genius_8k-ex1001.htm


    EXHIBIT
10.1

    
 

    NOTE
AND WARRANT PURCHASE AGREEMENT

     

    This Note and Warrant Purchase
Agreement (this “Agreement”), dated as
of February 17, 2009, is made by and among Genius Products, Inc., a
Delaware corporation (“Genius Inc.”), Genius
Products, LLC, a Delaware limited liability company (“Genius LLC” and,
collectively with Genius Inc., “Genius”), and each of
the other parties whose name appears from time to time on the signature pages hereto (each an “Investor” and
collectively, the “Investors”).

     

    WHEREAS, on the terms and subject to
the conditions set forth herein, each Investor is willing to purchase from
Genius LLC, and the Genius LLC is willing to issue and sell to such Investor, a
promissory note in the principal amount set forth opposite such Investor’s name
on Annex A
hereto;

     

    WHEREAS, on the terms and subject to
the conditions set forth herein, each Investor is willing to purchase from
Genius Inc., and Genius Inc. is willing to issue and sell to such Investor, a
Warrant for the number of shares of Genius Inc.’s Common Stock set forth
opposite such Investor’s name on Annex A hereto;
and

     

    WHEREAS, the Board of Directors of
Genius Inc. has authorized, and the stockholders of Genius Inc. have approved, a
500-for-1 reverse split of the Common Stock (the “Reverse Split”) so
that Genius Inc. will have sufficient authorized shares of Common Stock to issue
the Warrant Shares upon exercise of the Warrant.  The Reverse Split
will be effected immediately upon the filing with the Commission of a definitive
Information Statement on Schedule 14C, the mailing to stockholders of Genius
Inc. of such Schedule 14C and the expiration of the 20-day waiting period
specified by the Commission in Rule 14c-2 under the Exchange Act (the “Reverse Split
Procedure”).

     

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

     

    ARTICLE
1.

    DEFINITIONS

     

    Article
1.1.     In addition to the terms defined elsewhere
in this Agreement, for all purposes of this Agreement, the following terms shall
have the meanings indicated in this Definitions section:

     

    “Action” means any
action, suit, inquiry, notice of violation, proceeding (including any partial
proceeding such as a deposition) or investigation pending or threatened in
writing against or affecting Genius Inc., any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), stock market, stock exchange or trading facility.

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are
used in and construed under Rule 144.

     


    
      
         


      

      
        
        

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    “Business Day” means
any day except Saturday, Sunday and any day which is a federal legal holiday or
a day on which banking institutions in the State of New York are authorized or
required by law or other governmental action to close.

     

    “Closing” means the
closing of the transactions contemplated under Section 2.1.

     

    “Closing Date” means
the date hereof.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of Genius Inc., par value $0.0001 per share, and any securities
into which such common stock may hereafter be reclassified.

     

    “Company Counsel”
means Reed Smith LLP.

     

    “Disclosure Materials”
has the meaning set forth in Section 4.8.

     

    “Evaluation Date” has
the meaning set forth in Section 4.19.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “GAAP” means U.S.
generally accepted accounting principles.

     

    “Intellectual Property
Rights” has the meaning set forth in Section 4.16.

     

    “Lien” means any lien,
charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind.

     

    “Material Adverse
Effect” means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects, business or
condition (financial or otherwise) of Genius Inc. and the Subsidiaries, taken as
a whole, or (iii) an adverse impairment to Genius Inc.’s or Genius LLC’s ability
to perform on a timely basis its obligations under any Transaction
Document.

     

    “New York Courts”
means the state and federal courts sitting in the City of New York, Borough of
Manhattan.

     

    “Note” has the meaning
set forth in Section 2.1.

     

     “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    “Registration
Statement” means a registration statement meeting the requirements set
forth in the Warrant Shares Registration Rights Agreement and covering the
resale by the Investors of the Common Stock.

     

    “Required Approvals”
has the meaning set forth in Section 4.5.

     

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “SEC Reports” has the
meaning set forth in Section 4.8.

     

    “Securities” means the Notes, the
Warrants and the Common Stock issuable upon the exercise of the
Warrants.

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Subsidiary” means any
“significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the Exchange Act, and, for the avoidance of
doubt, includes Genius LLC.

     

    “Trading Day” means
(i) a day on which the Common Stock is traded on a Trading Market (other than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
Pink Sheets, LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.

     

    “Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ SmallCap Market or OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date in
question.

     

    “Transaction” has the
meaning set forth in Section 2.1.

     

    “Transaction
Documents” means this Agreement, the Notes, the Warrants, the Warrant
Shares Registration Rights Agreement, and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.

     

    “Warrant or Warrants”
means the warrants, dated February 17, 2009, issued by Genius Inc. to the
Investors exercisable for shares of Common Stock in the amounts set forth on
Annex A
hereto.

     

    “Warrant Shares” means the shares of
Common Stock received upon exercise of a Warrant.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    “Warrant Shares Registration
Rights Agreement” means the Registration Rights Agreement, dated as of
the date of this Agreement, among Genius Inc. and the Investors pursuant to
which Genius Inc. will agree to register for resale the Warrant Shares with the
Commission.

     

    ARTICLE
2.

    PURCHASE
AND SALE

     

    Section 2.1    
Purchase and
Sale. On the terms and subject to the conditions set forth in this
Agreement, at the Closing on the Closing Date: (a) Genius LLC shall issue and
sell to each of the Investors, and, subject to all of the terms and conditions
hereof, each of the Investors severally shall purchase, a promissory note in the
form of Exhibit A hereto
(each, a “Note”
and, collectively, the “Notes”) in the
principal amount set forth opposite the respective Investor’s name on Annex A hereto,
(b) each Investor agrees that each of the warrants set forth opposite its name
on Annex B
hereto are canceled and of no further force or effect, and (c) Genius Inc. shall
issue and sell to each of the Investors, and, subject to all of the terms and
conditions hereof, each of the Investors severally shall purchase, a Warrant in
the form of Exhibit B hereto
exercisable for the number of shares of Common Stock set forth opposite the
respective Investor’s name on Annex A
hereto.  The obligations of the Investors to purchase the Notes and
the Warrants are several and not joint.  The transactions contemplated
in clauses (a) and (b) of this Section 2.1 are referred to collectively herein
as the “Transaction”.

     

    Section 2.2    
Closing
Deliveries.

     

    (a)     At the
Closing, Genius will deliver or cause to be delivered to each Investor the
following:

     

    (i)           the
Notes described in Section 2.1;

     

    (ii)           the
Warrants described in Section 2.1;

     

    (iii)           the
Registration Rights Agreement, duly executed by Genius Inc.;

     

    (iv)           the
legal opinion of Company Counsel, in agreed form, addressed to the Investors;
and,

     

    (v)           evidence
from the Secretary of State of Delaware that the Certificate of Designation of
Series A Interim Convertible Preferred Stock (the “Series A Preferred Stock”) of
Genius Inc. has been amended such that the Series A Preferred Stock will be
automatically converted into Common Stock, without notice or delay or any action
required on the part of the holders of the Series A Preferred Stock, at the
earliest time that Genius Inc. has a sufficient number of authorized and
unreserved shares of Common Stock to permit the conversion of all (and not less
than all) outstanding shares of Series A Preferred Stock into shares of Common
Stock.

