Document:

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.

     

    
      
         

      

      
        11

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        13

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        14

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        15

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        16

        
          

        

      

      
         

        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.

     

    
      
         

      

      
        17

        
          

        

      

      
         

        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                           
      

            

    

    

     

     

     

     

    32genius_8k-ex1002.htm

    
EXHIBIT 10.2

    
 

    REGISTRATION RIGHTS
AGREEMENT

    

    This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of February 17, 2009, by and among Genius Products, Inc., a
Delaware corporation (the “Company”), and the investors
from time to time signatory hereto (each an “Investor” and collectively,
the “Investors”).

     

    Recitals

     

    WHEREAS,
pursuant to the terms of that certain Note and Warrant Purchase Agreement, dated
as of the date hereof, among the Company, Genius Products, LLC (“Genius LLC”) and the Investors (the
“Purchase Agreement”),
the Company and Genius have agreed to sell to the Investors and the Investors
have agreed to purchase Notes in an aggregate principal amount of up to
$9,500,000 and Warrants exercisable for that number of shares of Common Stock of
the Company (the “Warrant
Shares”) set forth opposite each Investor’s name on Schedule I hereto;
and

     

    WHEREAS,
in order to induce the Investors to consummate the transactions contemplated by
the Purchase Agreement, the Company has agreed to grant to the Investors the
registration rights set forth in this Agreement.

     

    NOW,
THEREFORE, the parties hereto, in consideration of the foregoing, the mutual
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
hereby agree as follows:

     

    1.           Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement will have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms have the
respective meanings set forth in this Section 1:

     

    “Advice” has the meaning set
forth in Section 6(c).

     

    “Commission” means the
Securities and Exchange Commission.

     

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

     

    “Effective Date” means, as to
a Registration Statement, the date on which such Registration Statement is first
declared effective by the Commission.

     

    “Effectiveness Date” means,
subject in each instance to Section 2(f):

     

    (a) with respect to the initial
Registration Statement required to be filed under Section 2(a), the earlier of
(i) the 120th day
following the Closing Date (the 150th day if
the Commission reviews and has written comments to the initial Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission) and (ii) the fifth Trading Day following the date on which
the Company is notified by the Commission that such initial Registration
Statement will not be reviewed or is no longer subject to further review and
comments;

     

    
      
         

      

      
        1

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (b) with respect to any additional
Registration Statements that may be required pursuant to Section 2(b), the
earlier of (i) the 90th day
following (x) if such Registration Statement is required because the Commission
shall have notified the Company in writing that certain Registrable Securities
were not eligible for inclusion on a previously filed Registration Statement,
the date or time on which the Commission shall indicate as being the first date
or time that such Registrable Securities may then be included in a Registration
Statement, or (y) if such Registration Statement is required for a reason other
than as described in (x) above, the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement(s) is
required; provided, that, if
the Commission reviews and has written comments to a Registration Statement
filed under Section 2(b) that would require the filing of a pre-effective
amendment thereto with the Commission, then the Effectiveness Date under this
clause (b)(i) for such Registration Statement shall be the earlier of the
120th day
following the date that the Company first knows, or reasonably should have
known, that such additional Registration Statement is required under such
Section, and (ii) the fifth Trading Day following the date on which the Company
is notified by the Commission that such additional Registration Statement will
not be reviewed or is no longer subject to further review and comments;
and

     

    (c) with respect to a Registration
Statement required to be filed under Section 2(c), the earlier of: (c)(i) the
90th
day following the date on which the Company becomes eligible to utilize Form S-3
to register the resale of Common Stock; provided, that, if
the Commission reviews and has written comments to such filed Registration
Statement that would require the filing of a pre-effective amendment thereto
with the Commission, then the Effectiveness Date under this clause (c)(i) shall
be the earlier of the 120th day
following the date on which the Company becomes eligible to utilize Form S-3 to
register the resale of Common Stock, and (ii) the fifth Trading Day following
the date on which the Company is notified by the Commission that the initial
Registration Statement will not be reviewed or is no longer subject to further
review and comments.

