Document:

merc-ex101_8.htm

EXHIBIT 10.1

REGISTRATION RIGHTS AGREEMENT

by and among

Mercer International Inc.,

 

and

Credit Suisse Securities (USA) LLC

Dated as of October 3, 2019

 

 

Registration Rights Agreement

This Registration Rights Agreement (this “Agreement”) is made and entered into as of October 3, 2019, by and among Mercer International Inc., a Washington corporation (the “Company”), and Credit Suisse Securities (USA) LLC, as representative of the several initial purchasers (collectively, the “Initial Purchasers”), each of which has agreed to purchase $200,000,000 in aggregate principal amount of the Company’s 7.375% Senior Notes due 2025 (the “Initial Notes”) on the Closing Date (as defined below), pursuant to the Purchase Agreement (as defined below).

This Agreement is made pursuant to the Purchase Agreement, dated September 19, 2019 (the “Purchase Agreement”), among the Company and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Notes, including the Initial Purchasers.  In order to induce the Initial Purchasers to purchase the Initial Notes, the Company has agreed to provide the registration rights set forth in this Agreement.  The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 5(h) of the Purchase Agreement.

The Company has previously issued on December 7, 2018, (the “Original Issue Date”) an aggregate of $350,000,000 of 7.375% Senior Notes due 2024 (the “Existing Notes”) under the Indenture (as defined below).  

The parties hereby agree as follows:

Section 1.  Definitions.  As used in this Agreement, the following capitalized terms shall have the following meanings:

Additional Interest:  As defined in Section 6 hereto.

Additional Interest Payment Date:  With respect to the Initial Notes, each Interest Payment Date.

	
Advice:
	
As defined in Section 7 hereto.

	
Agreement: 
	
As defined in the preamble hereto.

Broker-Dealer:  Any broker or dealer registered under the Exchange Act.

Business Day:  Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.  

Closing Date:  The date of this Agreement.

Commission:  The Securities and Exchange Commission.

	
Company:
	
As defined in the preamble hereto.

Consummate:  A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 4(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Initial Notes that were tendered by Holders thereof pursuant to the Exchange Offer.

Effectiveness Period:  As defined in Section 5(a) hereof.

 

 

Effectiveness Target Date:  As defined in Section 6 hereof.

Entitled Securities:  Each Note, until the earliest to occur of (a) the date on which such Initial Note has been exchanged by a Person other than a Broker-Dealer for an Exchange Note in the Exchange Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer of such Initial Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement, (c) the date on which such Initial Note has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, (d) the date on which such Initial Note is actually sold pursuant to Rule 144 under the Securities Act.

Exchange Act:  The Securities Exchange Act of 1934, as amended.

Exchange Notes:  The 7.375% Senior Notes due 2025, of the same series under the Indenture as the Initial Notes, to be issued to Holders in exchange for Entitled Securities pursuant to this Agreement.

Exchange Offer:  The registration by the Company under the Securities Act of the Exchange Notes pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Entitled Securities the opportunity to exchange all such outstanding Entitled Securities held by such Holders for Exchange Notes in an aggregate principal amount equal to the aggregate principal amount of the Entitled Securities tendered in such exchange offer by such Holders.

Exchange Offer Effectiveness Target Date:  As defined in Section 4(a) hereof.

Exchange Offer Registration Statement:  The Registration Statement relating to the Exchange Offer, including the related Prospectus.

Exempt Resales:  The transactions in which the Initial Purchasers propose to sell the Initial Notes to certain “qualified institutional buyers,” as such term is defined in Rule 144A under the Securities Act and to certain non-U.S. persons pursuant to Regulation S under the Securities Act.  

Existing Notes:  See the introductory paragraphs hereto.

FINRA:  Financial Industry Regulatory Authority, Inc.

Holders:  As defined in Section 2(b) hereof.

Indemnified Holder:  As defined in Section 9(a) hereof.

Indenture:  The Indenture, dated as of December 7, 2018, by and between the Company and Wells Fargo, National Association, as trustee (the “Trustee”), pursuant to which the Existing Notes were issued and pursuant to which the Initial Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

Initial Notes:  As defined in the preamble hereto.

Initial Placement:  The issuance and sale by the Company of the Initial Notes to the Initial Purchasers pursuant to the terms of the Purchase Agreement.

Initial Purchasers:  As defined in the preamble hereto.

Interest Payment Date:  January 15 and July 15, commencing July 15, 2019.

Original Issue Date:  December 7, 2018 the date of original issuance of the Existing Notes.

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Person:  An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

Prospectus:  The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

Registration Default:  As defined in Section 6 hereof.

Registration Statement:  Any registration statement of the Company relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or (b) the registration for resale of Entitled Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

Securities Act:  The Securities Act of 1933, as amended.

Shelf Registration Statement:  As defined in Section 5(a) hereof.

Suspension Period: As defined in Section 5(a) hereof.

Trust Indenture Act:  The Trust Indenture Act of 1939, as amended.

Underwritten Registration or Underwritten Offering:  A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

Section 2.  Securities Subject to this Agreement.  

(a)  Entitled Securities.  The securities entitled to the benefits of this Agreement are the Entitled Securities.

(b)  Holders of Entitled Securities.  A Person is deemed to be a holder of Entitled Securities (each, a “Holder”) whenever such Person owns Entitled Securities.

Section 3.  Authorization of the Exchange Notes.  The Company hereby represents, warrants and covenants to each Initial Purchaser that the Exchange Notes have been duly and validly authorized for issuance by the Company, and when issued and authenticated in accordance with the terms of the Indenture, this Agreement and the Exchange Offer, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles including limitations and other restrictions on a party's rights to specific performance and indemnification and will be entitled to the benefits of the Indenture. 

Section 4.  Registered Exchange Offer.  