     

    (b)     At the
Closing, each Investor shall deliver or cause to be delivered to Genius LLC the
following:

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    (i)           the
amount set forth for such Investor on Annex A hereto in United States
dollars and in immediately available funds, by wire transfer to the following
account designated by Genius LLC for such purpose:

     

    Account Name:  Genius
Products, LLC

    Account
No.:  202304853

    Bank Name:  Citibank,
NA

    Bank Address:  Los Angeles,
CA

    ABA Routing No.:  322271724;
and

     

    (ii)           the
Registration Rights Agreement, duly executed by such Investor.

     

    Section 2.3    
Supplemental
Action. If, at any time after the Closing Date, the Investors or Genius
shall determine that any further conveyances, agreements, documents,
instruments, and assurances or any further action is necessary or desirable to
carry out the provisions of this Article 2, the Investors or Genius, as the case
may be, shall execute and deliver any and all proper conveyances, agreements,
documents, instruments, and assurances and perform all necessary or proper acts
to carry out the provisions of this Article 2.

     

    Section 2.4    
Subsequent
Closings.  Additional investors may become Investors under this
agreement by executing the signature page hereto and shall have all of the
rights and obligations of an Investor hereunder; provided, however, that (i)
upon the ascension of any additional investors as Investors under this
agreement, Section 2.1 shall only apply to such additional investors, (ii) the
representations of Genius in Sections 4.7 shall only be accurate as of the
Closing Date; and (iii) no subsequent closings shall occur under this Agreement
after June 30, 2009.  Genius may amend Annex A and Annex B hereto to
reflect information relating to such additional investors. The maximum aggregate
principal amount of Notes that may be issued under this Agreement is $9.5
million and the maximum number of Warrant Shares underlying Warrants that may be
issued under this Agreement is 1,984,587,356 (subject to adjustment for stock
splits, stock dividends, stock combinations and similar transactions occurring
after the date hereof) (the “Total Warrant Shares”).  The ratio of
Warrant Shares to principal amount of Notes issued at subsequent closings shall
be no higher than the ratio of Warrant Shares to principal amount of Notes
issued on the Closing Date (excluding from the calculation of the number of
Warrant Shares in each instance the number of shares of Common Stock underlying
warrants listed on Annex B and cancelled on the Closing Date or at subsequent
closings).

     

    ARTICLE
3.

    REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS

     

    The following representations and
warranties are made severally and not jointly by each of the Investors, for
itself and no other Investor, to Genius:

     

     Section
3.1     Authorization, Validity and
Effect of Agreements. Such Investor has the requisite power and authority
to execute and deliver this Agreement and to consummate the
Transaction.  This Agreement constitutes the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors’ rights or by other equitable
principles of general application.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 3.2    
Litigation.  There
are (i) no continuing orders, injunctions or decrees of any court, arbitrator or
governmental authority to which such Investor, in its capacity as an Investor,
is a party or by which any of their properties or assets are bound or likely to
be affected and (ii) no actions, suits or proceedings pending against such
Investor, in its capacity as an Investor, or to which any of its properties or
assets are subject or, to the knowledge of such Investor, threatened against
such Investor, in its capacity as an Investor, or to which any of its properties
or assets are subject, at law or in equity, that in each such case could,
individually or in the aggregate, have a Material Adverse Effect.
 

     

    Section 3.3    
No Violation.
The execution, delivery and performance by such Investor of this Agreement and
the consummation of the Transaction does not and will not (i) contravene or
conflict with or constitute a violation of any provision of any law, judgment,
injunction, order or decree binding upon or applicable to the Investor; (ii)
require the consent or other action of any person under, constitute a default
under, or give rise to any right of termination, cancellation or acceleration of
any right or obligation of the Investor or to a loss of any benefit to which the
Investor is entitled under any provision of any material agreement or other
instrument binding upon the Investor; or (iii) result in the creation or
imposition of any material lien on any asset of the Investor, except in each
case, such as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

     

    Section 3.4    
 Investment
Representations. 

     

    (a)     Each
Investor understands that the Securities issued pursuant to Section 2 of this
Agreement have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of such Investor’s representations as
expressed herein or otherwise made pursuant hereto. Each Investor is acquiring
the Securities for his/her/its own account, not as a nominee or agent, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act; provided, however, that by making the representations herein, such Investor
does not agree to hold any of the Securities for any minimum period of time and
reserves the right, subject to the provisions of this Agreement and the Warrant
Shares Registration Rights Agreement, at all times to sell or otherwise dispose
of all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
and in compliance with applicable federal and state securities
laws.

     

    (b)     Each
Investor understands that the Securities issued pursuant to this Agreement will
be “restricted securities” under the federal securities laws, inasmuch as the
Securities are being acquired from Genius in a transaction not involving a
public offering and that under such laws such Securities may not be resold
without registration under the Securities Act or an exemption therefrom. Each of
the Securities issued pursuant to this Agreement will be endorsed with a legend
to such effect. Each Investor has been informed and understands that (i) there
are substantial restrictions on the transferability of the, and (ii) no federal
or state agency has made any finding or determination as to the fairness for
public investment, nor any recommendation nor endorsement, of the
Securities.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    (c)     Each
Investor has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to Genius and
acknowledges that such Investor can protect his/her/its own
interests.  Each Investor has such knowledge and experience in
financial and business matters so that such Investor is capable of evaluating
the merits and risks of his/her/its investment in Genius.

     

    (d)     Each
Investor is an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act. 

     

    (e)     Each
Investor understands that all books, records, and documents of Genius relating
to this investment have been and remain available for inspection by such
Investor upon reasonable notice. Each Investor confirms that all documents
requested have been made available, and that such Investor has been supplied
with all of the information concerning this investment that has been requested.
Each Investor confirms that he/she/it has obtained sufficient information, in
his/her/its judgment or that of his/her/its’ independent purchaser
representative, if any, to evaluate the merits and risks of this investment.
Each Investor confirms that he/she/it has had the opportunity to obtain such
independent legal and tax advice and financial planning services as such
Investor has deemed appropriate prior to making a decision to subscribe for the
Securities. In making a decision to purchase the Securities, each Investor has
relied exclusively upon his/her/its’ experience and judgment, or that of
his/her/its’ purchaser representative, if any, upon such independent
investigations as he/she/it, or they, deemed appropriate, and upon information
provided by Genius in writing or found in the books, records, or documents of
Genius.

     

    (f)    
Each Investor is aware that an investment in the Securities is speculative and
subject to substantial risks. Each Investor is capable of bearing the high
degree of economic risk and burdens of this venture, including, but not limited
to, the possibility of a complete loss, the lack of a sustained and orderly
public market, and limited transferability of the Securities, which may make the
liquidation of this investment impossible for the indefinite
future.

     

    (g)     The offer
to sell the Securities was directly communicated to each Investor by such a
manner that such Investor, or his/her/its purchaser representative, if any, was
able to ask questions of and receive answers from Genius or a person acting on
its behalf concerning the terms and conditions of this Transaction. At no time,
except in connection and concurrently with such communicated offer, was such
Investor presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement, or any other form of general
advertising.