     

    “Effectiveness Period” has the
meaning set forth in Section 2(a).

     

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

     

    “Filing Date” means, subject
in each instance to Section 2(f), (a) with respect to the initial Registration
Statement required to be filed under Section 2(a), the 45th day
following the Closing Date; (b) with respect to any additional Registration
Statements that may be required pursuant to Section 2(b), the 30th day
following (x) if such Registration Statement is required because the Commission
shall have notified the Company in writing that certain Registrable Securities
were not eligible for inclusion on a previously filed Registration Statement,
the date or time on which the Commission shall indicate as being the first date
or time that such Registrable Securities may then be included in a Registration
Statement, or (y) if such Registration Statement is required for a reason other
than as described in (x) above, the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement(s) is
required, but in any event no earlier than the initial Filing Date; and (c) with
respect to a Registration Statement required to be filed under Section 2(c), the
30th
day following the date on which the Company becomes eligible to utilize Form S-3
to register the resale of Common Stock, but in any event no earlier than the
initial Filing Date.

     

    
      
         

      

      
        2

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    “Holder” or “Holders” means the holder or
holders, as the case may be, from time to time of Registrable
Securities.

     

    “Indemnified Party” has the
meaning set forth in Section 5(c).

     

    “Indemnifying Party” has the
meaning set forth in Section 5(c).

     

    “Losses” has the meaning set
forth in Section 5(a).

     

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

     

    “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.

     

    “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

     

    “Registrable Securities”
means: (i) the Warrant Shares, and (ii) any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar
event, or any price adjustment with respect to any of the securities referenced
in (i) above.

     

    “Registration Statement” means
the initial registration statement required to be filed in accordance with
Section 2(a) and any additional registration statement(s) required to be filed
under Section 2(b) and 2(c), including (in each case) the Prospectus, amendments
and supplements to such registration statements or Prospectus, including pre-
and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference
therein.

     

    “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.

     

    “Rule 415” means Rule 415
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.

     

    
      
         

      

      
        3

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    “Rule 424” means Rule 424
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.

     

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

     

    2.           Registration.

     

    (a)           On
or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415,
on Form S-1 or if eligible, Form S-3 (or on such other form appropriate for such
purpose), which Registration Statement will contemplate the ability of such
Holder to do an underwritten offering.  Such Registration Statement
shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the
“Plan of Distribution” attached hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
such Registration Statement to be declared effective under the Securities Act as
soon as possible but, in any event, no later than its Effectiveness Date, and
shall use its reasonable best efforts to keep the Registration Statement
continuously effective under the Securities Act until the date which is the
earlier of (i) such time as all of the Registrable Securities covered by such
Registration Statement have been publicly sold by the Holders, or (ii) such time
as all of the Registrable Securities covered by such Registration Statement may
be sold by the Holders pursuant to Rule 144 as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness
Period”).  By 5:00 p.m. (New York City time) on the Business
Day immediately following the Effective Date of each Registration Statement, the
Company shall file with the Commission in accordance with Rule 424 under the
Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement (whether or not such filing is technically
required under such Rule).  If for any reason other than due solely to
Commission restrictions, a Registration Statement is effective but not all
outstanding Registrable Securities are registered for resale pursuant thereto,
then the Company shall prepare and file by the applicable Filing Date an
additional Registration Statement to register the resale of all such
unregistered Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415.

     