(a)  Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 7(a) hereof have been complied with), the Company shall (i) cause to be filed with the Commission the Exchange Offer Registration Statement under the Securities Act relating to the Exchange Notes and the Exchange Offer, but in no event later than 30 days after the Closing Date (or if such 30th day is not a Business Day, the next succeeding Business Day) (ii) use its commercially reasonable efforts to cause such Exchange Offer Registration Statement to become effective at the earliest practicable time, but in no event later than 90 days after the Closing Date (or if such 90th day is not a Business Day, the next succeeding Business Day) (the “Exchange Offer Effectiveness Target Date”), (iii) in connection with the foregoing, file (A) all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Securities Act and (C), subject to the proviso in 

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Section 7(c)(x), cause all necessary filings in connection with the registration and qualification of the Exchange Notes to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence the Exchange Offer and (v) issue Exchange Notes in exchange for all Initial Notes tendered prior to the Consummation of the Exchange Offer.  The Exchange Offer Registration Statement shall be on the appropriate form permitting registration of the Exchange Notes to be offered in exchange for the Entitled Securities and to permit resales of Initial Notes held by Broker-Dealers as contemplated by Section 4(c) hereof. Notwithstanding any other provision hereof, the Company shall not be obligated to file a Prospectus with the securities commissions or similar regulatory authority in any of the provinces or territories of Canada.

(b)  The Company shall use its commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days from and including the date notice of the Exchange Offer is mailed to the Holders.  The Company shall cause the Exchange Offer to comply in all material respects with all applicable federal and state securities laws.  No securities other than the Exchange Notes shall be included in the Exchange Offer Registration Statement.  The Company shall use its commercially reasonable efforts to cause the Exchange Offer to be Consummated within 30 Business Days (or longer if required by applicable securities laws) of the Exchange Offer Effectiveness Target Date.

(c)  The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer which holds Initial Notes that are Entitled Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Entitled Securities acquired directly from the Company), may exchange such Initial Notes pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement.  Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement.

The Company shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 7(c) hereof to the extent necessary to ensure that it is available for resales of Initial Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 90 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 90-day (or shorter as provided in the preceding paragraph) period in order to facilitate such resales.

Section 5.  Shelf Registration.  

(a)  Shelf Registration.  If (i) the Company is not permitted to file an Exchange Offer Registration Statement or to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 7(a) hereof have been complied with), (ii) for any reason, the Exchange Offer is not Consummated within 30 Business Days of the Exchange Offer Effectiveness Target Date, or (iii) any Holder of Entitled Securities notifies the Company in writing that (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder 

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may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial Notes acquired directly from the Company or one of its affiliates, then, upon such Holder’s written request, the Company shall:

(i)  cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”), which Shelf Registration Statement shall provide for resales of all Entitled Securities the Holders of which shall have provided the information required pursuant to Section 5(b) hereof; and

(ii)  use its commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 90th day after so requested or required pursuant to this Section 5 and to keep it continuously effective until the earliest of (i) the date on which all Entitled Securities entitled to the benefit of this Section 5(a) have been sold pursuant to the Shelf Registration Statement, (ii) the date on which all Entitled Securities are no longer “restricted securities” within the meaning of Rule 144 of the Securities Act and (iii) the date which is one year after the Closing Date, such shortest time period referred to as the “Effectiveness Period.”

During the Effectiveness Period, the Company shall use its commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 7(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Notes by the Holders of Entitled Securities entitled to the benefit of this Section 5(a), and to ensure that it conforms in all material respects with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time.

Notwithstanding the foregoing and any other provision hereof, the Company may suspend the availability of the Shelf Registration Statement, without being required to pay any Additional Interest (as defined below), upon written notice to the Holders (which notice shall be accompanied by an instruction to suspend the use of the Prospectus), for one or more periods not to exceed 60 consecutive days in any 90-day period, and not to exceed, in the aggregate, 95 days in any 365-day period (each such period, a “Suspension Period”) if:

(i)  an event occurs and is continuing that, in the Company's good faith judgment, would require the Company to make changes in the Shelf Registration Statement or the Prospectus in order that the Shelf Registration Statement or the Prospectus does not 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 the case of the prospectus, in light of the circumstances under which they were made) not misleading; and

(ii)  the Company reasonably determines that the disclosure of such event at such time would have a material adverse effect on the business of the Company (and its subsidiaries, if any, taken as a whole).

(b)  Provision by Holders of Certain Information in Connection with the Shelf Registration Statement.  No Holder of Entitled Securities may include any of its Entitled Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 7 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

Section 6.  Additional Interest.  If (i) the Company fails to file any of the Registration Statements required by this Agreement on or before the date specified for such filing, if any; (ii) any of the Registration Statements required by this Agreement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 30 Business Days of the Exchange Offer Effectiveness Target Date or (iv) any Registration 

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Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective (other than for a Suspension Period) without being succeeded  within five Business Days by a post-effective amendment to such Registration Statement that is declared effective (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company hereby agrees that the interest rate borne by the Entitled Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the beginning of each subsequent 90-day period (such increase, “Additional Interest”) until all Registration Defaults have been cured, but in no event shall such increase exceed 1.00% per annum.  Following the cure of all Registration Defaults relating to any particular Entitled Securities, the interest rate borne by the relevant Entitled Securities will be reduced to the original interest rate borne by such Entitled Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Entitled Securities shall again be increased pursuant to the foregoing provisions. The Company shall not be required to pay Additional Interest for more than one Registration Default at a time. The amount of Additional Interest will be determined on the basis of a 360-day year comprised of twelve 30-day months and the actual number of days on which Additional Interest accrued during such period.

In connection with a Registration Default in respect of a Shelf Registration Statement, notwithstanding anything to the contrary herein, a Holder will not be entitled to any Additional Interest under this Article 6 if such Holder has not provided all registration information to the Company as required herein at least two Business Days prior to the Effective Date of the Shelf Registration Statement or any subsequent amendment (with respect to any period subsequent to such amendment and prior to the next amendment in respect of which such information is so provided). 

All obligations of the Company set forth in the preceding paragraph to pay Additional Interest that are outstanding with respect to any Entitled Security at the time such security ceases to be an Entitled Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

Section 7.  Registration Procedures.  

