth in Section 3.9 of this
Agreement.
 
“Investor Director” has the meaning set forth in Section 5.3(a)(i) of this
Agreement.
 
“Liabilities” mean any liabilities or obligations, whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, and whether due or to become due, regardless of when asserted.
 
“Lien” means any security interest, pledge, lien, bailment (in the nature of a
pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sale or title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easement,
reservation, restriction, cloud, right of first refusal or first offer, option,
commitment or other similar arrangement or interest in real or personal
property, whether oral or written.
 
“Material Adverse Effect” means, with respect to any Person, a material adverse
effect on the business, operations, assets, condition (financial or otherwise)
or operating results of such Person and its subsidiaries, if any, taken as a
whole.
 
“Material Agreement” has the meanings set forth in Section 3.7 of this
Agreement.
 
“MNPI” has the meaning set forth in Section 1.2(b) of this Agreement.
 
“Option” has the meaning set forth in the preamble of this Agreement.
 
“Option Closing” has the meaning set forth in Section 1.2(b) of this Agreement.
 
“Option Closing Date” has the meaning set forth in Section 1.2(b) of this
Agreement.
 
“Option Shares” means an aggregate of 6,923,077 shares of Common Stock (subject
to adjustment in the case of a stock split or share combination).
 
“Option Warrants” means Common Stock purchase warrants, in substantially the
form attached as Exhibit A, and any warrant or warrants delivered in exchange or
replacement therefor, to purchase an aggregate number of shares of Common Stock
equal to the aggregate number of Option Shares.
 
 “Organizational Documents” means the documents by which any Person (other than
an individual) establishes its legal existence or which govern its internal
affairs.
 
 “Ownership Condition” means the beneficial ownership by Buyer of at least
769,231 shares of Common Stock (subject to adjustment in the case of a stock
split or share combination) directly (and not pursuant to the Warrants or any
other security convertible into or exchangeable for shares of Common Stock).
 
- 18 -

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

“Permits” means all permits, licenses, authorizations, registrations,
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.
 
“Person” means and includes an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a Governmental Entity (or any
department, agency, or political subdivision thereof).
 
“Proceeding” means any action, suit, proceeding, complaint, charge, hearing,
inquiry or investigation before or by a Governmental Entity or an arbitrator.
 
 “SEC” has the meaning set forth in Section 3.3 of this Agreement.
 
“Securities Act” has the meaning set forth in Section 1.3 of this Agreement.
 
“Shares” means the Initial Shares and the Option Shares.
 
“Statement Date” has the meaning set forth in Section 3.9 of this Agreement.
 
 “Tax” as used in this Agreement, means, with respect to any Person, (a) all
income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all gross receipts, sales, use, ad valorem, transfer,
franchise, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, alternative or add-on
minimum taxes, customs duties and other taxes, fees, assessments or charges of
any kind whatsoever, together with all interest and penalties, additions to tax
and other additional amounts imposed by any taxing authority (domestic or
foreign) on such Person (if any) and (b) any liability for the payment of any
amount of the type described in clause (a) above as a result of being a
“transferee” (within the meaning of Section 6901 of the Code or any other
applicable Law) of another entity or a member of an affiliated or combined
group.
 
“Termination Date” has the meaning set forth in Section 1.2(d) of this
Agreement.
 
“Transaction Documents” mean this Agreement and the Warrants.
 
 “Warrants” means the Initial Warrants and the Option Warrants.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Initial Warrants and the Option Warrants.
 

6.14 Incorporation of Schedules and Exhibits.

 
The schedules and exhibits identified in this Agreement are incorporated herein
by reference and made a part hereof
 
- 19 -

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

6.15 Rules of Construction.

 
The term “this Agreement” means this agreement together with all schedules and
the exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof.  In this
Agreement, the term “the Company’s knowledge” or “the knowledge of the Company”
means the knowledge of each officer of the Company, which could have been
acquired after making such reasonable due inquiry and exercising such reasonable
diligence as a prudent business person could have made or exercised in the
management of his or her business affairs, including reasonable due inquiry of
those key employees and professionals of the Company who could reasonably be
expected to have actual knowledge of the matters in question. Accounting terms
used but not otherwise defined herein shall have the meanings given to them
under GAAP.  The use in this Agreement of the term “including” means “including,
without limitation.”  The words “herein,” “hereof,” “hereunder” and other words
of similar import refer to this Agreement as a whole, including the schedules
and exhibits, as the same may from time to time be amended, modified,
supplemented or restated, and not to any particular section, subsection,
paragraph, subparagraph or clause contained in this Agreement.  All references
to sections, schedules and exhibits mean the sections of this Agreement and the
schedules and exhibits attached to this Agreement, except where otherwise
stated.  The title of and the section and paragraph headings in this Agreement
are for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement.  The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, and words imparting the singular number only shall include the plural and
vice versa, as in each case the context may require or permit.  Where specific
language is used to clarify by example a general statement contained herein,
such specific language shall not be deemed to modify, limit or restrict in any
manner the construction of the general statement to which it relates.  The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
 