    (b)           If
for any reason the Commission does not permit all of the Registrable Securities
to be included in the Registration Statement filed pursuant to Section 2(a), or
for any other reason any outstanding Registrable Securities are not then covered
by an effective Registration Statement, then the Company shall prepare and file
by the Filing Date for such Registration Statement, an additional Registration
Statement covering the resale of all Registrable Securities not already covered
by an existing and effective Registration Statement for an offering to be made
on a continuous basis pursuant to Rule 415, on Form S-1 or if eligible, Form S-3
(or on such other form appropriate for such purpose); provided, however,
that the Company shall not be required to file such additional Registration
Statement, or may exclude shares from such additional Registration Statement, if
it believes in good faith, based upon advice from the Commission’s Staff, that
application of Rule 415 would not permit registration of all or the excluded
portion of such Registrable Securities; provided further that the Company shall
be obligated to use reasonable best efforts to advocate with the Commission for
the registration of all of the Registrable Securities in accordance with
Commission guidance.  If the Commission does require a reduction in
the number of Registrable Securities or other shares of Common Stock that may be
included in a Registration Statement, the number of Registrable Securities or
other shares of Common Stock to be registered on such Registration Statement
will be reduced on a pro rata basis based on the total number of unregistered
shares held by the holders thereof, subject to a determination by the Commission
that certain holders must be reduced before other holders based on the number of
shares held by such holders.  Each such additional Registration
Statement shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such additional
Registration Statement) the “Plan of Distribution” attached hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
each such additional Registration Statement to be declared effective under the
Securities Act as soon as possible but, in any event, by its Effectiveness Date,
and shall use its reasonable best efforts to keep such additional Registration
Statement continuously effective under the Securities Act during the entire
Effectiveness Period.

     

    
      
         

      

      
        4

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (c)           Promptly
following any date on which the Company becomes eligible to use a registration
statement on Form S-3 to register the Registrable Securities for resale, the
Company shall file a registration statement on Form S-3 covering the Registrable
Securities (or a post-effective amendment on Form S-3 to the then effective
Registration Statement) and shall use its reasonable best efforts to cause
such Registration Statement to be declared effective as soon as possible
thereafter, but in any event prior to the Effectiveness Date therefor. Such
Registration Statement shall contain (except if otherwise required pursuant to
written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” attached hereto as Annex
A.  The Company shall use its reasonable best efforts to cause
such Registration Statement to be declared effective under the Securities Act as
soon as possible but, in any event, by its Effectiveness Date, and shall use its
reasonable best efforts to keep such additional Registration Statement
continuously effective under the Securities Act during the entire Effectiveness
Period.

     

    (d)            Subject
to Section 2(f), if: (i) a Registration Statement is not filed on or prior to
its Filing Date (if the Company files a Registration Statement, except in the
case of an amendment that does not  concern a Holder, without
affording the Holders the opportunity to review and comment on the same as
required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (i)), or (ii) a Registration Statement is not declared
effective by the Commission on or prior to its required Effectiveness Date, or
(iii) after its Effective Date, without regard for the reason thereunder or
efforts therefore, such Registration Statement ceases for any reason to be
effective and available to the Holders as to all Registrable Securities to which
it is required to cover at any time prior to the expiration of its Effectiveness
Period for more than an aggregate of 15 calendar days (which need not be
consecutive) in any 12-month period (any such failure or breach being referred
to as an “Event,” and
for purposes of clauses (i) or (ii) the date on which such Event occurs, or for
purposes of clause (iii) the date which such 15 calendar day-period is exceeded,
being referred to as “Event
Date”), then in addition to any other rights the Holders may have
hereunder or under applicable law, on each monthly anniversary of each such
Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to 1%
of the fair market value as determined in good faith by the Company’s board of
directors of the Registrable Securities held by such Holder.  If the
Company fails to pay any partial liquidated damages pursuant to this Section in
full within seven days after the date payable, the Company will pay interest
thereon at a rate of 10% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the
date such partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full.  The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event, except in the case of the
first Event Date.

     

    
      
         

      

      
        5

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (e)           Each
Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder
Questionnaire”).  The Company shall not be required to include
the Registrable Securities of a Holder in a Registration Statement and shall not
be required to pay any liquidated or other damages under Section 2(d) to any
Holder who fails to furnish to the Company a fully completed Selling Holder
Questionnaire at least two Trading Days prior to the Filing Date (subject to the
requirements set forth in Section 3(a)).