(a)  Exchange Offer Registration Statement.  In connection with the Exchange Offer, the Company shall comply with all of the provisions of Section 7(c) hereof, shall use its commercially reasonable efforts to effect such exchange so that it permits the sale of Entitled Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions:

 (i)  As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Entitled Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company (within the meaning of Rule 405 of the Securities Act), (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course of business.  In addition, all such Holders of Entitled Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer, including providing all information relating to the Holder required to be included in a Registration Statement under applicable law.  Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S‐K if the resales are of Exchange Notes obtained by such Holder in exchange for Initial Notes acquired by such Holder directly from the Company.

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(b)  Shelf Registration Statement.  In connection with the Shelf Registration Statement, the Company shall comply with all the provisions of Section 7(c) hereof and shall use its commercially reasonable efforts to effect such registration so that it permits the sale of the Entitled Securities being sold in accordance with the intended method or methods of distribution thereof.

(c)  General Provisions.  In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Entitled Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Notes by Broker-Dealers), the Company shall:

(i)  subject to the terms hereof, use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, its financial statements for the period specified in Section 4 or 5 hereof, as applicable); upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Entitled Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter;

(ii)  prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 4 or 5 hereof, as applicable, or such shorter period as will terminate when all Entitled Securities covered by such Registration Statement have been sold or cease to be Entitled Securities; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424, 430A and 430B under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

(iii)  advise the underwriter(s), if any, and selling Holders within five Business Days and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Entitled Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading.  If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Entitled Securities under state securities or blue sky laws, the Company shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

(iv)  upon written request, furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement, and each of the underwriter(s), if any, before filing with the 

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Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus, which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least two  Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus to which an Initial Purchaser of Entitled Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within two  Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period) provided, that this clause (iv) shall not apply to any filing by the Company of any annual report on Form 10-K, quarterly report on Form 10-Q or current report on Form 8-K with respect to matters unrelated to the Entitled Securities and the offering or exchange thereof;     

(v)  in the case of an Underwritten Registration, make available during normal business hours for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all of its financial and other records, pertinent corporate documents and properties and cause its officers, directors and employees to supply all information reasonably requested by any such Initial Purchaser, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent requested by the managing underwriter(s), if any;

(vi)  in the case of a Shelf Registration Statement, if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, information relating to the “Plan of Distribution” of the Entitled Securities, information with respect to the principal amount of Entitled Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Entitled Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

 (vii)  upon request, furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

(viii)  deliver to each selling Holder and each of the underwriter(s), if any, who is required to deliver a Prospectus in connection with the sale of its Entitled Securities, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Entitled Securities covered by the Prospectus or any amendment or supplement thereto;

(ix)  enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Entitled Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may reasonably be requested by any Initial Purchaser or by any Holder of Entitled Securities or underwriter and as are reasonably on terms customary for transactions of such nature in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and  if an underwriting agreement is entered into and the registration is an Underwritten Registration, the Company shall:

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(A)  furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may reasonably request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the Consummation of the Exchange Offer or, if applicable, the effectiveness of the Shelf Registration Statement:

(1)  a certificate, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of the Company, confirming, as of the date thereof, the matters set forth in paragraphs (i) and (ii) of Section 5(d) of the Purchase Agreement and such other matters as such parties may reasonably request;

(2)  opinions, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, covering such matters as are customarily covered in legal opinions to underwriters in connection with primary underwritten offerings of securities; and

(3)  a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent accountants for the three fiscal years ended December 31, 2016 and all subsequent financial reporting periods, if permitted by applicable accounting standards or pronouncements, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 5(h) of the Purchase Agreement;

(B)  set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 9 hereof with respect to all parties to be indemnified pursuant to said Section; and

(C)  deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 7(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company pursuant to this Section 7(c)(xi), if any.

If at any time the representations and warranties contemplated in Section 7(c)(xi)(A)(1) hereof cease to be true and correct, the Company shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;

(x)  prior to any public offering of Entitled Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Entitled Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Entitled Securities covered by the Shelf Registration Statement; provided, however, that the Company shall not be required to register or qualify as a foreign corporation where it is not then so qualified or to take any action that would subject it to the service of process in suits or to taxation, in any jurisdiction where it is not then so subject;

(xi)  shall issue, upon the request of any Holder of Initial Notes covered by the Shelf Registration Statement, Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Initial Notes surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Notes, if in certificated form, to be registered in the name of such Holder or in the name of the purchaser(s) of such Exchange Notes, as the case may be; in return, the Initial Notes held by such Holder, if in certificated form, shall be surrendered to the Company for cancellation;

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(xii)  cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Entitled Securities to be sold and not bearing any restrictive legends; and enable such Entitled Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Entitled Securities made by such Holders or underwriter(s);

(xiii)  use its commercially reasonable efforts to cause the Entitled Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Entitled Securities, subject to the proviso contained in Section 7(c)(xii) hereof;

(xiv)  if any fact or event contemplated by Section 7(c)(iii)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Entitled Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading;

(xv)  provide a CUSIP number for all Exchange Notes not later than the effective date of the Registration Statement covering such Exchange Notes and provide the Trustee under the Indenture with printed certificates for such Exchange Notes which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;

(xvi)  cooperate and assist in any filings required to be made with the FINRA and in the performance of any due diligence investigation by any underwriter  that is required to be retained in accordance with the rules and regulations of the FINRA;

(xvii)  otherwise use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 under the Securities Act (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Entitled Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement;

(xviii)  cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Exchange Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and to execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; 

(xix)  cause all Exchange Notes covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Initial Notes or the managing underwriter(s), if any; and

Each Holder agrees by acquisition of a Entitled Security that, upon receipt of any notice from the Company of a Suspension Period or the existence of any fact of the kind described in Section 7(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Entitled Securities pursuant to the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7(c)(xvi) hereof, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be 

10

 

 

 

resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus.  If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Entitled Securities that was current at the time of receipt of such notice.  In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 4 or 5 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 7(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 7(c)(xvi) hereof or shall have received the Advice; provided, however, that no such extension shall be taken into account, except in connection with a Suspension Period, in determining whether Additional Interest is due pursuant to Section 6 hereof or the amount of such Additional Interest, it being agreed that the Company’s option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 6 hereof.