     

    (h)     None of the
following information has ever been represented, guaranteed, or warranted to the
undersigned, expressly or by implication by any broker, Genius, or agent or
employee of the foregoing, or by any other person:

     

    (i)           The
approximate or exact length of time prior to maturity that the undersigned will
be required to remain as a holder of the Securities;

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    (ii)          The
amount of consideration, profit, or loss to be realized, if any, as a result of
an investment in Genius; or

     

    (iii)         That
the past performance or experience of Genius, its officers, directors,
associates, agents, affiliates, or employees or any other person will in any way
indicate or predict economic results in connection with the plan of operations
of Genius or the return on the investment.

     

    (i)     No Investor
has distributed any information relating to this investment to anyone other than
his/her/its’ purchaser representative, if any, and such Investor’s legal and
investment advisers and no other person except such personal representative,
advisers and such Investor has used this information.

     

    (j)     Each
Investor hereby agrees to indemnify Genius and its affiliates and to hold them
harmless from and against any and all liability, damage, cost, or expense,
including their respective reasonable attorneys’ fees and costs for a period of
four (4) years from the Closing Date, incurred on account of or arising out
of:

     

    (i)           Any
material inaccuracy in the declarations, representations, and warranties
hereinabove set forth; and

     

    (ii)           The
disposition of the Securities or any part thereof by such Investor, contrary to
the foregoing declarations, representations, and warranties.

     

    (k)     Each
Investor acknowledges that no market exists or is expected to develop for the
Notes or the Warrants.

     

    Section 3.5    
Short Sales and
Confidentiality Prior To the Date Hereof.  Other than the
Transaction, such Investor has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with such Investor,
executed any disposition, including short sales (but not including the location
and/or reservation of borrowable shares of Common Stock), in the Securities
during the period commencing from the time that such Investor first received a
term sheet from Genius or any other Person setting forth the material terms of
the Transaction until the date hereof (“Discussion
Time”).  Notwithstanding the foregoing, in the case of an
Investor that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Investor’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Investor’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement and to its legal and investment advisers,
such Investor has maintained the confidentiality of all disclosures made to it
in connection with the Transaction (including the existence and terms of the
Transaction).

    



    
      
         


      

      
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        EXHIBIT
10.1

      

    


    ARTICLE
4.

    REPRESENTATIONS
AND WARRANTIES OF GENIUS

     

    Each of Genius Inc. and Genius LLC
hereby makes the following representations and warranties to each
Investor:

     

    Section 4.1    
Subsidiaries.
Genius Inc. has no direct or indirect Subsidiaries other than Genius LLC and as
otherwise specifically disclosed in the SEC Reports.  Except as
otherwise disclosed in the SEC Reports, Genius Inc. owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock or other equity interests of each Subsidiary
are validly issued, fully paid and non-assessable.

     

    Section 4.2    
Organization and
Qualification. Genius Inc. and each Subsidiary are duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted.  Except as disclosed in
Schedule 4.2,
neither Genius Inc. nor any Subsidiary is in violation of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents.  Genius Inc. and each Subsidiary
are duly qualified to conduct its respective businesses and are in good standing
as a foreign corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.

     

    Section 4.3    
Authorization;
Enforcement. Each of Genius Inc. and Genius LLC has the requisite
corporate or limited liability company power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder.  Except for the
Required Approvals, the execution and delivery of each of the Transaction
Documents by Genius and the consummation by each of them of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of each of Genius Inc. and Genius LLC and no further action is required by
them in connection therewith.  Each Transaction Document has been (or
upon delivery will have been) duly executed by each of Genius Inc. and Genius
LLC and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of Genius enforceable against them in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application.

     

    Section 4.4    
No Conflicts.
The execution, delivery and performance of the Transaction Documents by each of
Genius Inc. and Genius LLC and the consummation by them of the transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of Genius Inc.’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii)
conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a debt of Genius Inc. or Genius LLC or otherwise) or
other understanding to which Genius Inc. or any Subsidiary is a party or by
which any property or asset of Genius Inc. or any Subsidiary is bound or
affected, or (iii) subject to the filing contemplated by Section 4.5(iii),
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
Genius Inc. or a Subsidiary is subject (including federal and state securities
laws and regulations), or by which any property or asset of Genius Inc. or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.5    
Filings, Consents and
Approvals.  Genius Inc. and Genius LLC are not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by either of them of the Transaction
Documents, other than (i) the filing with the Commission of one or more
Registration Statements in accordance with the requirements of the Warrant
Shares Registration Rights Agreement, (ii) filings required by state securities
laws, (iii) the filing of a Notice of Sale of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) applications to the
Trading Market for the listing of the Common Stock for trading thereon and (v)
filings required by Section 5.4 hereof and, (vi) those that have been made or
obtained prior to the date of this Agreement (collectively, the “Required
Approvals”).

     

    Section 4.6    
Issuance of the
Securities.  The Securities have been duly authorized (other
than the Warrant Shares which will be duly authorized upon consummation of the
Reverse Split) and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens other than restrictions on transfer provided for in the
Transaction Documents.  Upon consummation of the Reverse Split, Genius
Inc. will have reserved from its duly authorized capital stock the shares of
Common Stock issuable upon exercise of the Warrant.

     

    Section 4.7    
Capitalization.  Schedule 4.7
discloses the number of shares and type of all authorized, issued and
outstanding capital stock of Genius Inc. and all shares of Common Stock reserved
for issuance under Genius Inc.’s option and incentive plans and arrangements and
provides the vesting conditions for the grant of options to management to
purchase up to 1,014,136,410 shares of Common Stock or the grant of the same
number of shares of restricted stock (in either case prior to any Reverse
Split), subject to customary adjustments.  Schedule 4.7
discloses the post-Closing capitalization of Genius Inc., giving effect to the
options to management to purchase up to 1,014,136,410 shares of Common Stock or
the grant of the same number of shares of restricted stock.  Except as
disclosed in Schedule
4.7, no securities of Genius Inc. are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as disclosed in
Schedule 4.7
and in connection with Genius Inc.’s agreements under the Transaction, there are
no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which Genius Inc. or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common
Stock.  Except as contemplated under the Transaction, the issue and
sale of the Securities will not, immediately or with the passage of time,
obligate Genius Inc. to issue shares of Common Stock or other securities to any
Person (other than the Investors) and will not result in a right of any holder
of Common Stock to adjust the exercise, conversion, exchange or reset price
under such securities.

     


    
      
         


      

      
        10

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 4.8    
SEC Reports; Financial
Statements.  Except as disclosed in Schedule 4.8, Genius
Inc. has filed all reports required to be filed by it under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (or such shorter period as Genius
Inc. was required by law to file such reports) (the foregoing materials being
collectively referred to herein as the “SEC Reports” and,
together with the Transaction Documents and the Schedules to this Agreement, the
“Disclosure
Materials”) on a timely basis or has timely filed a valid extension of
such time of filing and has filed any such SEC Reports prior to the expiration
of any such extension.  Except as disclosed in Schedule 4.8, as of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  Except as disclosed in Schedule 4.8, the
financial statements of Genius Inc. included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Except as disclosed in Schedule 4.8, such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present
in all material respects the financial position of Genius Inc. and its
consolidated Subsidiaries as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit
adjustments.

