Document:

EXHIBIT 10.2

 

NEITHER
THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD 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 THEREFROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

 

Spiral
Toys, Inc.

 

8%
Original Issue Discount Promissory Note (the
“Note”)

 

	Issuance
    Date: January 22, 2016	Original
    Principal Amount:$______
	Note
    No. STOY-_	Consideration
    Paid at Close: $______

 

FOR
VALUE RECEIVED, Spiral Toys, Inc., a Nevada corporation with a par value of $0.001 per common share (“Par Value”)
(the “Company”), hereby promises to pay to the order of or registered assigns (the “Holder”)
the amount of $______ (_______ Thousand Dollars) (as reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding
Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the “Issuance Date”)
until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).

 

This
Note has been executed and delivered pursuant to that certain Securities Purchase Agreement dated as of January 22, 2016 (the
“Purchase Agreement”) by and among the Company and the Holder. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth for such terms in the Purchase Agreement.

 

(1)GENERAL
TERMS

 

(a)Payment
of Principal. The “Maturity Date” shall be the date that is the eighth month anniversary of the Issuance
Date. The Maturity Date may be extended at the option of the Holder in the event that, and for so long as, an Event of Default
(as defined below) shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section
1) or any event shall not have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1)
that with the passage of time and the failure to cure would result in an Event of Default.

 

(b)Interest.
A one-time interest charge of eight percent (8%) (“Interest Rate”) shall be applied on the Issuance Date to
the Principal. Interest accrued on the Principal is in addition to the original issue discount of $______(____ Thousand Dollars).
On the Maturity Date (or sooner as provided herein), Interest hereunder shall be paid to the Holder in cash.

 

    	 	 	 

    	 	 	 

    

 

(c)Security.
This Note shall not be secured by any collateral or any assets pledged to the Holder

 

(2)EVENTS
OF DEFAULT. 

 

(a)An
“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):

 

(i)The
Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note
(including, without limitation, the Company’s failure to pay any redemption payments or amounts hereunder);

 

(ii)The
Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of
the Company, a proceeding under any applicable bankruptcy or insolvency laws as are now or hereafter in effect or any successor
thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any
subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days;
or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving
any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian,
private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or
unstayed for a period of 61 days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of
creditors; or the Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall
be unable to pay, its debts generally as they become due; or the Company or any subsidiary of the Company shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other
action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

 

(iii)The
Company or any subsidiary of the Company shall default in any of its obligations under any other note or any mortgage, credit
agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or
by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring
arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists
or shall hereafter be created;

 

(iv)The
Common Stock is suspended or delisted for trading or quotation on the Over the Counter OTCQB Venture Marketplace or OTC Pink Open
Marketplace (the “Primary Market”);

 

(v)The
Company shall become late or delinquent in filings reports with the Securities & Exchange Commission; provided, however, that
the Company shall not be considered to be late or delinquent if it timely files with the Securities & Exchange Commission
a Notice of Late Filing pursuant to Rule 12(b)-25 promulgated under the Securities Exchange Act of 1934 and files the report which
is subject to the Notice of Late Filing in accordance with the time periods proscribed in Rule 12(b)-25(b)(2)(ii);

 

    	 	2	 

    	 	 	 

    

 

(vi)The
Company shall fail to reserve and keep available out of its authorized Common Stock, in accordance with Section 3(d)(i) of this
Note, a number of shares equal to at least 1.5 (one and a half) times the full number of shares of Common Stock issuable upon
conversion of all outstanding amounts under this Note.

 

(b)Upon
the occurrence of any Event of Default that has not been cured within ten Business Days following receipt of notice of the Event
of Default from the Holder, the unpaid Principal amount together with all unpaid Interest (the “Outstanding Balance”)
shall immediately increase to 130% of the Outstanding Balance immediately prior to the occurrence of the Event of Default (the
“Default Effect”) and a daily penalty of $1,000 (One Thousand Dollars) shall accrue from the date of the occurrence
of such Event of Default until the Event of Default is remedied. The Default Effect shall automatically apply upon the occurrence
of an Event of Default without the need for any party to give any notice or take any other action.

 

(3)CONVERSION
OF NOTE.If an Event of Default has occurred and is not cured within ten business days following the date of the Event
of Default (a “Cure Failure”), the Holder shall have the right, but not the obligation, to convert the Outstanding
Balance into shares of the Company’s Common Stock, on the terms and conditions set forth in this Section 3.

 

(a)Conversion
Right. Subject to the provisions of Section 3(c), at any time or times on or after the Cure Failure, the Holder shall be entitled
to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares
of Common Stock in accordance with Section 3(b), at the Conversion Price (as defined below). The number of shares of Common Stock
issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) (the “Conversion Shares”) shall
be equal to the quotient of dividing the Conversion Amount by the Conversion Price. The Company shall not issue any fraction of
a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and
all transfer agent fees, legal fees, costs and any other fees or expenses that may be incurred or charged in connection with the
issuance of shares of the Company’s Common Stock to the Holder arising out of or relating to the conversion of this Note.

 

(i)“Conversion
Amount” means the portion of the Outstanding Balance to be converted, plus any penalties, redeemed or otherwise with
respect to which this determination is being made.