Section 8.  Registration Expenses.  

(a)  All expenses incident to the Company’s performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the FINRA (and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of the FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of the Company’s counsel and, subject to Section 8(b) hereof, the Holders of Entitled Securities; (v) all application and filing fees in connection with listing the Exchange Notes on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of the Company’s independent certified public accountants (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by it.

(b)  In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchasers and the Holders of Entitled Securities being tendered in the Exchange Offer and/or resold pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be such counsel as may be chosen by the Holders of a majority in principal amount of the Entitled Securities for whose benefit such Registration Statement is being prepared.

Section 9.  Indemnification.  

(a)  The Company agrees to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an “Indemnified Holder”), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities and expenses (or actions in respect thereof) (including, without limitation, and as incurred, reimbursement of all reasonable costs of investigating, or defending any claim or action, or any investigation or proceeding by any governmental agency or body,  including the reasonable fees and expenses of counsel to any Indemnified Holder), joint or several, directly or indirectly caused by, related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact required to be stated therein 

11

 

 

 

or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein.  This indemnity agreement shall be in addition to any liability which the Company may otherwise have.

In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company in writing; provided, however, that the failure to give such notice shall not relieve any of the Company of its obligations pursuant to this Agreement.  Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company (regardless of whether it is ultimately determined that an Indemnified Holder is not entitled to indemnification hereunder).  Notwithstanding the foregoing, the Company shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders.  The Company shall be liable for any settlement of any such action or proceeding effected with the Company’s prior written consent, which consent shall not be withheld unreasonably, and the Company agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the Company’s written consent.  The Company shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding.

(b)  Each Holder of Entitled Securities agrees, severally and not jointly, to indemnify and hold harmless the Company and its directors and officers who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company and the officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement or Prospectus.  In case any action or proceeding shall be brought against the Company or its directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Entitled Securities, such Holder shall have the rights and duties given the Company, and the Company, its directors and officers and such controlling Person shall have the rights and duties given to each Holder, in each case, by the preceding paragraph.  

(c)  If the indemnification provided for in this Section 9 is unavailable to an indemnified party under Section 9(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable 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, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company shall be deemed to be equal to its total gross proceeds from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnified Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the 

12

 

 

 

Company, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 9(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

Each of the Company and the Holders of Entitled Securities agrees that it would not be just and equitable if contribution pursuant to this Section 9(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 9, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Notes exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  The Holders’ obligations to contribute pursuant to this Section 9(c) are several in proportion to the respective principal amount of Initial Notes held by each of the Holders hereunder and not joint.

Section 10.  Rule 144A.  The Company hereby agrees with each Holder, for so long as any Entitled Securities remain outstanding, to make available to any Holder or beneficial owner of Entitled Securities in connection with any sale thereof and any prospective purchaser of such Entitled Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Entitled Securities pursuant to Rule 144A under the Securities Act.

Section 11.  Participation in Underwritten Registrations.  No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Entitled Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

Section 12.  Selection of Underwriters.  The Holders of Entitled Securities covered by the Shelf Registration Statement who desire to do so may sell such Entitled Securities in an Underwritten Offering.  In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Entitled Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company; provided further, that if the Company is conducting a primary issuance of securities in such Underwritten Offering, the Company shall have sole discretion in such selection.

Section 13.  Miscellaneous.  

(a)  Remedies.  The Company hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

(b)  No Inconsistent Agreements.  The Company will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.  The Company has not previously entered into any agreement granting any registration rights with respect to its securities to any Person.  The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date hereof.

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(c)  Amendments and Waivers.  The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has (i) in the case of Section 6 hereof and this Section 13(c)(i), obtained the written consent of Holders of all outstanding Entitled Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Entitled Securities (excluding any Entitled Securities held by the Company or its Affiliates).  Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Entitled Securities being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

(d)  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, facsimile, or air courier guaranteeing overnight delivery:

(i)  if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and

(ii)  if to the Company:

Mercer International Inc.

Suite 1120, 700 West Pender Street

Vancouver, British Columbia

Canada, V6C 1G8

Facsimile:  (604) 684-1094

Attention:  Chief Financial Officer

With a copy to:

 

Sangra Moller LLP

Barristers & Solicitors

1000 Cathedral Place

925 West Georgia Street

Vancouver, British Columbia

Canada, V6B 3L2

Facsimile:  (604) 669-8803

Attention:  Harjit Sangra

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if faxed; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

(f)  Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment or assumption, subsequent Holders of Entitled Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Entitled Securities from such Holder.

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(g)  Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate 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.

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

(i)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(j)  Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(k)  Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Entitled Securities.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

 

[Signature pages follow]

15

 

 

 

 

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

Mercer International Inc.

	
 
	
By:
	
 /s/ David M. Gandossi

	
 
	

	
Name:David M. Gandossi

	
 
	

	
Title:President and Chief Executive Officer

 

|

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:  

 

Credit Suisse Securities (USA) LLC

	
By:
	
 /s/ Ali R. Mehdi 
	
 

	

	
Name:Ali R. Mehdi
	
 

	

	
Title:Managing Director
	
 

 

Acting for themselves and on behalf of the several Initial Purchasers

|Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase
Agreement (“Agreement”) is made as of October 2, 2019 (the “Effective Date”), by and among
Genius Brands International Inc., a Nevada corporation (the “Company”), and each of those persons and entities,
severally and not jointly, listed as a Purchaser on the Schedule of Purchasers attached as Exhibit A hereto (the “Schedule
of Purchasers”). Such persons and entities are hereinafter collectively referred to herein as “Purchasers”
and each individually as a “Purchaser.”

 

AGREEMENT

 

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 Company and each Purchaser (severally and not jointly) hereby agree as follows:

 

Section
1.