6.16 Severability.

 
In the event that any provision of this Agreement is determined to be invalid or
unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect without such provision.  In such
event, the parties hereto shall in good faith attempt to negotiate a substitute
clause for any provision declared invalid or unenforceable, which substitute
clause shall most nearly approximate the intent of the parties hereto in
agreeing to such invalid provision, without itself being invalid.
 

6.17 Loss of Warrant. 

 
Upon receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of a Warrant, and indemnity reasonably satisfactory to
the Company (in case of loss, theft or destruction) or surrender and
cancellation of such Warrant (in case of mutilation), the Company will make and
deliver to Buyer in lieu of such Warrant a new Warrant of like tenor.
 
{Signature pages follow.}
- 20 -

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

IN WITNESS WHEREOF, the Company and the Buyer have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
 

 
4LICENSING CORPORATION
           
By:
/s/ Bruce R. Foster
     
Name:  Bruce R. Foster
     
Title:    Chief Executive Officer
 

 
[Signature Page to Purchase Agreement]
 

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

IN WITNESS WHEREOF, the Company and the Buyer have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
 

 
LESLIE G. RUDD LIVING TRUST
           
By:
/s/ Leslie G. Rudd by Darrell Swank
     
Name:
Leslie G. Rudd by Darrell Swank as
       
Attorney-in-Fact under Durable Power
       
of Attorney dated December 13, 2010
 

 
[Signature Page to Purchase Agreement]
 

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

Exhibit A
 
Form of Warrant
 
See attached.
 

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

COMMON STOCK PURCHASE WARRANT

4LICENSING CORPORATION
 
Warrant Shares: [____]
 
Issue Date:  [___], 2015

 
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, [_____] or its assigns (the “Holder”) is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on January 30, 2025 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from 4Licensing Corporation, a
Delaware corporation (the “Company”), up to [____] shares (as subject to
adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
 
Section 1.              Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated January 30, 2015, among the
Company, the purchaser signatory thereto and the guarantors signatory thereto.
 
Section 2.              Exercise.
 
a)            Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company (or such
other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of the Holder appearing on the books of
the Company) of a duly executed facsimile copy of the Notice of Exercise in the
form annexed hereto. Within three (3) days on which the Common Stock is not
suspended from trading on any national securities exchange or over-the-counter
market at the close of business and has traded at least once on the national
securities exchange or over-the-counter market that is the primary market for
the trading of the Common Stock (“Trading Days”) following the date of exercise
as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
shares specified in the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank; provided, however, in the event
that the Holder has not delivered such aggregate Exercise Price within three (3)
Trading Days following the date of such exercise as aforesaid, the Company shall
not be obligated to deliver such Warrant Shares hereunder until such payment is
made. No ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of any Notice
of Exercise form be required.  Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder
shall surrender this Warrant to the Company for cancellation within three (3)
Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.  The Holder
and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise within two (2) Business Days of receipt of
such notice.  The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be less
than the amount stated on the face hereof.
 

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

b)           Exercise Price.  The exercise price per share of the Common Stock
under this Warrant shall be $0.72, subject to adjustment hereunder (the
“Exercise Price”).
 
c)            Mechanics of Exercise.
 
i.       Delivery of Warrant Shares Upon Exercise.  Upon exercise of this
Warrant, the Company shall promptly, but in no event later than three (3)
Trading Days after the delivery of the aggregate Exercise Price pursuant to
Section 2(a), issue or cause to be issued and cause to be delivered to or upon
the written order of the Holder and in such name or names as the Holder may
designate, a certificate for the Warrant Shares issuable upon such exercise. 
The Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised, with payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to
the issuance of such shares, having been paid.
 
ii.       Delivery of New Warrants Upon Exercise.  If this Warrant shall have
been exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.
 