     

    (f)           Notwithstanding the defined terms set forth in Section
1, if on or prior to May 30, 2009 the Company has terminated, or taken material
steps towards terminating (including filing of a Form 15 with the Commission),
the registration of the Common Stock under the Exchange Act in compliance with
applicable securities laws, then the term “Closing Date” used in the definitions
of “Filing Date” and “Effectiveness Date” hereunder shall mean the date that is
the one-year anniversary of the effectiveness of the termination of registration
of the Common Stock, but no later than June 30, 2010.  For example, if
the registration of the Common Stock is terminated on March 31, 2009, the
“Filing Date” for purposes of filing the initial Registration Statement
under Section 2(a) shall be the 45th day
following the one-year anniversary of such date, or May 15, 2010.

     

    3.           Registration
Procedures.

     

    In
connection with the Company’s registration obligations hereunder, the Company
shall:

     

    (a)           Not
less than four Trading Days prior to the filing of a Registration Statement or
any related Prospectus or any amendment or supplement thereto, the Company shall
furnish to each Holder copies of the “Selling Stockholders” section of such
document, the “Plan of Distribution” and any risk factor contained in such
document that addresses specifically this transaction or the Selling
Stockholders, as proposed to be filed which documents will be subject to the
review of such Holder.  The Company shall not file a Registration
Statement, any Prospectus or any amendments or supplements thereto in which the
“Selling Stockholder” section thereof differs from the disclosure received from
a Holder in its Selling Holder Questionnaire (as amended or
supplemented).  The Company shall not file a Registration Statement,
any Prospectus or any amendments or supplements thereto in which it (i)
characterizes any Holder as an underwriter, (ii) excludes a particular
Holder due to such Holder refusing to be named as an underwriter (except as
otherwise permitted in Section 2(b)), or (iii) reduces the number of
Registrable Securities being registered on behalf of a Holder except pursuant
to, in the case of subsection (iii), comments received from the Commission,
without, in each case, such Holder’s express written authorization.

     

    
      
         

      

      
        6

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (b)           (i)  Prepare
and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably possible to any comments received from the Commission with respect to
each Registration Statement or any amendment thereto and, as promptly as
reasonably possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to such Registration
Statement that would not result in the disclosure to the Holders of material and
non-public information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange Act with
respect to the Registration Statements and the disposition of all Registrable
Securities covered by each Registration Statement.

     

    (c)           Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing and, in the case of
(v) below, not less than three Trading Days prior to the financial statements in
any Registration Statement becoming ineligible for inclusion therein) and (if
requested by any such Person) confirm such notice in writing no later than one
Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a “review” of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement (the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to a Registration Statement or
Prospectus or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.

     

    
      
         

      

      
        7

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (d)           Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment.

     

    (e)           Furnish
to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by
such Person (including those previously furnished) promptly after the filing of
such documents with the Commission.

     

    (f)           Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request.  The
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.

     

    (g)           Prior
to any public offering of Registrable Securities, register or qualify such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of all jurisdictions within the United States, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statements.

     

    (h)           Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee
pursuant to the Registration Statements, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive legends, and
to enable such Registrable Securities to be in such denominations and registered
in such names as any such Holders may request.

     

    (i)           Upon
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.

     

    (j)           Make
available to any underwriter participating in such offering and the
representatives of any underwriter (but not more than one firm of counsel to
such Holders), all financial and other information as shall be reasonably
requested by them, and provide the underwriter and the representatives of such
underwriter the opportunity to discuss the business affairs of the Company with
its principal executives and independent public accountants who have certified
the audited financial statements included in such Registration Statement, in
each case all as reasonably necessary to enable them to exercise their due
diligence responsibility under the Securities Act; provided, however, that
information that the Company determines, in good faith, to be confidential and
which the Company advises such Person in writing is confidential shall not be
disclosed unless such Person signs a confidentiality agreement reasonably
satisfactory to the Company.

     

    
      
         

      

      
        8

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (k)           In
the event of any underwritten or agented offering, select an underwriter
reasonably acceptable to Holders of a majority in interest of the Regsitrable
Securities, enter into and perform its obligations under an underwriting
agreement, in customary and usual form, with the managing underwriter of such
underwritten offering, including, without limitation, to obtain a so-called
“comfort letter” from the Company’s independent public accountants, and legal
opinions of counsel to the Company addressed to the underwriter participating in
such offering, in customary form and covering such matters of the type
customarily covered by such letters, and in a form that shall be reasonably
satisfactory to the underwriters.  Delivery of any such opinion or
comfort letter shall be subject to the recipient furnishing such written
representations or acknowledgements as are required or customarily provided by
selling shareholders who receive such comfort letters or opinions.