 

(ii)“Conversion
Price” shall equal 65% of the lowest sale price occurring during the fifteen (15) consecutive Trading Days (defined
as any day during which the Primary Market shall be open for business) immediately preceding the applicable Conversion Date on
which the Holder elects to convert all or part of this Note, subject to adjustment as provided in this Note; provided, however,
in no event shall the Conversion Price be lower than the lesser of $.01.

 

    	 	3	 

    	 	 	 

    

 

(b)Mechanics
of Conversion.

 

(i)Optional
Conversion. To convert any Conversion Amount into Conversion Shares on any date following a Cure Failure (a “Conversion
Date”), the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m.,
New York, NY Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the
“Conversion Notice”) to the Company. On or before the third Business Day following the date of receipt of a
Conversion Notice (the “Share Delivery Date”), the Company shall (A) if legends are not required to be placed
on certificates of Common Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule
144”) and provided that the Transfer Agent is participating in the Depository Trust Company’s (“DTC”)
Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be
entitled to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission
system or (B) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver
to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for
the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends
unless required pursuant the Rule 144. If this Note is physically surrendered for conversion and the outstanding Principal of
this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall, upon request
of the Holder, as soon as practicable and in no event later than three (3) Business Days after receipt of this Note and at its
own expense, issue and deliver to the holder a new Note representing the outstanding Principal not converted. The person or persons
entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as the
record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice.

 

(ii)Company’s
Failure to Timely Convert. If the Company shall fail to issue and deliver to the Holder the Conversion Shares in accordance
with section 3(b)(i) above, (a “Conversion Failure”), the Principal of the Note shall increase by $1,000 (One
Thousand Dollars) per day until the Company issues and delivers a certificate for the Conversion Shares to the Holder or credits
the Holder’s account with DTC for the Conversion Shares. The Company will not be subject to any penalties once its Transfer
Agent processes the Conversion Shares to the DWAC system or acknowledges receipt of the Conversion Notice. If the Company
fails to deliver the Conversion Shares in accordance with Section 3(b)(i) above, resulting in a Conversion Failure, the Holder,
at any time prior to selling all of the Conversion Shares, may rescind any portion, in whole or in part, of that particular conversion
attributable to the unsold shares and have the rescinded conversion amount returned to the Outstanding Balance with the rescinded
conversion shares returned to the Company (under Holder’s and Company’s expectations that any returned conversion
amounts will tack back to the original date of the Note).

 

(iii)DWAC/FAST
Eligibility.If there is a Conversion Failure as defined in Section 3(b)(ii), and if the Holder incurs a Market Price Loss
(as defined below), then at any time subsequent to incurring the loss the Holder may provide the Company written notice indicating
the amounts payable to the Holder in respect of the Market Price Loss and the Company must make the Holder whole by either of
the following options at Holder’s election:

 

Market
Price Loss = [(High sales price for the period between the day of conversion and the day the shares clear in the Holder’s
brokerage account) x (Number of shares receivable from the conversion)] – [(Net Sales price realized by Holder) x (Number
of shares receivable from the conversion)].

 

Option
A – Pay Market Price Loss in Cash. The Company must pay the Market Price Loss by cash payment, and any such cash payment
must be made by the third Business Day from the time of the Holder’s written notice to the Company.

 

Option
B – Add Market Price Loss to Outstanding Balance. The Company must pay the Market Price Loss by adding the Market Price
Loss to the Outstanding Balance.

 

In
the case that the Conversion Shares are not deliverable by DWAC/FAST electronic transfer an additional 5% discount to the Conversion
Price will apply.

 

    	 	4	 

    	 	 	 

    

 

(iv)DTC
Eligibility & Sub-Penny. If the Company fails to maintain its status as “DTC Eligible” for any reason, or,
if the effective Conversion Price as calculated in Section 3(a)(ii) is less than $0.01 at any time (regardless of whether or not
a Conversion Notice has been submitted to the Company), the Holder will have the option at its sole discretion to either call
the Note immediately due and payable in which case the Company must fully the pay the Note within five business days or convert
the Outstanding Balance into shares of the Company’s Common Stock on the terms and conditions set forth in this Section
3. If the Holder chooses to convert the Outstanding Balance into shares of the Company’s Common Stock, the Principal Amount
of the Note shall increase by ten thousand dollars ($10,000) (under Holder’s and Company’s expectation that any Principal
Amount increase will tack back to the Issuance Date).

 

(iv)Par
Value True-Up. In the event that the Conversion Price is less than Par Value on the Conversion Date, the Holder may elect
to submit a Conversion Notice (attached hereto as Exhibit B) with a conversion price equal to the Company’s Par Value. In
addition, upon written notice from the Holder in the form attached hereto as Exhibit B (the “True-Up Notice”),
the Holder may require the Company, at the Holder’s election, to either (A) issue and deliver to the Holder a number of
shares of Common Stock as equals (X) the Conversion Amount divided by 60% of the lowest sale price occurring during the twenty
five (25) consecutive Trading Days immediately preceding the applicable Conversion Date, less (Y) the Conversion Amount divided
by the Par Value (Any additional shares of Common Stock issuable pursuant to this Section 3(b)(v) shall be referred to herein
as “True-Up Shares”), or (B) add to the Outstanding Balance a dollar amount equal to the number of True-Up Shares
(as calculated above) multiplied by the highest sale price on the Conversion Date (Any dollar amount added to the Outstanding
Balance pursuant to this Section 3(b)(v) shall be referred to herein as the “True-Up Balance”) (under Holder’s
and the Company’s expectation that any True-Up Balance amounts will tack back to the Issuance Date).