iii.      Rescission Rights.  If the Company fails to issue or cause to have
issued the Warrant Shares pursuant to Section 2(c)(i) within three (3) Trading
Days after the delivery of the aggregate Exercise Price pursuant to Section
2(a), then the Holder will have the right to rescind such exercise. The right of
rescission of Holder under this Section 2(c)(iii) is subject to delivery by the
Holder of the aggregate Exercise Price in accordance with the terms of Section
2(a) herein.
2

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

iv.     No Fractional Shares or Scrip.  No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.  As to any fraction of a share which the Holder would otherwise be
entitled to purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up to the next
whole share.
 
v.      Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder in the Notice of Exercise; provided, however, that in the event
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.  The Company shall pay all fees
required for same-day processing of any Notice of Exercise and all fees to the
Depository Trust Company (or another established clearing corporation performing
similar functions) required for same-day electronic delivery of the Warrant
Shares.
 
vi.     Closing of Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
 
Section 3.              Certain Adjustments.
 
a)            Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged.  Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re‑classification.
 
3

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

b) Issuance of Additional Shares of Common Stock, Options and Convertible
Securities.

 
i.        Issuance of Additional Shares of Common Stock. In case the Company at
any time or from time to time after the date hereof and prior to the Termination
Date shall issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 3(b)(ii) but
excluding a dividend or distribution described in Section 3(a), with respect to
which an adjustment to the number of shares of Common Stock issuable upon
exercise of the Warrants and the Exercise Price shall be made pursuant to the
terms of Section 3(a)) without consideration or for a consideration per share
less than the Exercise Price in effect immediately prior to such issue or sale,
then, and in each such case, the Exercise Price with respect to each unexercised
Warrant shall be reduced, concurrently with such issue or sale to a price
determined by multiplying such Exercise Price by a fraction
 
(a)      the numerator of which shall be (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale plus (ii) the number
of shares of Common Stock which the aggregate consideration received or to be
received by the Company for the total number of such Additional Shares of Common
Stock so issued or sold (or deemed issued or sold pursuant to Section 3(b)(ii))
would purchase at such Exercise Price, and
 
(b)    the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such issue or sale,
 
provided, that for the purposes of this Section 3(b)(i), (x) immediately after
any Additional Shares of Common Stock are deemed to have been issued pursuant to
Section 3(b)(ii), such Additional Shares shall be deemed to be outstanding, and
(y) treasury shares shall not be deemed to be outstanding.
 
ii.       Treatment of Options and Convertible Securities. In case the Company
at any time or from time to time after the date hereof and prior to the
Termination Date shall issue, sell, grant or assume, or shall fix a record date
for the determination of holders of any class of the Company’s securities
entitled to receive, any Options or Convertible Securities (other than a
distribution involving an Option or Convertible Security pursuant to Section
3(a)), then, and in each such case, the maximum number of Additional Shares of
Common Stock (as set forth in the instrument relating thereto, without regard to
any provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), provided that such Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 3(b)(iii)) of such shares would be
less than the Exercise Price of the unexercised Warrants in effect on the date
of and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be, and provided, further, that in any
such case in which Additional Shares of Common Stock are deemed to be issued;
 
4

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

(a)             no further adjustment of the Exercise Price of the unexercised
Warrants shall be made upon the subsequent issue or sale of Convertible
Securities or shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities;
 
(b)            if such Options or Convertible Securities by their terms provide,
with the passage of time or otherwise, for any increase in the consideration
payable to the Company, or decrease in the number of Additional Shares of Common
Stock issuable, upon the exercise, conversion or exchange thereof (by change of
rate or otherwise), the Exercise Price of the unexercised Warrants computed upon
the original issue, sale, grant or assumption thereof (or upon the occurrence of
the record date, or date prior to the commencement of ex-dividend trading, as
the case may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options, or the rights of conversion or exchange under such Convertible
Securities, which are outstanding at such time;
 
(c)             upon the expiration (or purchase by the Company and cancellation
or retirement) of any such Options which shall not have been exercised or the
expiration of any rights of conversion or exchange under any such Convertible
Securities which (or purchase by the Company and cancellation or retirement of
any such Convertible Securities the rights of conversion or exchange under
which) shall not have been exercised, the Exercise Price of the unexercised
Warrants computed upon the original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
 
5

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

(i)         in the case of Options for Common Stock or Convertible Securities,
the only Additional Shares of Common Stock issued or sold were the Additional
Shares of Common Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration actually received by
the Company for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Company upon such conversion or
exchange, and