     

    (l)           Otherwise
use its reasonable efforts to comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, beginning with the first fiscal quarter beginning after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;

     

    (m)           Use
its reasonable efforts to list such Registrable Securities on any securities
exchange or interdealer quotation system on which the Common Stock is then
listed, if the listing or quotation of such Registrable Securities is then
permitted under the rules of such exchange or interdealer quotation
system;

     

    (n)           Upon
the request of the Holders, take any and all other actions which may be
reasonably necessary to complete the registration and thereafter to complete the
distribution of the Registrable Securities so registered.

     

    4.           Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any Trading Market on which the Common Stock is then
listed for trading, and (B) in compliance with applicable state securities or
Blue Sky laws), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.  The
Company shall not be responsible for the payment of underwriting discounts or
similar fees, discounts or commissions.

     

    
      
         

      

      
        9

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    5.           Indemnification.

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, investment advisors, partners, members and employees of each
of them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable costs of
preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred,
arising out of or relating to any violation by the Company of the Securities
Act, Exchange Act, or any state securities law or any rule or regulation
thereunder in connection with the performance of its obligations to register
securities under this Agreement, or any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex
A hereto for this purpose) or (2) in the case of an occurrence of an
event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of
an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Holder of an Advice or an amended or supplemented Prospectus, but only
if and to the extent that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected.  The Company shall notify the Holders
promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this
Agreement.

     

    
      
         

      

      
        10

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (b)           Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act (without regard to the content of
such prospectus) or (y) any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading to the extent, but only to the extent
that, (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement (it being understood that the
Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or  defective and prior to the receipt by
such Holder of an Advice or an amended or supplemented Prospectus, but only if
and to the extent that following the receipt of the Advice or the amended or
supplemented Prospectus the misstatement or omission giving rise to such Loss
would have been corrected.  In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

     

    (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party).  The Indemnifying Party shall not be liable
for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld.  No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding.

     

    
      
         

      

      
        11

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

     

    (d)           Contribution.  If
a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.

     

    
      
         

      

      
        12

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in diminution or limitation of the indemnification
provisions under the Purchase Agreement.

     

    6.           Miscellaneous.

     

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder, of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     

    (b)           Compliance.  Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.

     

    (c)           Discontinued
Disposition.  Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

     

    (d)           Piggy-Back
Registrations.  If at any time during the Effectiveness
Period  there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.

     

    
      
         

      

      
        13

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (e)           Amendments and
Waivers.  The provisions of this Agreement, including the
provisions of this Section 6(e), may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of no less than a majority in interest of the then outstanding
Registrable Securities.  Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of certain Holders and that does not directly
or indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities to which such waiver or consent
relates.

     

    (f)           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. (New York City time) 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. (New York City time) 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 the Company:

              	
                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
      Grand Avenue, Suite 2900

                    Los
      Angeles, CA 90071

                     

                    Attention:
      Allen Z. Sussman,
Esq.

                  

                

              

      

    

    
       

      
        	
              	
                If
      to a Investor:

              	
                To
      the address set forth under such Holder’s name on the signature pages
      hereto.

              

      

    

     

    
      If to any
other Person who is then the registered Holder:

    

     

    
      To the
address of such Holder as it appears in the stock transfer books of the
Company

    

     

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

     

    (g)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder.  Each Holder may assign their respective rights hereunder in
the manner and to the Persons as permitted under the Purchase
Agreement.

     

    
      
         

      

      
        14

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (h)           Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

     

    (i)           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 (whether brought against a party hereto or its respective
Affiliates, employees or agents) will be commenced 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, 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 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 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 this Agreement, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.