 

(v)Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion
Amount represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which
notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder
and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall
use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this
Note upon conversion.

 

(c)Limitations
on Conversions or Trading.

 

(i)Beneficial
Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the right to convert any
portion of this Note or receive shares of Common Stock as payment of Principal or Interest hereunder to the extent that after
giving effect to such conversion or receipt of such Principal or Interest payment, the Holder, together with any affiliate thereof,
would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder)
in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt
of shares as payment of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common
Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares
of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may
be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of which portion of the Principal or Interest of this
Note is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice
for an amount of Principal and/or Interest that, without regard to any other shares that the Holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact
and shall honor the conversion for the maximum amount of Principal and/or Interest permitted to be converted on such Conversion
Date in accordance with Section 3(a) and, any amount of Principal and/or Interest tendered for conversion in excess of the permitted
amount hereunder shall remain outstanding under this Note. In the event that the Market Capitalization of the Company falls below
$2,500,000, the term “4.99%” above shall be permanently replaced with “9.99%”. “Market Capitalization”
shall be defined as the product of (a) the closing price of the Common Stock as reported by the Principal Market multiplied by
(b) the number of shares of Common Stock outstanding as reported on the Company’s most recently filed Form 10-K or Form
10-Q. The provisions of this Section may be waived by Holder upon not less than 65 days prior written notification to the Company.

 

    	 	5	 

    	 	 	 

    

 

(ii)Capitalization.
So long as this Note is outstanding, upon written request of the Holder, the Company shall furnish to the Holder the then-current
number of shares of Common Stock issued and outstanding, the then-current number of shares of Common stock authorized, and the
then-current number of shares of Common Stock reserved for third parties.

 

(d)Other
Provisions.

 

(i)Share
Reservation.The Company shall at all times reserve and keep available out of its authorized Common Stock a number of shares
equal to at least 1.5 (one and a half) times the full number of shares of Common Stock issuable upon conversion of all outstanding
amounts under this Note; and within 3 (three) Business Days following the receipt by the Company of a Holder’s notice that
such minimum number of shares of Common Stock is not so reserved, the Company shall promptly reserve a sufficient number of shares
of Common Stock to comply with such requirement. The Company will at all times reserve at least 470,000 shares of Common Stock
for conversion.

 

(ii)
Prepayment.At any time within the 180 day period immediately following the Issuance Date, the Company shall have the
option, upon 10 Business Days’ notice to Holder, to pre-pay the entire Outstanding Balance in cash, provided that (i) the
Company shall pay the Holder 100% of the Outstanding Balance, (ii) such amount must be paid in cash on the next Business Day following
such 10 Business Day notice period, and (iii) the Holder may still convert this Note pursuant Section 3(a) until such prepayment
amount has been received in full. Except as set forth in this Section the Company may not prepay this Note in whole or in part.

 

(iii)
All calculations under this Section 3 shall be rounded up to the nearest $0.00001 or whole share.

 

(iv)
Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section
2 herein for the Company’s failure to deliver certificates representing shares of Common Stock upon conversion within the
periods specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or
provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant
to any other Section hereof or under applicable law.

 

(4)REISSUANCE
OF THIS NOTE.

 

(a)Assignability.
The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the
benefit of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s
approval, so long as any such assignee agrees to adopt and affirm as to itself the representations in, and be bound by the covenants
of, Section 2 of the Purchase Agreement.

 

    	 	6	 

    	 	 	 

    

 

(b)Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note representing the outstanding Principal.

 

(5)NOTICES.Any
notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) (iii)
upon receipt, when sent by email; or (iv) one (1) Business Day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications
shall be those set forth in the communications and documents that each party has provided the other immediately preceding the
issuance of this Note or at such other address and/or facsimile number and/or to the attention of such other person as the recipient
party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.
Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically
or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and
an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service
in accordance with clause (i), (ii) or (iii) above, respectively.

 

The
addresses for such communications shall be:

 

If
to the Company, to:

 

Spiral
Toys, Inc.

30077
Agoura Court, Suite 230

Agoura
Hills, California 91301

Attn.:
Chief Executive Officer

Facsimile
No.:805-380-7633

Email
Address: Akio@Spiraltoys.com

 

If
to the Holder:

____________________

____________________

____________________.com

 

    	 	7	 

    	 	 	 

    

 

(6)APPLICABLE
LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without giving
effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the city of New York,
in the State of New York. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction of such
courts.

 

(7)WAIVER.
Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon
strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 

(8)LIQUIDATED
DAMAGES. Holder and Company agree that in the event Company fails to comply with any of the terms or provisions of this Note,
Holder’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’
inability to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly,
Holder and Company agree that any fees, balance adjustments, default interest or other charges assessed under this Note are not
penalties but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Holder’s and Company’s
expectations that any such liquidated damages will tack back to the Closing Date for purposes of determining the holding period
under Rule 144).