(ii)         in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued or sold upon the exercise of
such Options were issued at the time of the issue, sale, grant or assumption of
such Options, and the consideration received by the Company for the Additional
Shares of Common Stock deemed to have then been issued was the consideration
actually received by the Company for the issue, sale, grant or assumption of all
such Options, whether or not exercised, plus the consideration deemed to have
been received by the Company (pursuant to Section 3(b)(iii)) upon the issue or
sale of such Convertible Securities with respect to which such Options were
actually exercised;

(d)            no readjustment pursuant to subsections 3(b)(ii)(b) or (c) above
shall have the effect of increasing the Exercise Price of the unexercised
Warrants by an amount in excess of the amount of the adjustment thereof
originally made in respect of the issue, sale, grant or assumption of such
Options or Convertible Securities; and

(e)             in the case of any such Options which expire by their terms not
more than 30 days after the date of issue, sale, grant or assumption thereof, no
adjustment of the Exercise Price of the unexercised Warrants shall be made until
the expiration or exercise of all such Options, whereupon such adjustment shall
be made in the manner provided in subsection 3(b)(ii)(c) above.
 
6

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

iii.      Computation of Consideration.  For purposes of this Section 3(b):
 
(a)     the consideration for the issue or sale of any Additional Shares of
Common Stock shall, irrespective of the accounting treatment of such
consideration,

(i)  insofar as it consists of cash, be computed at the net amount of cash
received by the Company,
 
(ii) insofar as it consists of property (including securities) other than cash,
be computed at the fair value thereof at the time of such issue or sale, as
determined in good faith by the Board of Directors of the Company (the “Board”),
and
 
(iii) in case Additional Shares of Common Stock are issued or sold together with
other stock or securities or other assets of the Company for a consideration
which covers both, be the portion of such consideration so received, computed as
provided in clauses (i) and (ii) above, allocable to such Additional Shares of
Common Stock, all as determined in good faith by the Board;
 
(b)    Additional Shares of Common Stock deemed to have been issued pursuant to
Section 3(b)(ii), relating to Options and Convertible Securities, shall be
deemed to have been issued for a consideration per share determined by dividing

(i) the total amount, if any, received and receivable by the Company as
consideration for the issue, sale, grant or assumption of the Options or
Convertible Securities in question, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration to protect against dilution) payable to the Company upon the
exercise in full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, in each case computing such
consideration as provided in the foregoing subsection 3(b)(iii)(a),
by
 
7

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

(ii) the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number to protect against dilution) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
 
iv.       Definitions. As used in this Section 3(b), unless the context
otherwise requires, the following terms have the following respective meanings:
 
(a)      “Additional Shares of Common Stock” means all shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to Section
3(b)(ii), deemed to be issued) by the Company after the date hereof and prior to
the Expiration Date, whether or not subsequently reacquired or retired by the
Company, other than
 
(i)  shares of Common Stock issuable upon the exercise of the Warrants, and
shares of Common Stock issuable upon those certain warrants to purchase Common
Stock for $0.98 per share (as such exercise price may be adjusted from time to
time in accordance with the terms of such warrants) issued on March 25, 2014 and
any additional warrants (and the shares of Common Stock issuable upon exercise
of such warrants)  issuable pursuant to the Securities Purchase Agreement, dated
as of March 25, 2014, by and among 4Licensing Corporation, Cleveland Capital,
L.P., Prescott Group Aggressive Small Cap Masterfund, GP and the Guarantors
listed on Annex I thereto;

(ii)  shares of Common Stock, or options or other equity awards for shares of
Common Stock, issued or issuable pursuant to equity compensation plans, stock
purchase plans or other compensation arrangements for officers, directors and
other employees of the Company and its subsidiaries;

(iii)  shares of Common Stock issued or issuable upon the conversion or exchange
of any security of the Company or its subsidiaries convertible into or
exchangeable for Common Stock outstanding on the date hereof;

(iv)  shares of Common Stock issued or issuable upon the conversion or exchange
of any security of the Company or its subsidiaries issued to an unaffiliated 
third party or group of third parties in connection with any bona fide merger,
acquisition, business combination or joint venture;
 
8

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

(v)  shares of Common Stock issued or issuable upon the conversion or exchange
of any security of the Company or its subsidiaries offered by the Company to the
public pursuant to a registration statement filed under the Securities Act; and

(vi)  such additional number of shares of Common Stock as may become issuable
upon the exercise of any of the securities referred to in the foregoing clauses
(i) through (v) by reason of adjustments required pursuant to anti-dilution
provisions applicable to such secu­rities in order to reflect any subdivision or
combination of Common Stock, by reclassification or otherwise, or any dividend
on Common Stock payable in Common Stock.