AUTHORIZATION
OF SALE OF STOCK

 

The Company has authorized
the sale and issuance of up to 1,000,000 shares (the “Shares”) of its common stock, par value $0.0001 per share
(the “Common Stock”), on the terms and subject to the conditions set forth in this Agreement.

 

Section
2.

AGREEMENT
TO SELL AND PURCHASE THE STOCK

 

2.1             
Sale of Stock. At the Closing (as defined in Section 3.1), the Company will sell to each Purchaser, and each
Purchaser will purchase from the Company, the number of Shares set forth opposite such Purchaser’s name on the Schedule of
Purchasers at a purchase price of $0.76 per Share. The aggregate purchase price for the Shares purchased by each Purchaser is set
forth opposite such Purchaser’s name on the Schedule of Purchasers.

 

2.2             
Separate Agreement. Each Purchaser shall severally, and not jointly, be liable for only the purchase of the
Shares that appear on the Schedule of Purchasers that relate to such Purchaser. The Company’s agreement with each of the
Purchasers is a separate agreement, and the sale of Shares to each of the Purchasers is a separate sale. The obligations of each
Purchaser hereunder are expressly not conditioned on the purchase by any or all of the other Purchasers of the Shares such other
Purchasers have agreed to purchase.

 

Section
3.

CLOSING
AND DELIVERY

 

3.1             
Closing. The closing of the purchase and sale of the Shares pursuant to this Agreement (the “Closing”)
shall be held on October 3, 2019 at the offices of Mintz, Levin, Cohn, Glovsky and Popeo, P.C., 666 Third Avenue, New York, NY
10017, or on such other date and place as may be agreed to by the Company and the Purchasers. At or prior to the Closing, each
Purchaser shall execute any related agreements or other documents required to be executed hereunder, dated as of the date of the
Closing (the “Closing Date”).

 

3.2             
Issuance of the Shares at the Closing. At the Closing, the Company shall issue or deliver to each Purchaser
evidence of a book entry position evidencing the Shares purchased by such Purchaser hereunder, registered in the name of such Purchaser,
or in such nominee name(s) as designated by such Purchaser, representing the number of Shares to be purchased by such Purchaser
at the Closing against payment of the purchase price for such Shares.

 

 

 

    	 	1	 

     

    

 

Section
4.

REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY

 

Except as set forth
on the Schedule of Exceptions delivered to the Purchasers concurrently with the execution of this Agreement (the “Schedule
of Exceptions”) or as otherwise described in the SEC Documents (as defined below), which disclosures qualify these representations
and warranties in their entirety, the Company hereby represents and warrants as of the date hereof to, and covenants with, the
Purchasers as follows:

 

4.1             
Organization and Standing. The Company (i) has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with full corporate power
and authority to own or lease, as the case may be, and to operate its properties and conduct its business as presently conducted
or proposed to be conducted in the SEC Documents, and (ii) is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such qualification, except in the case of clause (ii) above, to
the extent that the failure to be so qualified or be in good standing would not reasonably be expected to result in (i) a material
adverse effect on the validity or enforceability of this Agreement, (ii) a material adverse effect on the condition (financial
or otherwise), results of operations, business, prospects or properties of the Company and its subsidiaries, taken as a whole,
or (iii) a material adverse effect on the Company’s ability to perform in any material respect its obligations under this
Agreement (any of (i), (ii) or (iii)) (a “Material Adverse Effect”).

 

4.2             
Corporate Power; Authorization. The Company has all requisite corporate power and authority, and has taken
all requisite corporate action, to execute and deliver this Agreement, sell and issue the Shares and carry out and perform all
of its obligations under this Agreement. Each Transaction Document constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting the enforcement of creditors’ rights generally, and (ii) as limited by equitable
principles generally, including any specific performance.

 

4.3             
Issuance and Delivery of the Shares. The Shares have been duly authorized and, when issued and paid for in
compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. Assuming the accuracy of
the representations made by the Purchasers in Section 5, the offer and issuance by the Company of the Shares is exempt from registration
under the Securities Act of 1933, as amended (the “Securities Act”).

 

4.4             
SEC Documents; Financial Statements. The Company has filed in a timely manner all documents that the Company
was required to file with the Securities and Exchange Commission (the “Commission”) under Sections 13, 14(a)
and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since January 1, 2018 (collectively
with all exhibits, schedules and annexes thereto, the “SEC Documents”). As of their respective filing dates
(or, if amended prior to the date of this Agreement, when amended), all SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder. None of the SEC Documents
as of their respective dates contained any untrue statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the SEC Documents (the “Financial Statements”)
present fairly the consolidated financial condition, results of operations and cash flows of the Company and its Subsidiaries,
taken as a whole, as of the dates and for the periods indicated, 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 and have been prepared
in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout
the periods involved (except as otherwise noted therein).

 

4.5             
No General Solicitation. Neither the Company nor any Person acting on its behalf, has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act) in connection
with the offer or sale of the Shares.

 

 

 

    	 	2	 

     

    

 

Section
5.

REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE PURCHASERs

 

5.1             
Each Purchaser, severally and not jointly, represents and warrants to and covenants with the Company that:

 

(a)              
Such Purchaser (if an entity is a validly existing corporation, limited partnership or limited liability company) has all
requisite corporate, partnership or limited liability power and authority to enter into and consummate the transactions contemplated
by this Agreement and to carry out its obligations hereunder and thereunder, and to purchase the Shares pursuant to this Agreement.

 

(b)              
Such Purchaser acknowledges that it can bear the economic risk and complete loss of its investment in the Shares and has
such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment
contemplated hereby. Such Purchaser has had an opportunity to receive, review and understand all information related to the Company
requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms
and conditions of the offering of the Shares, and has conducted and completed its own independent due diligence. Such Purchaser
acknowledges that the Company has made available the SEC Documents. Based on the information such Purchaser has deemed appropriate,
and without reliance upon any placement agent, it has independently made its own analysis and decision to enter into this Agreement.
Such Purchaser is relying exclusively on its own sources of information, investment analysis and due diligence (including professional
advice it deems appropriate) with respect to the execution, delivery and performance of this Agreement, the Shares and the business,
condition (financial and otherwise), management, operations, properties and prospects of the Company, including but not limited
to all business, legal, regulatory, accounting, credit and tax matters.