 

(9)FILING
OF FROM 8-A. No later than June 15, 2016, the Company shall file with the Securities and Exchange Commission a Form 8-A for
registration of all classes of its common stock pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 (“Form
8-A”). If the Company fails to file the Form 8-A with the Securities and Exchange Commission by June 15, 2016 and an Event
of Default has occurred, liquidated damages of $15,000 shall be added to the outstanding principal of the Note (as further defined
in the SPA) (and shall tack back to the Effective Date of the Note for purposes of Rule 144).

 

[Signature
Page Follows]

  

    	 	8	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date
set forth above.

 

	 	COMPANY:
	 	 
	 	Spiral
    Toys, Inc.
	 	 	 
	 	By:	 
	 	Name:	Mark
    Meyers
	 	Title:	Chief
    Executive Officer

 

	 	HOLDER:
	 	 	 
	 	By:	 

 

[Signature
Page to Convertible Note No. STOY-1]

 

    	 	9	 

    	 	 	 

    

 

EXHIBIT
A

 

CONVERSION
NOTICE

 

[Company
Contact, Position]

[Company
Name]

[Company
Address]

[Contact
Email Address}

 

The
undersigned hereby elects to convert a portion of the $________ Convertible Note _______ issued to on ____________ into Shares
of Common Stock of ____________ according to the conditions set forth in such Note as of the date written below.

 

By
accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 10%
(ten percent) of the common stock outstanding. If the number of shares to be delivered represents more than 9.99% of the common
stock outstanding, this conversion notice shall immediately automatically extinguish and debenture Holder must be immediately
notified.

 

	Date
    of Conversion:	 	 
	 	 	 
	Conversion
    Amount:	 	 
	 	 	 
	Conversion
    Price:	 	 
	 	 	 
	Shares
    to be Delivered:	 	 

 

Shares
delivered in name of: 

  

	Signature:	 	 
	 	By:	 
	 	Title:	 

 

    	 	10	 

    	 	 	 

    

 

EXHIBIT
B

 

TRUE-UP
NOTICE

 

[Company
Contact, Position]

[Company
Name]

[Company
Address]

[Contact
Email Address}

 

The
undersigned hereby gives notice to Spiral Toys, Inc., a ______ corporation (the “Company”), pursuant to that
certain Note dated _______ ___, 20__ by and between the Company and the Holder (the “Note”), that the Holder elects
to:

 

	 	___	Receive
    fully paid and non-assessable True-Up Shares pursuant to Section 3(b)(v) of the Note (such Additional Origination Shares shall
    be calculated as set forth below), or
	 	 	 
	 	___	Add
    to the Outstanding Balance a dollar amount equal to the True-Up Amount (such True-Up Amount shall be calculated as set forth
    below).

 

The
number of True-Up Shares Holder is entitled to receive is calculated as follows:

 

Conversion
Amount ($___) / 60% of the lowest trade occurring during the twenty five (25) consecutive Trading Days immediately preceding the
applicable Conversion Date ($_.__) - Conversion Amount ($___) divided by the Par Value ($_.__) =

 

____________
True-Up Shares

 

The
amount of True-Up Balance to be added to the Outstanding Balance is calculated as follows:

 

Number
of True-Up Shares (_____) * high trade price on the Conversion Date ($_.__)=

 

____________
True-Up Balance

 

	Shares
    delivered in name of: 	 	 
	 	 	 
	__________________	 	 
	 	 	 
	Signature:	 	 
	 	By:	 

 

    	 	11EXHIBIT 10.3

 

THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SPIRAL TOYS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

SPIRAL
TOYS, INC.

 

WARRANT
TO PURCHASE SHARES OF COMMON STOCK

 

1.
Issuance. For good and valuable consideration as set forth in the Purchase Agreement (defined below), including without
limitation the Purchase Price (as defined in the Purchase Agreement), the receipt and sufficiency of which are hereby acknowledged
by spiral toys, Inc., a Nevada corporation (the “Company”); __________,
its successors and/or registered assigns (the “Holder”), is hereby granted the right to purchase at any time
on or after the Issue Date (as defined below) until the date which is the last calendar day of the month in which the third anniversary
of the Issue Date occurs (the “Expiration Date”), _____________ fully paid and nonassessable shares (the “Warrant
Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), as
such number of Warrant Shares may be adjusted from time to time pursuant to the terms and conditions of this Warrant to Purchase
Shares of Common Stock (this “Warrant”). This Warrant is being issued pursuant to the terms of that certain
Securities Purchase Agreement dated January 22, 2016, to which the Company and the Holder are parties (as the same may be amended
from time to time, the “Purchase Agreement”).

 

Unless
otherwise indicated herein, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase
Agreement.

 

This
Warrant was originally issued to the Holder on January 22, 2016 (the “Issue Date”).