     

    (j)           Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     

    (k)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

     

    (l)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    
      
         

      

      
        15

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (m)           Independent Nature of
Investors’ Obligations and Rights.  The obligations of each
Investor under this Agreement are several and not joint with the obligations of
each other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under this
Agreement.  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 this Agreement or any other Transaction
Document.  Each Investor acknowledges that no other Investor will be
acting as agent of such Investor in enforcing its rights under this
Agreement.  Each Investor shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement, and it shall not be necessary for any other Investor to be
joined as an additional party in any Proceeding for such purpose.  The
Company acknowledges that each of the Investors has been provided with the same
Registration Rights Agreement for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by any
Investor.

     

    (n)           Rights of
Holders. Each Holder shall have the
absolute right to exercise or refrain from exercising any right or rights which
such Holder may have by reason of this Agreement or any Registrable Security,
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an agreement
with the Company for the purpose of modifying this Agreement or any agreement
effecting any such modification, and such Holder shall not incur any liability
to any other Holder with respect to exercising or refraining from exercising any
such right or rights.

     

    (o)           Rule 144. To the extent that the Company is subject to the
filing and reporting requirements of the Securities Act and the Exchange Act,
and so long as there are Registrable Securities outstanding, the Company will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder,
make and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act, and will take such further action
as any Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (i)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such information
and requirements and with a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents of the Company as a Holder
may reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without
registration.

     

    (p)           Enforcement
Costs. In the event of any dispute
hereunder proceeding to litigation, the prevailing party shall be entitled to
recover from the other party, all costs and expenses incurred, including
attorneys’ fees.

     

    
      
         

      

      
        16

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    (q)           Subsequent
Closings.  One or more Investors
may become party to this agreement after the Closing Date and have all of the
rights and obligations hereunder by executing a signature page hereto; provided,
however, that the ascension of additional Investors to this Agreement shall not
alter the definition of Closing Date.

     

    

     

    
 

     

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        17

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

     

    

     

    
      	 
      	
              GENIUS
      PRODUCTS, INC.

            
	
               

               
      

            	 
      
	 
      	
              By:        /s/
      Trevor
      Drinkwater                    
      

            
	 
      	
              Name:
      Trevor Drinkwater

            
	 
      	
              Title:
      Chief Executive Officer

            

    

     

     

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PAGES OF INVESTORS TO FOLLOW]

     

    

    

    

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        18

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written 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:                                                
                                
      

            

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    

     

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

     

    

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

            
	 
      	
              By: 
      Wellington Management Company, LLP, as investment
  adviser

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:    /s/ Steven M.
      Hoffman                          
                   

            
	 
      	 
      
	 
      	
              Name:    Steven M.
      Hoffman                            
                                    

            
	 
      	 
      
	 
      	
              Title:
          Vice President &
      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         
                             

            

    

    

    

    
      
         

      

      
        20

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above.

     

    

    
      	 
      	
              J.
      CAIRD PARTNERS, L.P.

            
	 
      	
              By: 
      Wellington Management Company, LLP, as investment
  adviser

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By:   /s/ Steven M.
      Hoffman                    
                      

            
	 
      	 
      
	 
      	
              Name:
          Steven M.
      Hoffman                    
                    

            
	 
      	 
      
	 
      	
              Title:
          Vice President &
      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                             

            

    

    

    
      
         

      

      
        21

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    

    IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written 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                       
      

            

    

    
      
         

      

      
        22

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    Annex A

    Plan
of Distribution

     

    The
Selling Stockholders and any of their pledgees, donees, transferees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions.  These sales
may be at fixed or negotiated prices.  The Selling Stockholders may
use any one or more of the following methods when selling shares:

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits Investors;

            

    

     

    
      	
               
      

            	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      underwritten offering;

            

    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              to
      cover short sales made after the date that this Registration Statement is
      declared effective by the
Commission;

            

    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      combination of any such methods of sale;
and

            

    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated.  The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.

     

    The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of Common Stock from time to time under this prospectus,
or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus.

     

    
      
         

      

      
        23

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    Upon the
Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common
Stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such the shares of Common Stock were sold, (iv)the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction.  In
addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledgee intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.

     

    The
Selling Stockholders also may transfer the shares of Common Stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this
prospectus.