 

(c)              
The Shares to be received by such Purchaser hereunder will be acquired for such Purchaser’s own account, not as nominee
or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act, and such Purchaser
has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities
Act without prejudice, however, to such Purchaser’s right at all times, subject to the terms and conditions of this Agreement,
to sell or otherwise dispose of all or any part of such Shares in compliance with applicable federal and state securities laws.
Such Purchaser understands that the Shares are characterized as “restricted securities” under the U.S. federal securities
laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited
circumstances. Such Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of the securities purchased hereunder except in compliance
with the Securities Act, applicable blue sky laws, and the rules and regulations promulgated thereunder.

 

(d)              
Such Purchaser is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act.

 

(e)              
The execution, delivery and performance by such Purchaser of this Agreement to which such Purchaser is a party have been
duly authorized and each has been duly executed by such Purchaser, and when delivered will constitute the valid and legally binding
obligation of such Purchaser, enforceable against such Purchaser in accordance with their respective terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability relating to or affecting
creditors’ rights generally.

 

(f)               
Purchaser is not a broker or dealer registered pursuant to Section 15 of the Exchange Act (a “registered broker-dealer”),
or an entity engaged in a business that would require it to be so registered, and is not affiliated with a registered broker dealer.
Purchaser is not party to any agreement for distribution of any of the Shares.

 

(g)              
Such Purchaser understands that no United States federal or state agency, or similar agency of any other country, has reviewed,
approved, passed upon, or made any recommendation or endorsement of the Company or the purchase of the Shares.

 

 

 

    	 	3	 

     

    

 

(h)              
Such Purchaser has not taken any of the actions set forth in, and is not subject to, the disqualification provisions of
Rule 506(d)(1) of the Securities Act.

 

(i)                
Such Purchaser did not learn of the investment in the Shares as a result of any general solicitation or general advertising.

 

5.2             
Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the
purchase and sale of the Shares constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

 

5.3             
Legends.

 

(a)       Except
as otherwise provided below, Purchaser understands that until such time as the Shares have been sold pursuant to a registration
statement under the Securities Act or the Shares may be sold pursuant to Rule 144 under the Securities Act (“Rule 144”)
without any restriction as to the number of securities as of a particular date that can then be immediately sold, the book entry
notations evidencing the Shares may bear one or more legends in substantially the following form and substance:

 

“THESE SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT
TO RULE 144 OF THE SECURITIES ACT.”

 

(b)       The
legend set forth in Section 5.3(a) above shall be removed by the Company from any certificate evidencing the Shares upon the earlier
of (1) the sale of the Shares pursuant to an effective registration statement, (2) the sale of the Shares pursuant to Rule 144,
or (3) the date the Shares are eligible to be sold under Rule 144 without restriction, in each case following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a certificate representing Shares, if such Shares are certificated,
and such representations and covenants of such Purchaser or, solely in the case of clause (2) above, such Purchaser’s executing
broker as the Company may reasonably require in connection therewith, and the Company shall deliver or cause to be delivered to
such Purchaser a book entry position representing such shares that is free from any legend referring to the Securities Act. The
Company shall take all action including requesting that counsel for the Company issue an opinion to the Company’s transfer
agent with respect to such removal. The Company shall not make any notation on its records or give instructions to any transfer
agent of the Company that enlarge the restrictions on transfer set forth in this Section. Shares subject to legend removal hereunder
shall be transmitted by the transfer agent of the Company to the Purchasers by crediting the account of such Purchaser’s
prime broker with the Depository Trust Company (“DTC”). All costs and expenses related to the removal of the
legends and the reissuance of any Shares shall be borne by the Company; provided, however, that the Purchaser shall be responsible
for the costs of the Purchaser’s counsel and advisors.

 

5.4             
Restricted Securities. Purchaser understands that the Shares are characterized as “restricted securities”
under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such Shares may be resold without registration under the Securities
Act only in certain limited circumstances. In this connection, such Purchaser represents that it is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

 

5.5             
Exculpation Among Purchasers. Purchaser acknowledges that it is not relying upon any other Purchaser, or any
officer, director, employee, agent, partner, member or affiliate of any such other Purchaser, in making its investment or decision
to invest in the Company. Purchaser agrees that neither any Purchaser nor the respective controlling Persons, officers, directors,
partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted
to be taken by any of them in connection with the purchase of the Shares.

 

 

 

    	 	4	 

     

    

 

Section
6.

CONDITIONS
TO COMPANY’S OBLIGATIONS AT THE CLOSING

 

The Company’s
obligation to complete the sale and issuance of the Shares and deliver Shares to each Purchaser, individually, as set forth in
the Schedule of Purchasers at the Closing shall be subject to the following conditions to the extent not waived by the Company:

 

6.1             
Receipt of Payment. The Company shall have received payment, by wire transfer of immediately available funds,
in the full amount of the purchase price for the Shares being purchased by such Purchaser at the Closing as set forth in the Schedule
of Purchasers.

 

6.2             
Representations and Warranties. The representations and warranties made by the Purchasers in Section 5 hereof
shall be true and correct in all material respects as of, and as if made on, the date of this Agreement and the Closing Date. The
Purchaser shall have performed in all material respects all obligations and covenants herein required to be performed by them on
or prior to the Closing Date.

 

Section
7.

CONDITIONS
TO PURCHASERS’ OBLIGATIONS AT THE CLOSING

 

Each Purchaser’s
obligation to accept delivery of the Shares and to pay for the Shares shall be subject to the following conditions to the extent
not waived by such Purchaser:

 

7.1             
Representations and Warranties. The representations and warranties made by the Company in Section 4 hereof
shall be true and correct in all material respect as of, and as if made on, the date of this Agreement and the Closing Date, except
to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material
respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.