 

2.
Exercise of Warrant.

 

2.1.
General.

 

(a)
This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Issue Date and ending on the
Expiration Date. Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by email
or facsimile transmission) a completed and duly executed Notice of Exercise substantially in the form attached to this Warrant
as Exhibit A (the “Notice of Exercise”) and, if the exercise is not a cashless exercise in accordance
with subsection (b) below, together with an amount equal to the Aggregate Exercise Price payable by wire transfer or other immediately
available funds The date such Notice of Exercise is either faxed, emailed or delivered to the Company shall be the “Exercise
Date,” provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder
shall tender this Warrant to the Company within five (5) Trading Days thereafter, but only if the Warrant Shares to be delivered
pursuant to the Notice of Exercise have been delivered to the Holder as of such date. The Notice of Exercise shall be executed
by the Holder and shall indicate (i) the number of Warrant Shares (as defined below) to be issued pursuant to such exercise, and
(ii) if applicable (as provided below), whether the exercise is a cashless exercise.

 

    	 	1	 

    	 	 	 

    

 

For
purposes of this Warrant, the term “Trading Day” means any day during which the principal market on which the
Common Stock is traded or quoted (the “Principal Market”) shall be open for business.

 

(b)
To the extent this Warrant is not previously exercised, and if the Market Price of one Warrant Share is greater than the Exercise
Price, the Holder may elect to receive Warrant Shares, in lieu of a cash exercise, equal to the value of this Warrant determined
in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise,
in which event the Company shall issue to Holder a number of Shares computed using the following formula:

 

	X
    = 	Y
    (A-B)	 
	 	A	 

 

	Where
    X =	 	the
    number of Warrant Shares to be issued to Holder.
	 	 	 
	Y
    =	 	the
    number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
	 	 	 
	A
    =	 	the
    Market Price (at the date of such calculation).
	 	 	 
	B
    =	 	Exercise
    Price (as adjusted to the date of such calculation).

 

For
the purposes of this Warrant, the following terms shall have the following meanings:

 

“Affiliate”
shall mean an affiliate as such term is defined in Rule 144 under the Securities Act of 1933, as amended (or a successor rule).

 

“Aggregate
Exercise Price Payable” shall mean the product of multiplying the number of Warrant Shares exercisable by the Exercise
Price then in effect.

 

“Closing
Price” shall mean the 4:00 P.M. last sale price of the Common Stock on the Principal Market on the relevant Trading
Day(s), as reported by Bloomberg LP (or if that service is not then reporting the relevant information regarding the Common Stock,
a comparable reporting service of national reputation selected by the Holder and reasonably acceptable to the Company) (“Bloomberg”)
for the relevant date.

 

“Deemed
Issuance” means a requested conversion under the Note that is not honored by the Company.

 

“Exercise
Price” shall mean $0.50 per share of Common Stock, subject to adjustments herein.

 

“Market
Price” shall mean the Closing Price for the Common Stock on the Trading Day that is two Trading Days prior to the Exercise
Date.

 

“Note”
shall mean that certain Promissory Note issued by the Company to the Holder pursuant to the Purchase Agreement, as the same may
be amended from time to time, and including any promissory note(s) that replace or are exchanged for such referenced promissory
note.

 

    	 	2	 

    	 	 	 

    

 

(c)
If the Notice of Exercise form elects a “cash” exercise (or if the cashless exercise referred to in the immediately
preceding subsection (b) is not available in accordance with the terms hereof), the Exercise Price per share of Common Stock for
the Warrant Shares shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire
transfer in accordance with instructions provided by the Company at the request of the Holder.

 

(d)
Upon the appropriate payment to the Company, if any, of the Aggregate Exercise Price Payable for the Warrant Shares, together
with the surrender of this Warrant (if required), the Company shall promptly, but in no case later than the date that is three
(3) Trading Days following the date the Exercise Price is paid to the Company (or with respect to a “cashless exercise,”
the date that is three (3) Trading Days following the Exercise Date) (the “Delivery Date”), provided that all
DWAC Eligible Conditions (as defined in the Note) are then satisfied, deliver or cause the Company’s Transfer Agent to deliver
the applicable Warrant Shares electronically via the Deposit/Withdrawal at Custodian (“DWAC”) system to the
account designated by the Holder on the Notice of Exercise. If all DWAC Eligible Conditions are not then satisfied, the Company
shall instead issue and deliver or cause to be issued and delivered (via reputable overnight courier) to the address as specified
in the Notice of Exercise, a certificate, registered in the name of the Holder or its designee, for the number of Warrant Shares
to which the Holder shall be entitled. For the avoidance of doubt, the Company has not met its obligation to deliver Warrant Shares
by the Delivery Date unless the Transfer Agent has posted the shares for DWAC pickup and the Holder or its broker, as applicable,
has been notified of this availability, or if the DWAC Eligible Conditions are not then satisfied, has actually received the certificate
representing the applicable Warrant Shares no later than the close of business on the relevant Delivery Date pursuant to the terms
set forth above.