     

    Section 4.9    
Press Releases.
The press releases disseminated by Genius Inc. during the twelve months
preceding the date of this Agreement taken do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not
misleading.

     

    Section 4.10    Material Changes.
Except as disclosed on Schedule 4.10, since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) except in connection with
the Transaction, Genius has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in Genius Inc.’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) Genius Inc. has not altered its method of accounting (except
as may be required by GAAP) or the identity of its auditors, (iv) Genius Inc.
has not declared or made any dividend or distribution of cash or other property
to its stockholders or, except in connection with the Transaction, purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) Genius Inc. has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing stock option or incentive
plans or arrangements specifically approved by the Board of Directors of Genius
Inc.  Genius Inc. does not have pending before the Commission any
request for confidential treatment of information.  Except for the
transactions contemplated by this Agreement or as disclosed on Schedule 4.10, no
event, liability or development has occurred or exists with respect to Genius or
its Subsidiaries or their respective business, properties, operations or
financial condition that would be required to be disclosed by Genius under
applicable securities laws at the time this representation is made that has not
been publicly disclosed at least one Trading Day prior to the date that this
representation is made.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.11    Litigation. There is
no Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.  Neither Genius Inc.
nor any Subsidiary, nor any director or officer thereof (in his or her capacity
as such), is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty, except as specifically disclosed in the SEC
Reports.  There has not been, and to the knowledge of Genius Inc.,
there is not pending any investigation by the Commission involving Genius Inc.
or any current or former director or officer of Genius Inc. (in his or her
capacity as such).  The Commission has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
Genius Inc. or any Subsidiary under the Exchange Act or the Securities
Act.

     

    Section 4.12    Labor Relations.
Except as disclosed on Schedule 4.12, no
material labor dispute exists or, to the knowledge of Genius, is imminent with
respect to any of the employees of Genius Inc. or any Subsidiary.

     

    Section 4.13    Compliance. Except as
disclosed in Schedule
4.13, neither Genius Inc. nor any Subsidiary (i) is in default under or
in violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by Genius Inc. or any
Subsidiary under), nor has Genius Inc. or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in Schedule 4.13, Genius
Inc. is in compliance with all effective requirements of the Sarbanes-Oxley Act
of 2002, as amended, and the rules and regulations thereunder, that are
applicable to it, except where such noncompliance could not have or reasonably
be expected to result in a Material Adverse Effect.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.14    Regulatory Permits.
Genius Inc. and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, and neither Genius Inc. nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
permits.

     

    Section 4.15    Title to Assets. No
real property is owned by Genius.  Genius Inc. and the Subsidiaries
have good and marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by Genius Inc. and the Subsidiaries. Any real property and
facilities held under lease by Genius Inc. and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which Genius Inc. and the
Subsidiaries are in compliance, except as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

     

    Section 4.16    Patents and
Trademarks.

     

    (a)     Genius Inc.
or its Subsidiaries own or have valid rights to use all patent, copyright, trade
secret, trademark or other proprietary rights that are used in the business of
Genius and are material to Genius and its Subsidiaries taken as a whole
(collectively, “Intellectual
Property”), except where the failure to own or have such rights would not
reasonably be expected to result in a Material Adverse Effect.

     

    (b)     All
material licenses or other material agreements under which (i) Genius Inc.
or any Subsidiary is granted rights in Intellectual Property and
(ii) Genius Inc. or any Subsidiary has granted rights to others in
Intellectual Property owned or licensed by Genius or any Subsidiary, are in full
force and effect and there is no material default by Genius or any Subsidiary
thereto, except where the failure to be in full force and effect or such default
would not reasonably be expected to result in a Material Adverse
Effect.

     

    (c)     No
proceedings have been instituted or are pending which challenge in a material
manner the rights of Genius Inc. or any Subsidiary in respect to Genius Inc. or
any Subsidiary’s right to the use of the Intellectual
Property.  Genius Inc. and each Subsidiary has the right to use, free
and clear of material claims or rights of other persons, all of its customer
lists, designs, computer software, systems, data compilations, and other
information that are required for its products or its business as presently
conducted.

     

    (d)     To the
knowledge of Genius, the present business, activities and products of Genius
Inc. and each Subsidiary do not infringe any intellectual property of any other
person, except where such infringement would not have a Material Adverse
Effect.  No material proceeding charging Genius Inc. or any Subsidiary
with infringement of any adversely held Intellectual Property has been
filed.  Genius has not received notice of or is not otherwise aware of
any infringement of or conflict with asserted rights of others with respect to
any Intellectual Property or of any facts or circumstances which would render
any Intellectual Property invalid or inadequate to protect the interests of
Genius Inc. or any Subsidiary, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect.  To Genius’s knowledge, there exists no
third party unexpired patent or patent application which includes claims that
would be infringed by, or otherwise have a Material Adverse Effect on
Genius.  To the knowledge of Genius, Genius is not making unauthorized
use of any material confidential information or trade secrets of any third
party.  To Genius’ knowledge, the activities of Genius Inc. or any
Subsidiary or any employee on behalf of Genius Inc. or any Subsidiary do not
violate any material agreements or arrangements known to Genius which any such
employees have with other persons, if any.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.17    Insurance. Genius
Inc. and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which Genius Inc. and the Subsidiaries are
engaged.  Genius Inc. has no reason to believe that it will not be
able to renew its and the Subsidiaries’ existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business on terms consistent with market for Genius
Inc.’s and such Subsidiaries’ respective lines of business.

     

    Section 4.18    Transactions With Affiliates
and Employees. Except as set forth in the SEC Reports, none of the
officers or directors of Genius Inc. and, to the knowledge of Genius Inc., none
of the employees of Genius Inc. is presently a party to any transaction with
Genius Inc. or any Subsidiary (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of Genius Inc., any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of Genius Inc. and
(iii) for other employee benefits, including stock option agreements under any
stock option plan of Genius Inc.

     

    Section 4.19    Internal Accounting
Controls. Genius Inc. and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.  Genius Inc. has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Genius
Inc. and designed such disclosure controls and procedures to ensure that
material information relating to Genius Inc., including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which Genius Inc.’s Form 10-K or 10-Q, as the
case may be, is being prepared.  Genius Inc.’s certifying officers
have evaluated the effectiveness of Genius Inc.’s disclosure controls and
procedures in accordance with Item 307 of Regulation S-K under the Exchange Act
for Genius Inc.’s most recently ended fiscal quarter or fiscal year-end (such
date, the “Evaluation
Date”).  Genius Inc. presented in its most recently filed Form
10-K or Form 10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Except as disclosed in Schedule 4.19, since
the Evaluation Date, there have been no significant changes in Genius Inc.’s
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) or, to Genius’s knowledge, in other factors
that could significantly affect Genius’s internal controls.  Except as
disclosed in Schedule
4.19, during the past 12 months prior to the date hereof neither Genius
Inc. nor any Subsidiary has received any notice of correspondence from any
accountant relating to any potential material weakness in any part of the system
of internal accounting controls of either Genius Inc. or any
Subsidiary.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.20    Solvency. Based on
the financial condition of Genius Inc. and the Subsidiaries taken as a whole and
the on the financial condition of Genius LLC on its own, as of the Closing Date
(and assuming that the Transaction and other transactions contemplated by Genius
Inc. and Genius LLC shall have occurred), each of Genius Inc. and Genius LLC
hereby represent with respect to itself that (i) such entity’s fair saleable
value of its assets exceeds the amount that will be required to be paid on or in
respect of such entity's existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) such entity’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by such entity, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of such entity,
together with the proceeds such entity would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid.  Each of Genius Inc. and Genius LLC does not
intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

     

    Section 4.21    Certain
Fees.  No brokerage or finder’s fees or commissions are or will
be payable by Genius to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by this Agreement.  The Investors shall have
no obligation with respect to any fees or with respect to any claims (other than
such fees or commissions owed by a Investor pursuant to written agreements
executed by such Investor which fees or commissions shall be the sole
responsibility of such Investor) made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.