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Discounts,
concessions, commissions and similar selling expenses, if any, that can be
attributed to the sale of Securities will be paid by the Selling Stockholder
and/or the purchasers.  Each Selling Stockholder has represented and
warranted to the Company that it acquired the securities subject to this
registration statement in the ordinary course of such Selling Stockholder’s
business and, at the time of its purchase of such securities such Selling
Stockholder had no agreements or understandings, directly or indirectly, with
any person to distribute any such securities.

     

    The
Company has advised each Selling Stockholder that it may not use shares
registered on this Registration Statement to cover short sales of Common Stock
made prior to the date on which this Registration Statement shall have been
declared effective by the Commission.  If a Selling Stockholder uses
this prospectus for any sale of the Common Stock, it will be subject to the
prospectus delivery requirements of the Securities Act.  The Selling
Stockholders will be responsible to comply with the applicable provisions of the
Securities Act and Exchange Act, and the rules and regulations thereunder
promulgated, including, without limitation, Regulation M, as applicable to such
Selling Stockholders in connection with resales of their respective shares under
this Registration Statement.

     

    The
Company is required to pay all fees and expenses incident to the registration of
the shares, but the Company will not receive any proceeds from the sale of the
Common Stock.  The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

     

    
      
         

      

      
        24

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    Annex B

     

    GENIUS
PRODUCTS, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock (the “Common Stock”), of GENIUS PRODUCTS, INC. (the
“Company”) understands
that the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a Registration
Statement for the registration and resale of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
February 17, 2009 (the “Registration Rights
Agreement”), among the Company and the Investors named
therein.  A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below.  All
capitalized terms used and not otherwise defined herein shall have the meanings
ascribed thereto in the Registration Rights Agreement.

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
               
      

            	
              1.

            	
              Name.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Full
      Legal Name of Selling Securityholder

            
	 	 	 

    

     

    
    

    

    
      	
               
      

            	
              (b)

            	
              Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities Listed in Item 3 below are
    held:

            
	 	 	 

    

     

    
    

    

    
      	
               
      

            	
              (c)

            	
              Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

            
	 	 	 

    

     

     

     

    2.  Address
for Notices to Selling Securityholder:

     

    
      	 
      
	 
      
	 
      
	
              Telephone:
      ______________________________________

            
	
              Fax:____________________________________________

            
	
              Contact
      Person:_____________________________________

            

    

     

     

    
      
         

      

      
        25

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    
 

    
      	
               
      

            	
              3.  Beneficial
      Ownership of Registrable
Securities:

            

    

     

    
      	
               
      

            	
              Type
      and Principal Amount of Registrable Securities beneficially
      owned:

            
	 	
               

               

            
	 	 
	 	 

    

     

     

    

     

    
      	
               
      

            	
              4.  Broker-Dealer
      Status:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
              Note:

            	
              If
      yes, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Are
      you an affiliate of a
broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
               
      

            	
              (c)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
              Note:

            	
              If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    
      	
               
      

            	
              5.  Beneficial
      Ownership of Other Securities of the Company Owned by the Selling
      Securityholder.

            

    

     

    Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

     

    
      	
               
      

            	
              Type
      and Amount of Other Securities beneficially owned by the Selling
      Securityholder:

            
	 	 
	 	 

    

     

     

    

    
      
         

      

      
        26

        
          

        

      

      
         

        EXHIBIT
10.2

      

    

    

    
      	
               
      

            	
              6.  Relationships
      with the Company:

            

    

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      	
               
      

            	
              State
      any exceptions here:

            
	 	 
	 	 

    

     

    
 

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
and prior to the Effective Date for the Registration Statement.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related
prospectus.  The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

     

     

    

       

      
        	Dated: __________________________________	      
                Beneficial
      Owner:                                                       

                

                By:                                                         
                            

                Name: 

                Title:

              

      

       

    

     

    

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    Reed
Smith LLP

    355 South
Grand Ave., Suite 2900

    Los
Angeles, CA  90071

    Attention: Allen Z.
Sussman, Esq.

    Facsimile:  (213)
457-8080

    

    

     

     

     

    27

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