 

(e)
If Warrant Shares are delivered later than as required under subsection (d) immediately above, the Company agrees to pay, in addition
to all other remedies available to the Holder in the Transaction Documents, a late charge equal to the greater of (i) $2,000.00
and (ii) 2% of the product of (1) the sum of the number of shares of Common Stock not issued to the Holder on a timely basis and
to which the Holder is entitled multiplied by (2) the Closing Price of the Common Stock on the Trading Day immediately preceding
the last possible date which the Company could have issued such shares of Common Stock to the Holder without violating this Warrant,
per Trading Day until such Warrant Shares are delivered. The Company shall pay any late charges incurred under this subsection
in immediately available funds upon demand; provided, however, that, at the option of the Holder (without notice to the
Company), such amount owed may be added to the principal amount of the Note. Furthermore, in addition to any other remedies which
may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares as
required under subsection (d) immediately above, the Holder may revoke all or part of the relevant Warrant exercise by delivery
of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this Warrant, except that the late charge described above shall be
payable through the date notice of revocation or rescission is given to the Company.

 

(f)
The Holder shall be deemed to be the holder of the Warrant Shares issuable to it in accordance with the provisions of this Section
2.1 on the Exercise Date.

 

    	 	3	 

    	 	 	 

    

 

2.2.
Ownership Limitation. If at any time after the Closing, the Buyer shall or would receive shares of Common Stock in payment
of interest or principal under Note, upon conversion of Note, under the Warrant, or upon exercise of the Warrant, so that the
Buyer would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such
action or receipt of additional shares of Common Stock a number of shares exceeding 9.99% of the number of shares of Common Stock
outstanding on such date (the “Maximum Percentage”), the Company shall not be obligated and shall not issue
to the Buyer and the Buyer shall not receive any shares of Common Stock which would exceed the Maximum Percentage, but only until
such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Buyer. The
foregoing limitations are enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Buyer.

 

3.
Mutilation or Loss of Warrant. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification,
and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver to the Holder
a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

 

4.
Rights of the Holder. The Holder shall not, by virtue of this Warrant alone, be entitled to any rights of a stockholder
in the Company, either at law or in equity, and the rights of the Holder with respect to or arising under this Warrant are limited
to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

 

5.
Certain Adjustments.

 

5.1.
Capital Adjustments. If the Company shall at any time prior to the expiration of this Warrant subdivide the Common Stock,
by split-up or stock split, or otherwise, or combine its Common Stock, or issue additional shares of its Common Stock as a dividend,
the number of Warrant Shares issuable upon the exercise of this Warrant shall forthwith be automatically increased proportionately
in the case of a subdivision, split or stock dividend, or proportionately decreased in the case of a combination. Appropriate
adjustments shall also be made to the Exercise Price, Market Price (in the event of a cashless exercise), and other applicable
amounts, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted)
shall remain the same. Any adjustment under this Section 5.1 shall become effective automatically at the close of business on
the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.

 

5.2.
Reclassification, Reorganization and Consolidation. In case of any reclassification, capital reorganization, or change
in the capital stock of the Company (other than as a result of a subdivision, combination, or stock dividend provided for in Section
5.1 above), then the Company shall make appropriate provision so that the Holder shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant, the kind and
amount of shares of stock and other securities and property receivable in connection with such reclassification, reorganization,
or change by a holder of the same number of shares of Common Stock as were purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such case appropriate provisions shall be made with respect to the rights
and interest of the Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or
other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price
per Warrant Share payable hereunder, provided the aggregate purchase price shall remain the same.

 

    	 	4	 

    	 	 	 

    

 

5.3.
Dilutive Issuances. If the Company, at any time while this Warrant is outstanding, shall sell or grant any option to purchase,
or sell or grant any right to re-price, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to
purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock,
at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price”
and such issuances collectively, a “Dilutive Issuance”) in any financing greater than $25,000, except a Significant
Financing, as defined below (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether
by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred
for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced and only reduced
to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the Aggregate Exercise
Price Payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the Aggregate Exercise
Price Prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.
Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 5.3 in respect to Exempt Issuances.
Exempt Issuances means the issuance of (a) Common Stock or options to employees, officers, directors, consultants or collaborators
of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, or
(b) securities issued pursuant to commercial collaborations, acquisitions or strategic transactions approved by a majority of
the disinterested directors. (c) any Common Stock or Common Stock Equivalents issued pursuant to contracts, agreements or arrangements
in effect as of the Issue Date, or (d) the issuance of Common Stock or Common Stock Equivalents by the Company in the first capital
raising transaction completed by the Company within 90 days following the Closing in which gross proceeds of no less than $1 million
are raised (a “Significant Financing”). The Company shall notify the Holder in writing, no later than three Trading
Days following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5.3, indicating therein the
applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the
“Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 5.3, upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance
the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder
accurately refers to the Base Share Price in the Notice of Exercise. Without limiting any other provision contained herein, when
any adjustment is required to be made in the number or kind of shares purchasable upon exercise of this Warrant, or in the Exercise
Price, pursuant to the terms hereof, the Company shall promptly notify the Holder of such event and of the number of Warrant Shares
or other securities or property thereafter purchasable upon exercise of this Warrant.