     

    Section 4.22    Certain Registration
Matters. Assuming the accuracy of the Investors’ representations and
warranties set forth in Section 3.4, no registration under the Securities Act is
required for the offer and sale of the Securities by either Genius Inc. or
Genius LLC to the Investors under the Transaction Documents.  Genius
Inc. is eligible to register the resale of its Common Stock for resale by the
Investors under Form S-1 promulgated under the Securities Act.  Except
as disclosed in Schedule 4.22, Genius
Inc. has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any of its securities registered with
the Commission or any other governmental authority that have not been satisfied;
provided, that the Investors acknowledge that Genius Inc. has granted
registration rights to all Investors in connection with the
Transaction.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.23    Listing and Maintenance
Requirements. Except as specified in the SEC Reports or as disclosed in
Schedule 4.23,
Genius Inc. has not, in the two years preceding the date hereof, received notice
from any Trading Market to the effect that Genius Inc. is not in compliance with
the listing or maintenance requirements thereof.  Except as disclosed
on Schedule
4.23, Genius Inc. is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with the listing and
maintenance requirements for continued listing of the Common Stock on the
Trading Market on which the Common Stock is currently listed or
quoted.  The issuance and sale of the Securities under the Transaction
Documents does not contravene the rules and regulations of the Trading Market on
which the Common Stock is currently listed or quoted, and no approval of the
stockholders of Genius Inc. thereunder is required for Genius to issue and
deliver to the Investors the Securities contemplated by Transaction
Documents.

     

    Section 4.24    Investment Company.
Genius Inc. is not, and is not an Affiliate of, and immediately following the
Closing will not have become, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

     

    Section 4.25    Use of
Proceeds.  Genius intends to use all of the proceeds of the
sale of the Notes and Warrants to repurchase a portion of a $20,000,000
promissory note issued by Genius LLC in favor of The Weinstein Company Holdings
LLC and now held by GNPR Investments LLC.

     

    Section 4.26    Application of Takeover
Protections. Genius Inc. has taken all necessary action, if any, in order
to render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under Genius Inc.’s Certificate of Incorporation
(or similar charter documents) or the laws of its state of incorporation that is
or could become applicable to the Investors as a result of the Investors and
Genius Inc. fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation each of Genius Inc. and
Genius LLC’s issuance of the Securities and the Investors’ ownership of the
Securities.

     

    Section 4.27    No Additional
Agreements. Genius does not have any agreement or understanding with any
Investor with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

     

    Section 4.28    Disclosure.  The
Disclosure Materials, taken as a whole, are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

     

    Section 4.29    No Integrated
Offering.  Assuming the accuracy of the Investors'
representations and warranties set forth in this Agreement, neither Genius, nor
any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by Genius for
purposes of the Securities Act and would therefore require registration of the
offer or sale of the Securities under the Securities Act or any applicable
shareholder approval provisions of any Trading Market on which any of the
securities of Genius are listed or designated.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    Section 4.30    Acknowledgement Regarding
Investors’ Purchase of Securities.  Genius acknowledges and
agrees that each of the Investors is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby.  Genius further acknowledges that no
Investor is acting as a financial advisor or fiduciary of Genius (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Investor or any of their
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Investors’ purchase of the Securities.

     

    Section 4.31    Non-Public
Information.  Genius represents and warrants that neither it
nor any other person acting on its behalf has provided any Investor or its
agents or counsel with any information that Genius believes constitutes material
non-public information except for (i) information relating to the Transaction
and the Transaction Documents, (ii) information covered by a written agreement
regarding the confidentiality and use of such information, or (iii) information
disclosed on Schedule
4.31.

     

    Section 4.32    Tax Matters. Genius
(i) has prepared and filed all foreign, federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith,
with respect to which adequate reserves have been set aside on the books of
Genius and (iii) has set aside on its books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply, except, in the case of clauses (i) and
(ii) above, where the failure to so pay or file any such tax, assessment, charge
or return would not have or reasonably be expected to have a Material Adverse
Effect.

     

    Section 4.33    No General Solicitation or
General Advertising.  Neither Genius nor any person acting on
its behalf has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with any offer or sale of the Securities.

     

    Section 4.34    Shell Company Status.
Genius Inc. is not an issuer identified in Rule 144(i)(1).

     

    


     

    ARTICLE
5.

     

    OTHER
AGREEMENTS OF THE PARTIES

     

    Section 5.1    
 (a)      Securities may only be disposed of in
compliance with state and federal securities laws.  In connection with
any transfer of the Securities other than pursuant to an effective registration
statement, pursuant to Rule 144, to Genius, to an Affiliate of an Investor, to
an entity that shares a common discretionary investment adviser with such
Investor or in connection with a pledge as contemplated in Section 5.1(b),
Genius may require (x) the transferor thereof to provide to Genius an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to Genius, to the effect that such transfer
does not require registration of such transferred Securities under the
Securities Act and (y) any transferee to agree in writing to be bound by the
terms of this Agreement.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    (b)    
Certificates evidencing the Securities will contain the following legend
substantially in the form following, until such time as they are not required
under Section 5.1(c):

     

    [NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  [THESE SECURITIES AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
SECURITIES.

     

    Genius acknowledges and agrees that an
Investor may from time to time pledge, and/or grant a security interest in some
or all of the Securities pursuant to a bona fide margin agreement in connection
with a bona fide margin account and, if required under the terms of such
agreement or account, such Investor may transfer pledged or secured Securities
to the pledgees or secured parties.  Such a pledge or transfer would
not be subject to approval or consent of Genius and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion may be required in connection with a
subsequent transfer following default by the Investor transferee of the
pledge.  No notice shall be required of such pledge.  At the
appropriate Investor’s expense, Genius will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities including the
preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders
thereunder.

     


    
      
         


      

      
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        EXHIBIT
10.1

      

    


    (c)    
Certificates evidencing the Securities shall not contain any legend (including
the legend set forth in Section 5.1(b)), (i) while a registration statement
(including the Registration Statement) covering the resale of such Security is
effective under the Securities Act, or (ii) following any sale of such
Securities pursuant to Rule 144, or (iii) if such Securities are eligible for
sale under Rule 144, or (iv) except relating to state securities laws, if such
legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the Staff of
the Commission).  Genius shall cause its counsel to issue a legal
opinion to Genius’s transfer agent promptly after the Effective Date if required
by Genius Inc.’s transfer agent to effect the removal of the legend
hereunder.  If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the resale of the
Warrant Shares, such Warrant Shares shall be issued free of all
legends.  Genius may not make any notation on its records or give
instructions to any transfer agent of Genius that enlarge the restrictions on
transfer set forth in this Section.  Certificates for Securities
subject to legend removal hereunder shall be transmitted by the transfer agent
of Genius to the Investors by crediting the account of the Investor’s prime
broker with the Depository Trust Company System.