(b)       “Convertible Securities” means any evidences of indebtedness, shares
of stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.

(c)        “Options” means rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
 
c)            Subsequent Rights Offerings. In addition to any adjustments
pursuant to the other subsections of this Section 3, if at any time the Company
grants, issues or sells any Common Stock equivalents or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of
any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
 
d)            Pro Rata Distributions.  During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Warrant, then, in each
such case, the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in
such Distribution.  To the extent that this Warrant has not been partially or
completed exercised at the time of such Distribution, such portion of the
Distribution shall be held in abeyance for the benefit of the Holder until the
Holder has exercised this Warrant.
 
9

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

e)            Fundamental Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into
another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires
more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such
stock or share purchase agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant,
the Holder shall have the right to receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder, the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such Fundamental Transaction.  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction.  Upon the occurrence of any such Fundamental Transaction in which
the Company is the survivor (such surviving entity, the “Successor Entity”), the
Successor Entity shall succeed to, and be substituted for, the Company (so that
from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and the Successor Entity may exercise
every right and power of the Company and shall assume all of the obligations of
the Company under this Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein.
 
10

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

f)            Calculations. All calculations under this Section 3 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 3, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
 
g)            Notice to Holder.
 
i.        Adjustment to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and setting forth a
brief statement of the facts requiring such adjustment.
 
ii.       Notice to Allow Exercise by Holder. If, during the period in which
this Warrant is outstanding, (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 10 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the subsidiaries, the Company shall
simultaneously file such notice with the Securities and Exchange Commission
pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of such notice to
the effective date of the event triggering such notice except as may otherwise
be expressly set forth herein.
 
11

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

Section 4.              Transfer of Warrant.
 
a)            Transferability.  The Holder shall not sell, assign, transfer,
pledge or dispose of all or any part of this Warrant, by operation of law or
otherwise.  Notwithstanding anything in this Warrant to the contrary, the Holder
may transfer all or any part of the Warrant to any person or corporation (profit
or nonprofit), partnership, limited liability company, association, trust or
other entity that controls, is controlled by, or under common control with, the
Holder, so long as such transferee consents in writing to be bound by the terms
and conditions of this Warrant.
 
b)             Warrant Register.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
 
Section 5.              Miscellaneous.
 
a)            No Rights as Stockholder Until Exercise.  This Warrant does not
entitle the Holder to any voting rights, dividends or other rights as a
stockholder of the Company prior to the exercise hereof as set forth in Section
2(c)(i), except as expressly set forth in Section 3.
 
b)           Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
 
12

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

c)            Saturdays, Sundays, Holidays, etc.  If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken or such right
may be exercised on the next succeeding Business Day.
 
d)            Authorized Shares.
 
The Company covenants that, during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary Warrant Shares upon the exercise of the purchase rights under this
Warrant.  The Company will take all such reasonable action as may be necessary
to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of any
national securities exchange upon which the Common Stock may be listed.  The
Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the
purchase rights represented by this Warrant and payment for such Warrant Shares
in accordance herewith, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by the Company
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
 
e)           Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.
 
f)             Nonwaiver.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder’s rights, powers or remedies.
 
g)           Notices.  Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall be
delivered in accordance with the notice provisions of the Purchase Agreement.
 
h)           Limitation of Liability.  No provision hereof, in the absence of
any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of the Holder for the purchase price of
any Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
 
i)             Successors and Assigns.  Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder.  The provisions of
this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.
 
13

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

j)            Amendment.  This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Requisite Holders (as defined in the Purchase Agreement).
 
k)           Severability.  Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
 
l)            Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14

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

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.
 
4LICENSING CORPORATION
    By:    
Name:
 
Title:

 

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

NOTICE OF EXERCISE

TO:4LICENSING CORPORATION

(1)    The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
 
(2)    Please issue said Warrant Shares in the name of the undersigned or in
such other name as is specified below:
 
 

 

 
The Warrant Shares shall be delivered to the following address:
 
 
  
 

 
 
  
 

 
 

 

 
[SIGNATURE OF HOLDER]
 
Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:

Title of Authorized Signatory:

Date:

 
 

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