 

5.4
Subject to Section 5.5 below, in case prior to the expiration of the purchase rights by exercise or by the terms of this Warrant,
the Company shall determine to consolidate or merge with, or convey all, or substantially all, of its property or assets to, any
other corporation or corporations, or to dissolve, liquidate or wind up, then, as a condition precedent to such consolidation,
merger, conveyance, dissolution, liquidation or winding up, notice shall be given to the Holder pursuant to Section 10 hereof
and lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to receive from the Company
or from the Company’ s successors or assigns, as the case may be, upon the basis and upon the terms and conditions specified
in this Warrant, in lieu of the shares of Common Stock of the Company theretofore purchasable upon the exercise of the purchase
rights, such shares of stock, securities, or assets as may be issued or payable with respect to, or in exchange for, the number
of shares of Common Stock of the Company theretofore purchasable upon the exercise of the purchase rights had such consolidation,
merger, conveyance, dissolution, liquidation or winding-up not taken place; and in any such event the rights of the Holder to
an adjustment of the number of shares of Common Stock purchasable upon the exercise of the Purchase Rights as herein provided,
shall continue and be preserved in respect of any stock or securities which the Holder becomes entitled to purchase.

 

    	 	5	 

    	 	 	 

    

 

5.5
Notwithstanding the foregoing, in the event of a consolidation, merger, conveyance, dissolution, liquidation or winding up as
contemplated by Section 5.4 (other than a consolidation, merger or conveyance effected solely to change the Company’ s jurisdiction
of organization), (each a “Fundamental Transaction” ), the Company shall have the right, but not the
obligation, with consent of the Holder upon 30 days prior written notice to the Holder (a “Purchase Notice”),
to purchase this Warrant from the Holder by paying to the Holder on the effective date of the Fundamental Transaction (or within
five Trading Days after delivery of such notice, whichever occurs later), cash in an amount equal to the Black Scholes Value of
the remaining unexercised portion of this Warrant as of the date of such Fundamental Transaction. For purposes of this Section
5.5, the following definition shall apply:

 

“Black
Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model reflecting (i)
a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as
of the delivery date of the Purchase Notice, (ii) an expected volatility determined in good faith by the Board of Directors of
the Company, and (iii) the underlying price per share used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being offered in the Fundamental Transaction.

 

6.
Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock issuable on
the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock issued or
sold or deemed to have been issued or sold, (b) the number of shares of Common Stock outstanding or deemed to be outstanding,
and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder and any Warrant Agent (as defined below) appointed pursuant to Section 8 hereof.
Nothing in this Section 6 shall be deemed to limit any other provision contained herein.

 

7.
Transfer to Comply with the Securities Act. This Warrant, and the Warrant Shares, have not been registered under the 1933
Act. This Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant may only be sold,
transferred, pledged or hypothecated (other than to an Affiliate) if (a) there exists an effective registration statement under
the 1933 Act relating to such security or (b) the Company has received an opinion of counsel reasonably satisfactory to the Company
that registration is not required under the 1933 Act. Until such time as registration has occurred under the 1933 Act, each certificate
for this Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend,
in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section
7. Any such transfer shall be accompanied by a transferor assignment substantially in the form attached to this Warrant as Exhibit
B (the “Transferor Assignment”), executed by the transferor and the transferee and submitted to the Company.
Upon receipt of the duly executed Transferor Assignment, the Company shall register the transferee thereon as the new Holder on
the books and records of the Company and such transferee shall be deemed a “registered holder” or “registered
assign” for all purposes hereunder, and shall have all the rights of the Holder.

 

    	 	6	 

    	 	 	 

    

 

8.
Warrant Agent. The Company may, by written notice to the Holder, appoint an agent (a “Warrant Agent”)
for the purpose of issuing shares of Common Stock on the exercise of this Warrant pursuant hereto, exchanging this Warrant pursuant
hereto, and replacing this Warrant pursuant hereto, or any of the foregoing, and thereafter any such issuance, exchange or replacement,
as the case may be, shall be made at such office by such Warrant Agent.

 

9.
Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat
the Holder as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

10.
Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices”
in the Purchase Agreement, the terms of which are incorporated herein by reference.

 

11.
Supplements and Amendments; Whole Agreement. This Warrant may be amended or supplemented only by an instrument in writing
signed by the parties hereto. This Warrant, together with the Purchase Agreement and all the other Transaction Documents, taken
together, contain the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings with respect to the subject matter hereof and thereof other than
as expressly contained herein and therein.

 

12.
Governing Law. This Warrant shall be governed by and interpreted in accordance with the laws of the State of Nevada, without
giving effect to the principles thereof regarding the conflict of laws. The Company and, by accepting this Warrant, the Holder,
each irrevocably (a) consent to and expressly submit to the exclusive personal jurisdiction of any state or federal court sitting
in New York in connection with any dispute or proceeding arising out of or relating to this Warrant, (b) agree that all claims
in respect of any such dispute or proceeding may only be heard and determined in any such court, (c) expressly submit to the venue
of any such court for the purposes hereof, and (d) waive any claim of improper venue and any claim or objection that such courts
are an inconvenient forum or any other claim or objection to the bringing of any such proceeding in such jurisdictions or to any
claim that such venue of the suit, action or proceeding is improper. The Company and, by accepting this Warrant, the Holder, each
hereby irrevocably consent to the service of process of any of the aforementioned courts in any such proceeding by the mailing
of copies thereof by reputable overnight courier (e.g., FedEx) or certified mail, postage prepaid, to such party’s address
as provided for herein, such service to become effective ten (10) calendar days after such mailing. THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

13.
Remedies. The remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and, without limiting
any other remedies available to the Holder in the Transaction Documents, law or equity, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

 

    	 	7	 

    	 	 	 

    

 

14.
Counterparts. This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Signature delivered
via facsimile or email shall be considered original signatures for purposes hereof.