 

7.2             
Nasdaq. The Company shall have filed with The Nasdaq Stock Market (“Nasdaq”) a Notification Form:
Listing of Additional Shares for the listing of the Shares on the Nasdaq Capital Market.

 

7.3             
Judgments. No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or
magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation
of the transactions contemplated hereby.

 

7.4             
Stop Orders. No stop order or suspension of trading shall have been imposed by Nasdaq, the Commission or any
other governmental regulatory body with respect to the Common Stock.

 

 

 

    	 	5	 

     

    

 

Section
8.

Termination
of Obligations to Effect Closing; Effects

 

8.1             
The obligations of the Company, on the one hand, and the Purchasers, on the other hand, to effect the Closing shall terminate
as follows:

 

(a)              
upon the mutual written consent of the Company and Purchasers that agreed to purchase a majority of the Shares to be issued
and sold pursuant to this Agreement;

 

(b)              
by the Company if any of the conditions set forth in Section 6 shall have become incapable of fulfillment, and shall not
have been waived by the Company; or

 

(c)              
by a Purchaser (with respect to itself only) if any of the conditions set forth in Section 7 shall have become incapable
of fulfillment or have not occurred on or before the fifth Business Day following the Effective Date, and shall not have been waived
by such Purchaser. “Business Day” means any day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required
by law or other governmental action to close.

 

8.2             
Nothing in this Section 8 shall be deemed to release any party from any liability for any breach by such party of the terms
and provisions of this Agreement or to impair the right of any party to compel specific performance by any other party of its obligations
under this Agreement.

 

Section
9.

NO
Broker’s feeS

 

The Company and each
Purchaser (severally and not jointly) hereby represent that there are no broker or finders fees payable and no brokers or finders
entitled to compensation in connection with the sale of the Shares, and shall indemnify each other for any such fees for which
they are responsible.

 

Section
10.

Additional
Agreements of the Parties

 

10.1         
Nasdaq Listing. The Company will use best efforts to continue the listing and trading of its Common Stock
on the Nasdaq Capital Market and, in accordance therewith, will use best efforts to comply in all respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of such market or exchange, as applicable.

 

10.2         
Access to Information. From the date hereof until the Closing, the Company will make reasonably available
to the Purchasers’ representatives, consultants and their respective counsels for inspection, such information and documents
as the Purchasers reasonably request, and will make available at reasonable times and to a reasonable extent officers and employees
of the Company to discuss the business and affairs of the Company.

 

10.3         
[Reserved].

 

10.4         
Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares and to provide
a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine
is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchaser at the Closing under applicable
securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

 

 

 

    	 	6	 

     

    

 

10.5         
Integration. The Company shall not, and shall use its commercially reasonable efforts to ensure that no affiliate
of the Company 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 will be integrated with the offer or sale of the Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares to the Purchasers, or that will be integrated with the offer
or sale of the Shares for purposes of the rules and regulations of any trading market such that it would require stockholder approval
prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

 

10.6         
Short Sales and Confidentiality After the Date Hereof. Each Purchaser covenants that neither it nor any affiliates
acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period from the date hereof
until the earlier of such time as (i)  the transactions contemplated by this Agreement are first publicly announced or (ii) this
Agreement is terminated in full. Each Purchaser covenants that until such time as the transactions contemplated by this Agreement
are publicly disclosed in accordance with Section 10.7, such Purchaser will maintain the confidentiality of all disclosures made
to it in connection with this transaction (including the existence and terms of this transaction). Each Purchaser understands and
acknowledges that the Commission currently takes the position that coverage of short sales of shares of the Common Stock “against
the box” prior to effectiveness of a resale registration statement with securities included in such registration statement
would be a violation of Section 5 of the Securities Act, as set forth in Item 239.10 of the Securities Act Compliance
and Disclosure Interpretations compiled by the Office of Chief Counsel, Division of Corporation Finance.

 

10.7         
Securities Laws Disclosure. Within four (4) business days following the entry into of this Agreement, the
Company will file a Current Report on Form 8-K (the “8-K”) with the Commission describing the terms of
this Agreement (and including as exhibits to such Current Report on Form 8-K the agreements required to be filed in connection
therewith).

 

10.8         
Offering Lock-Up. Until the date that is 24 months after the Closing Date, each Purchaser shall, if requested
by the Company and an underwriter of Common Stock of the Company in connection with any public offering involving an underwriting
of Common Stock of the Company, agree not to Dispose of any shares of Common Stock of the Company and/or Common Stock Equivalents
(as defined below) for a specified period of time, such period of time not to exceed one hundred eighty (180) days (a “Lock-Up
Agreement”). Any Lock-Up Agreement shall be in writing in a form reasonably satisfactory to the Purchaser, the Company
and the underwriter(s) in such offering. The Company may impose stop transfer instructions with respect to the shares of Common
Stock and/or Common Stock Equivalents subject to the foregoing restrictions until the end of the specified period of time.

 

(a)              
 “Dispose of” shall mean any direct or indirect (a) offer, pledge (other than pledges in connection
with bona fide debt financing transactions involving a general lien on assets of the Purchaser), sale, contract to sell, sale of
any option or contract to purchase, purchase of any option or contract to sell, grant of any option, right or warrant for the sale
of, or other disposition of or transfer of any shares of Common Stock, or any Common Stock Equivalents, including, without limitation,
any “short sale” or similar arrangement; (b) swap, hedge, derivative instrument, or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of shares of Common Stock, whether
any such swap or transaction is to be settled by delivery of securities, in cash or otherwise; (c) engagement in any short selling
of any shares of Common Stock or Common Stock Equivalents; or (d) publicly announced intention to effect a transaction specified
in clause (a), (b) or (c).

 

(b)              
“Common Stock Equivalents” means any options, warrants or other securities or rights convertible into
or exercisable or exchangeable for, whether directly or following conversion into or exercise or exchange for other options, warrants
or other securities or rights, shares of Common Stock.

 

 

 

    	 	7	 

     

    

 

Section
11.