     

    (d)     Each
Investor, severally and not jointly with the other Investors, agrees that the
removal of the restrictive legend from certificates representing Securities as
set forth in this Section 4.1 is predicated upon Genius’s reliance that the
Investor will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom..

     

    Section 5.2    
Furnishing of
Information.  As long as any Investor owns the Securities,
Genius Inc. covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
Genius Inc. after the date hereof pursuant to the Exchange Act.  As
long as any Investor owns Securities, if Genius Inc. is not required to file
reports pursuant to such laws, Genius will (i) prepare and furnish to the
Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Securities under Rule
144, and (ii) provide audited annual financial statements to such Investor.
Genius Inc. further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell the Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.

     

    Section 5.3    
Integration.  Genius
shall not, and shall use its best efforts to ensure that no Affiliate of Genius
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to the Investors, or that would be integrated with the offer or sale
of the Securities for purposes of the rules and regulations of any Trading
Market in a manner that would require stockholder approval of the sale of the
securities to the Investors.

     


    
      
         


      

      
        19

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section
5.4      Securities Laws Disclosure;
Publicity.  Not later than 9:00 a.m. (New York time) on the
Trading Day following the Closing Date, Genius Inc. shall issue a press release
disclosing the material terms of the transactions contemplated hereby and the
execution of this Agreement, and the Closing.  On or before 9:00 a.m.,
New York City time, on the fourth Trading Day immediately following the
execution of this Agreement, the Company will file a Current Report on Form 8-K
with the Commission describing (i) the terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement and the
Warrant Shares Registration Rights Agreement)) and (ii) the terms of the
documents entered into in connection with the Quadrant Transaction (as defined
on Schedule
4.10 to this Agreement), including the Purchase Agreement, the Amended
TWC Distribution Agreement, the Exchange Agreement, the TWC Note, the TWC
Warrants, the Credit Agreement Amendment, the Stockholders Rights Agreement and
the Registration Rights Agreement (each as defined on Schedule 4.10 to this
Agreement).  In addition, Genius Inc. will make such other filings and
notices in the manner and time required by the Commission and the Trading Market
on which the Common Stock is listed.  Notwithstanding the foregoing,
neither Genius nor any of its Subsidiaries shall publicly disclose the name of
any Investor or any Affiliate or investment adviser of any Investor, or include
the name of any Investor or any Affiliate or investment adviser of any Investor
in any filing with the Commission (other than the Registration Statement and any
exhibits to filings made in respect of this transaction in accordance with
periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to
the extent such disclosure is required by law or Trading Market
regulations.

     

    Section 5.5    
Non-Public
Information.  Except as disclosed on Schedule 5.15, Genius
covenants and agrees that neither it nor any other Person acting on its behalf
will provide any Investor or its agents or counsel with any information that
Genius believes constitutes material non-public information, unless prior
thereto such Investor shall have executed a written agreement regarding the
confidentiality and use of such information.  Genius understands and
confirms that each Investor shall be relying on the foregoing representations in
effecting transactions in the Securities.

     

    Section
5.6      Listing of
Securities.  Genius Inc. agrees that (i) if it applies to have
the Common Stock traded on any other Trading Market, it will include in such
application the Warrant Shares, and will take such other action as is necessary
or desirable to cause the Warrant Shares to be listed on such other Trading
Market as promptly as possible, and (ii) it will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all material respects with Genius Inc.’s reporting,
filing and other obligations under the bylaws or rules of the Trading
Market.

     

    Section 5.7    
Completion of Reverse
Split.  Genius Inc. represents and warrant to each Investor
that its Board of Directors has authorized, and its stockholders have duly
approved, the Reverse Split.  Genius Inc. agrees to use its best
efforts to diligently and promptly complete the Reverse Split Procedure
following the Closing.

     

    Section 5.8    
Form D and Blue
Sky. Genius agrees to timely file a Form D with respect to the Securities
as required under Regulation D.  Genius, on or before the Closing
Date, shall take such action as Genius shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to the
Investors at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification). Genius shall make all filings and reports relating to
the offer and sale of the Securities required under applicable securities or
“Blue Sky” laws of the states of the United States following the Closing
Date.

     


    
      
         


      

      
        20

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 5.9    
Cancellation of
Warrants.  Each of the Investors listed on Annex B hereto,
hereby separately and not jointly, cancels, forfeits and surrenders each of the
warrants set forth opposite its name on Annex B and further agrees that such
warrant shall have no further force or effect.

     

    Section 5.10    No Dilution Upon Subsequent
Closing.

     

    (a)     If, during
the period beginning on the date of the mandatory exercise of the Warrants and
ending at the close of business on June 30, 2009, Genius Inc. and Genius LLC
shall, at any time and from time to time, participate in a subsequent closing in
accordance with Section 2.4 hereof whereby Genius LLC issues additional Notes
and Genius Inc. issues additional shares of common stock (the “Additional Shares
of Common Stock”), then and in such event, Genius Inc. shall issue to each
Investor a number of shares of Common Stock equal to the product of (i) the
quotient of the aggregate number of Warrant Shares held by such Investor
immediately prior to the issuance of Additional Shares of Common Stock divided
by the aggregate number of issued and outstanding shares of Common Stock
immediately prior to the issuance of such Additional Shares of Common Stock and
(ii) the aggregate number of such Additional Shares of Common
Stock.  No issuance of Common Stock to the Investors shall be made
pursuant to this Section 5.10(a) upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Common Stock Equivalents (as defined below), if any such
issuance of Common Stock to the Investors shall previously have been made upon
the issuance of such warrants or other rights or upon the issuance of such
Common Stock Equivalents (or upon the issuance of any warrant or other rights
therefore) pursuant to Section 5.10(b).

     

    (b)    
If, during the period beginning on the date of the mandatory exercise of the
Warrants and ending at the close of business on June 30, 2009, Genius Inc. and
Genius LLC shall, at any time and from time to time, participate in a subsequent
closing in accordance with Section 2.4 hereof whereby Genius LLC issues
additional Notes and Genius Inc. issues any securities convertible into or
exchangeable for, directly or indirectly, Common Stock (“Convertible
Securities”), or any rights or warrants or options to purchase any such Common
Stock or Convertible Securities, shall be issued or sold (collectively, the
“Common Stock Equivalents”), then Genius Inc. shall issue shares of Common Stock
to the Investors pursuant to Section 5.10(a) above assuming that all Additional
Shares of Common Stock have been issued pursuant to the Convertible Securities
or Common Stock Equivalents.