 

15.
Descriptive Headings. Descriptive headings of the sections of this Warrant are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions hereof.

 

16.
Attorney’s Fees. In the event of any litigation or dispute arising from this Warrant, the parties agree that the
party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an
additional award of the full amount of the attorneys’ fees and expenses paid by said prevailing party in connection with
the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the
fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad
faith pleading.

 

17.
Severability. Whenever possible, each provision of this Warrant shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be invalid or unenforceable in any jurisdiction, such
provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this Warrant or the validity or enforceability of this Warrant
in any other jurisdiction.

 

[Remainder
of page intentionally left blank]

 

    	 	8	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by an officer thereunto duly authorized.

 

	Dated:
    January 22, 2016	
	 	 
	 	THE
    COMPANY:
	 	 
	 	spiral
    toys, Inc.
	 	 	 
	 	By:	 
	 	Name:	Mr.
    Mark Meyers
	 	Title:	Chief
    Executive Officer

 

[Signature
page to Warrant]

 

    	 	9	 

    	 	 	 

    

 

EXHIBIT
A

 

NOTICE
OF EXERCISE OF WARRANT

 

	TO:	SPIRAL
    TOYS, INC.
	 	ATTN:
    _______________
	 	VIA
    FAX TO: ( )______________
	 	VIA
    EMAIL TO: ( )______________

 

The
undersigned hereby irrevocably elects to exercise the right, represented by the Warrant to Purchase Shares of Common Stock dated
as of ____________, 2016 (the “Warrant”), to purchase shares of the common stock, $0.001 par value (“Common
Stock”), of SPIRAL TOYS, INC., and tenders herewith payment in accordance with Section 2 of the Warrant, as follows:

 

	_______	CASH:
    $__________________________ = (Exercise Price x Warrant Shares)
	 	 
	_______	Payment
    is being made by:

 

	 	_____	wire
    transfer 
	 	_____	other

 

	_______	CASHLESS
    EXERCISE:
	 	 
	 	Net
    number of Warrant Shares to be issued to Holder: ______*

 

	*
    X = 	Y
    (A-B)	 
	 	A	 

 

	Where
    X =	 	the
    number of Warrant Shares to be issued to Holder.
	 	 	 
	Y
    =	 	the
    number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date of such calculation).
	 	 	 
	A
    =	 	the
    Market Price (at the date of such calculation).
	 	 	 
	B
    =	 	Exercise
    Price (as adjusted to the date of such calculation).

 

Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to them in the Warrant.

 

It
is the intention of the Holder to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on the Holder’s
right to exercise thereunder. The Holder believes this exercise complies with the provisions of such Section 2.2. Nonetheless,
to the extent that, pursuant to the exercise effected hereby, the Holder would have more shares of Common Stock than permitted
under Section 2.2, this notice should be amended and revised, ab initio, to refer to the exercise which would result in
the issuance of the maximum number of such shares permitted under such provision. Any exercise above such amount is hereby deemed
void and revoked.

 

As
contemplated by the Warrant, this Notice of Exercise is being sent by facsimile or email to the fax number and officer indicated
above.

 

    	 		 

    	 	 	 

    

 

If
this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously
surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address
indicated above by express courier within five (5) Trading Days after delivery or email or facsimile transmission of this Notice
of Exercise; provided that the Warrant Shares to be delivered pursuant to this Notice of Exercise have been delivered to the Holder
as of such date.

 

To
the extent the Warrant Shares are not able to be delivered to the Holder via the DWAC system, please deliver certificates representing
the Warrant Shares to the Holder via reputable overnight courier after receipt of this Notice of Exercise (by facsimile transmission
or otherwise) to:

 

	 	 	 
	 	 	 
	 	 	 

 

	Dated:	 	 

 

	 	 
	[Name
    of Holder]	 

 

	By:	 	 

 

    	 		 

    	 	 	 

    

 

EXHIBIT
B

 

FORM
OF TRANSFEROR ENDORSEMENT

(To
be signed only on transfer of the Warrant)

 

For
value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees”
the right represented by the Warrant to Purchase Shares of Common Stock dated as of _________, 2016 (the “Warrant”)
to purchase the percentage and number of shares of common stock, $0.001 par value (“Common Stock”), of SPIRAL
TOYS, INC. specified under the headings “Percentage Transferred” and “Number Transferred,” respectively,
opposite the name(s) of such person(s), and appoints each such person attorney to transfer the undersigned’s respective
right on the books of SPIRAL TOYS, INC. with full power of substitution in the premises.

 

	Transferees	Percentage
    Transferred 	Number
    Transferred

 

Dated:___________,
______

 

	 	 
	 	[Transferor
    Name must conform to the name of Holder as specified on the face of the Warrant]

 

	 	By:	 
	 	Name:	 

 

	Signed
    in the presence of:	 
	 	 
	 	 
	(Name)	 
	 	 
	ACCEPTED
    AND AGREED:	 
	 	 
	 	 
	[TRANSFEREE]
    	 

 

	By:
    	 	 
	Name:

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