Indemnification

 

11.1         
Indemnification by the Company. The Company agrees to indemnify and hold harmless each of the Purchasers and
each Person, if any, who controls any Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act) (each, a “Purchaser Indemnified Party”), against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchaser Indemnified Party may become subject under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or are based in whole or in part on (i) any inaccuracy
in the representations and warranties of the Company contained in this Agreement or (ii) any failure of the Company to perform
its obligations hereunder, and will reimburse each Purchaser Indemnified Party for legal and other expenses reasonably incurred
as such expenses are reasonably incurred by such Purchaser Indemnified Party in connection with investigating, defending, settling,
compromising or paying such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (1)
the failure of such Purchaser Indemnified Party to comply with the covenants and agreements contained in Section 5, Section 6 and
Section 10.6 above respecting the sale of the Shares, or (2) the inaccuracy of any representations made by such Purchaser Indemnified
Party herein. The Company will reimburse such Purchaser Indemnified Party, each of its directors, and each of its controlling Persons
for any legal and other expense reasonably incurred, as such expenses are reasonably incurred by such Purchaser Indemnified Party,
each of its directors, and each of its controlling Persons in connection with investigating, defending, settling, compromising
or paying any such loss, claim, damage, liability, expense or action.

 

11.2         
Indemnification by Purchasers. Each Purchaser shall indemnify and hold harmless the other Purchasers and the
Company and its directors and each Person, if any, who controls the Company (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act) (each, a “Company Indemnified Party”) against any losses, claims,
damages, liabilities or expenses to which such Company Indemnified Party, each of its directors or each of its controlling Persons
may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of
such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated
below) arise out of or are based upon (i) any failure by such Purchaser to comply with the covenants and agreements contained in
Section 5, Section 6 and Section 10.6 above or (ii) the inaccuracy of any representation made by such Purchaser herein, and will
reimburse such Company Indemnified Party, each of its directors, and each of its controlling Persons for any legal and other expense
reasonably incurred, as such expenses are reasonably incurred by such Company Indemnified Party, each of its directors, and each
of its controlling Persons in connection with investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. No Purchaser shall be liable for the indemnification obligations of any other Purchaser.

 

 

 

    	 	8	 

     

    

 

Section
12.

NOTICES

 

All notices, requests,
consents and other communications hereunder shall be in writing, shall be sent by confirmed facsimile or electronic mail, or mailed
by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, and shall
be deemed given when so sent in the case of facsimile or electronic mail transmission, or when so received in the case of mail
or courier, and addressed as follows:

 

if to the Company,
to:

 

Genius Brands International Inc.

190 N. Canon Drive, FL #4

Beverly Hills, CA 90210

Attention: Robert Denton, CFO

E-mail: bdenton@gnusbrands.com

 

with a copy (which shall not constitute
notice) to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C

666 Third Avenue

New York, New York 10017

Attention: Jeffrey Schultz, Esq.

E-mail: jschultz@mintz.com

 

or to such other person,
at such other place or in such manner as one party shall designate to other party in writing; and if to the Purchasers, at the
address as may have been furnished to the Company in writing.

 

Section
13.

MISCELLANEOUS

 

13.1         
Payment of Fees and Expenses. Each of the Company and the Purchasers shall bear its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the transactions contemplated hereby. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s
fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

13.2         
Waivers and Amendments. Neither this Agreement nor any provision hereof may be changed, waived, discharged,
terminated, modified or amended except upon the written consent of the Company and holders of at least a majority of the Shares.

 

13.3         
Replacement of Shares. If the Shares are certificated and any certificate or instrument evidencing any Shares
is mutilated, lost, stolen or destroyed, the Company 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 the Company and the Company’s transfer agent of such loss, theft or destruction and the execution
by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the
Company and the Company’s transfer agent for any losses in connection therewith or, if required by the transfer agent, a
bond in such form and amount as is required by the transfer agent. If a replacement certificate or instrument evidencing any Shares
is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition
precedent to any issuance of a replacement.

 

 

 

    	 	9	 

     

    

 

13.4         
Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under this
Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way
for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein and no action taken
by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group, or are
deemed affiliates (as such term is defined under the Exchange Act) with respect to such obligations or the transactions contemplated
by this Agreement. Each Purchaser 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 Purchaser to be joined as an additional party
in any proceeding for such purpose.

 

13.5         
Governing Law; Submission to Jurisdiction. 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 legal 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, directors, officers, shareholders, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the County of New York, in the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of New York, in
the State of New York, 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 this Agreement), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any such suit, action or 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 other manner permitted
by law.

 

13.6         
Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. This Agreement,
or any rights or obligations hereunder, may not be assigned by any party without the prior written consent of the other parties;
provided that each Purchaser may assign its rights and obligations hereunder to an affiliate of such Purchaser without the prior
written consent of the Company or any other Purchaser.

 

13.7         
Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference
only and shall not be deemed to be part of this Agreement.

 

13.8         
Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be
affected or impaired thereby.

 

13.9         
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but
which together shall constitute one and the same instrument.

 

13.10     
Entire Agreement. This Agreement and other documents delivered pursuant hereto, including the exhibits and
the Schedule of Exceptions, constitute the full and entire understanding and agreement between the parties with regard to the subjects
hereof and thereof.

 

13.11     
Survival. The representations, warranties, covenants and agreements made in this Agreement shall survive any
investigation made by the Company or the Purchasers and the Closing.

 

[signature pages follow]

 

 

 

    	 	10	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first
above written.

 

 

	 	COMPANY:
	 	 
	 	GENIUS BRANDS INTERNATIONAL, INC.
	 	 
	 	By:	/s/ Robert L. Denton
	 	Name:	Robert L. Denton
	 	Title:	Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	11	 

     

    

 

	 	 	 
	 	 	 
	PURCHASERS:	 	 
	 	 	 
	 	 	/s/ Andy Heyward
	 	 	Andy Heyward

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	12	 

     

    

 

EXHIBIT A

SCHEDULE OF PURCHASERS

 

	Name and Address	Number of Shares	Aggregate Purchase Price of Shares
	Andy Heyward	1,000,000	$760,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	13

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