     

    (c)    
If, during the period beginning on the date of the mandatory exercise of the
Warrants and ending at the close of business on June 30, 2009, Genius Inc.
issues Additional Management Shares to the Company’s directors, officers,
employees or consultants pursuant to an employee benefit plan or similar
arrangement (which shall in any event exclude shares issued to such individuals
as a dividend or distribution or stock split or combination in which all holders
of Common Stock participate) (the “Management Retention Shares”), then and in
such event, Genius Inc. shall issue to each Investor a number of shares of
Common Stock equal to the product of (i) the quotient of the aggregate number of
Warrant Shares held by such Investor immediately prior to the issuance of
Additional Management Shares divided by the aggregate number of issued and
outstanding shares of Common Stock immediately prior to the issuance of such
Additional Management Shares and (ii) the aggregate number of such Additional
Management Shares.  For purposes of this Section 5.10(c), “Additional
Management Shares” shall mean all shares of Common Stock issued or issuable by
Genius Inc. pursuant to (i) restricted stock grants, (ii) the exercise of
rights, options or warrants to subscribe for, purchase or otherwise acquire
Common Stock, or (iii) the conversion or exchange of equity securities of the
Company, but shall exclude the options to purchase or grants of restricted stock
in the amount of 1,014,136,410 shares of Common Stock contemplated by Section
4.7 (and Schedule 4.7) of this Agreement.

     


    
      
         


      

      
        21

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 5.11    
Preemptive
Rights.  For so long as any Note remains outstanding, Genius Inc.
offers to sell equity securities or securities exercisable for or convertible
into equity securities to any third-party, it must offer to sell to each of the
Investors an amount of such securities sufficient to enable such Investor to
maintain its pre-offering percentage of ownership of Genius Inc. (calculated
assuming the full conversion or exercise of any securities held by such
Investor) after giving effect to the sale to the third party (assuming the
exercise or conversion of any such securities).  The offer to each
Investor must be on the same terms as the most favorable offer to any purchasing
third-party.  Each Investor shall have not less than 10 business days
notice before being required to either purchase such securities or forfeit its
rights pursuant to this Section.  Each Investor shall have the right,
in its sole discretion, to elect to purchase less than the full allotment of
securities such Investor would be entitled to purchase pursuant to this
Section.

     

    


     

    ARTICLE
6

    INDEMNIFICATION

     

    Section 6.1    
Indemnification.  In
addition to any other indemnity provided in the Transaction Documents, Genius
will indemnify and hold the Investors and their directors, officers,
shareholders, partners, employees, advisers, affiliates  and agents
(each, an “Investor
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”) that any
such Investor Party may suffer or incur as a result of or relating to (i) any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by Genius in any Transaction Document and (ii) any
action instituted against an Investor Party in any capacity, or any of them or
their respective affiliates, by any stockholder of Genius Inc. who is not an
affiliate of such Investor Party, with respect to any of the transactions
contemplated by this Agreement.  In addition to the indemnity
contained herein, Genius will reimburse each Investor Party for its reasonable
legal and other expenses (including the cost of any investigation, preparation
and travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.

     


    
      
         


      

      
        22

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 6.2    
Conduct of
Indemnification Proceedings. Promptly after receipt by any Person (the
“Indemnified
Person”) of notice of any demand, claim or circumstances which would or
might give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section
6.1, such Indemnified Person shall promptly notify Genius in writing and Genius
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify Genius
shall not relieve Genius of its obligations hereunder except to the extent that
Genius is actually and materially and adversely prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) Genius and the Indemnified
Person shall have mutually agreed to the retention of such counsel; (ii) Genius
shall have failed promptly to assume the defense of such proceeding and to
employ counsel reasonably satisfactory to such Indemnified Person in such
proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them;
provided, however, that in each such case Genius shall not be responsible for
the reasonable fees and expenses of more than one such counsel plus local
counsel. Genius shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, delayed or
conditioned, Genius shall not effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability arising out of such proceeding.

     

    


     

    ARTICLE
7

    MISCELLANEOUS

     

    Section 7.1    
Fees and
Expenses.  Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of the Transaction Documents; provided, however, that
at Closing Genius shall pay legal fees of Greenberg Traurig LLP, counsel on
behalf of certain Investors, up to a maximum of $20,000.  Genius shall
pay all stamp and other taxes and duties levied in connection with the sale of
the Securities.

     

    Section 7.2    
Entire
Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.

     


    
      
         


      

      
        23

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 7.3    
Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (EST) on a Trading Day, (b)
the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (EST) on
any Trading Day, (c) the Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given.  The address
for such notices and communications shall be as follows:

     

    
      	
               
      

            	
              If
      to Genius :

            	
              Genius
      Products, Inc.

            


    

    
      	
               
      

            	
              3301
      Exposition Blvd., Suite 100

            


    

    
      	
               
      

            	
              Santa
      Monica, CA 90404

            


    

    
      	
               
      

            	
              Facsimile:  (310)
      401-2865

            


    

    
      	
               
      

            	
              Attention:  Chief
      Executive Officer

            


    

    


    
      	
               
      

            	
              With
      a copy to:

            	
              Reed
      Smith LLP

            


    

    
      	
               
      

            	
              355
      South Grand Avenue, Suite 2900

            


    

    
      	
               
      

            	
              Los
      Angeles, CA 90071

            


    

    
      	
               
      

            	
              Facsimile:  (213)
      457-8080

            


    

    
      	
               
      

            	
              Attention:  Allen
      Z. Sussman, Esq.

            


    

    


    
      	
               
      

            	
              If
      to an Investor:

            	
              To
      the address set forth under such Investor’s
name

            


    

    
      	
               
      

            	
              on
      the signature pages hereof;

            


    

    


     

    or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

     

    Section 7.4    
Amendments; Waivers;
No Additional Consideration.  No provision of this Agreement
may be waived or amended except in a written instrument signed by Genius and the
Investors holding Notes representing more than 50% of the aggregate
principal amount of the Notes held by Investors as of such date.  No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right.  No consideration shall be offered or paid to any Investor to
amend or consent to a waiver or modification of any provision of any Transaction
Document unless the same consideration is also offered to all Investors who then
hold Securities.

     

    Section 7.5    
Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.  This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

     


    
      
         


      

      
        24

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 7.6    
Successors and
Assigns; No
Third-Party Beneficiaries.  This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and permitted
assigns. This Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person.  This
Agreement may not be assigned by Genius without the prior written consent of the
Investors.

     

    Section 7.7    
Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the New York Courts.  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein (including with respect
to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court, or
that such Proceeding has been commenced in an improper or inconvenient
forum.  Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.  If either party
shall commence a Proceeding to enforce any provisions of a Transaction Document,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such
Proceeding.

     

    Section 7.8    
Survival.  The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.

     

    Section 7.9    
Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

     


    
      
         


      

      
        25

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 7.10    Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    Section 7.11    Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever any Investor exercises a right, election, demand or option under a
Transaction Document and Genius does not timely perform its related obligations
within the periods therein provided, then such Investor may rescind or withdraw,
in its sole discretion from time to time upon written notice to Genius, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

     

    Section 7.12    Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, Genius Inc. or Genius LLC,
as appropriate, shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof, or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to them of such loss, theft or destruction and customary and
reasonable indemnity, if requested.  The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.  If a replacement certificate or instrument evidencing any
Securities is requested due to a mutilation thereof, Genius Inc. or Genius LLC,
as appropriate, may require delivery of such mutilated certificate or instrument
as a condition precedent to any issuance of a replacement.

     

    Section 7.13    Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Investors and Genius will be
entitled to specific performance under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.

     

    Section 7.14    Payment Set
Aside.  To the extent that Genius Inc. or Genius LLC, as
appropriate, makes a payment or payments to any Investor pursuant to any
Transaction Document or an Investor enforces or exercises its rights thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be
refunded, repaid or otherwise restored to Genius Inc. or Genius LLC, a trustee,
receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.

     


    
      
         


      

      
        26

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    Section 7.15   
 Independent
Nature of Investors’ Obligations and Rights.  The obligations
of each Investor under any Transaction Document are several and not joint with
the obligations of any other Investor, and no Investor shall be responsible in
any way for the performance of the obligations of any other Investor under any
Transaction Document.  The decision of each Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor
independently of any other Investor.  Nothing contained herein or in
any Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Documents.  Each Investor acknowledges that no other Investor has
acted as agent for such Investor in connection with making its investment
hereunder and that no Investor will be acting as agent of such Investor in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents.  Each Investor shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to
be joined as an additional party in any proceeding for such
purpose.  Each of Genius Inc. and Genius LLC acknowledges that each of
the Investors has been provided with the same Transaction Documents for the
purpose of closing a transaction with multiple Investors and not because it was
required or requested to do so by any Investor.

     

    Section 7.16    Limitation of
Liability.  Notwithstanding anything herein to the contrary,
each of Genius Inc. and Genius LLC acknowledges and agrees that the liability of
an Investor arising directly or indirectly, under any Transaction Document of
any and every nature whatsoever shall be satisfied solely out of the assets of
such Investor, and that no trustee, officer, other investment vehicle or any
other Affiliate of such Investor or any Investor, shareholder or holder of
shares of beneficial interest of such an Investor shall be personally liable for
any liabilities of such Investor.

     

    


     

    [Signature
page to follow]

     

    


     


    
      
         


      

      
        27

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    IN WITNESS WHEREOF, the parties hereto
have caused this Note and Warrant Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

     

    
    

     

    
      	 	      
              GENIUS
      PRODUCTS, INC.

              


                          /s/
      Trevor
      Drinkwater                         

              Name:    
      Trevor
      Drinkwater                           

              Title:    
      Chief Executive
      Officer                     

              


              


              GENIUS
      PRODUCTS, LLC

               

              By:           Genius Products, Inc.,
      Managing Member

              
 

                          /s/
      Trevor
      Drinkwater                         

              Name:   
      Trevor
      Drinkwater                            

              Title:    
      Chief Executive
      Officer                     

            


    

     

     

    
      

      
        
           


        

        
          28

          
            

          

        

        
           


          EXHIBIT
10.1

        

      



    IN WITNESS WHEREOF, the parties hereto
have caused this Note and Warrant Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

     

    


    
 

     

    
      	 	      
              By:   
      /s/ George
      Bolton                                    

              Name:  George
      Bolton

              Title:

              


              


              ADDRESS
      FOR NOTICE

              


              c/o:                                                                       

              


              Street:
      2440 Pacific
      Ave                                    

              


              City/State/Zip:
      San Francisco,
      CA 94115       

              


              Attention:
      George
      Bolton                                 

              


              Tel:                                                                       

              


              Fax:                                                                       

              


              Email:                                                 
                        
      

            


    

     

    


    


                                                                             


    
      
         


      

      
        29

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    


     

    IN WITNESS WHEREOF, the parties hereto
have caused this Note and Warrant Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

     

    
      	 
      	
              J.
      CAIRD PARTNERS, L.P.

            
	 
      	
              By: 
      Wellington Management Company, LLP,

            
	 
      	
              as
      investment adviser

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:       /s/
      Steven
      Hoffman                           
                 

            
	 
      	
              Name: Steven
      Hoffman                                  
                

            
	 
      	
              Title:   Vice President and
      Counsel              
                

            
	 
      	 
      
	 
      	 
      
	 
      	
              ADDRESS
      FOR NOTICE

            
	 
      	 
      
	 
      	
              c/o:
      Wellington Management Company,
      LLP        

            
	 
      	 
      
	 
      	
              Street:
      75 State
      Street                                                

            
	 
      	 
      
	 
      	
              City/State/Zip:
      Boston MA,
      02109                          

            
	 
      	 
      
	 
      	
              Attention:
      Legal Services – Steven M.
      Hoffman  

            
	 
      	 
      
	 
      	
              Tel:    (617)
      790-7429                                                  

            
	 
      	 
      
	 
      	
              Fax:    (617)
      289-5699                                                  

            
	 
      	 
      
	 
      	
              Email:    seclaw@wellington.com                             

            


    

    



    
      
         


      

      
        30

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    


    IN
WITNESS WHEREOF, the parties hereto have caused this Note and Warrant Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

     

    
      	 
      	
              J.
      CAIRD INVESTORS (BERMUDA), L.P.

            
	 
      	
              By: 
      Wellington Management Company, LLP,

            
	 
      	
              as
      investment adviser

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:       /s/
      Steven
      Hoffman                   

                       

            
	 
      	
              Name: Steven
      Hoffman                      
          
                       

            
	 
      	
              Title:   Vice President and
      Counsel            
                 

            
	 
      	 
      
	 
      	 
      
	 
      	
              ADDRESS
      FOR NOTICE

            
	 
      	 
      
	 
      	
              c/o:
      Wellington
      Management Company, LLP      
    

            
	 
      	 
      
	 
      	
              Street:
      75 State
      Street                             
                  
          

            
	 
      	 
      
	 
      	
              City/State/Zip:
      Boston MA,
      02109        
                     

            
	 
      	 
      
	 
      	
              Attention: Legal Services –
      Steven M. Hoffman 

            
	 
      	 
      
	 
      	
              Tel:    (617)
      790-7429                          
                            

            
	 
      	 
      
	 
      	
              Fax:    (617)
      289-5699                            
                          

            
	 
      	 
      
	 
      	
              Email:    seclaw@wellington.com                           

            


    

    



    
      
         


      

      
        31

        
          

        

      

      
         


        EXHIBIT
10.1

      

    


    IN WITNESS WHEREOF, the parties hereto
have caused this Note and Warrant Purchase Agreement to be duly executed by
their respective authorized signatories as of the date first indicated
above.

     

    
      	 
      	
              JANUS
      INVESTMENT FUND

            
	 
      	
              On
      Behalf of its Participating Series

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:         /s/
      William
      Bales                    
               
                   

            
	 
      	
              Name:
          William
      Bales                        
                              

            
	 
      	
              Title:
          Portfolio
      Manager              
                                  

            
	 
      	 
      
	 
      	 
      
	 
      	
              ADDRESS
      FOR NOTICE

            
	 
      	 
      
	 
      	
              c/o:
      Janus Capital
      Management
      LLC                         

            
	 
      	 
      
	 
      	
              Street:
          151
      Detroit
      Street                                          
      

            
	 
      	 
      
	 
      	
              City/State/Zip:    Denver, CO
      80206                           
      

            
	 
      	 
      
	 
      	
              Attention:
          Angela
      Morton                          
                
      

            
	 
      	 
      
	 
      	
              Tel:    (303)
      336-4358                                        
                  
      

            
	 
      	 
      
	 
      	
              Fax:    (303)
      316-5728                                      
                   
      

            
	 
      	 
      
	 
      	
              Email:    angela.morton@janus.com                           
      

            


    

    


     

     

     

     

    32