Document:

Exhibit 10.3

 

SECURITIES PURCHASE AGREEMENT

 

This Securities
Purchase Agreement (this “Agreement”) is dated as of November 15, 2013, between Genius Brands International
Inc., a Nevada corporation (the “Company”), and each purchaser identified on the signature pages hereto
(each, including its successors and permitted assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

PREAMBLE

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser,
and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described
in this Agreement (the “Offering”).

 

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 agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

 

“Accredited
Investor” shall have the meaning ascribed to it in Section 3.2(c).

 

“Acquiring
Person” shall have the meaning ascribed to such term in Section 4.18.

 

“Acquisition”
shall have the meaning ascribed to such term in Section 4.27.

 

“Acquisition
Closing Date” shall mean the date the Acquisition is consummated, which date must be no later than July 1, 2014.

 

“Action”
shall have the meaning ascribed to such term in Section 3.1(j).

 

“Additional
Shares” shall have the meaning ascribed to such term in Section 4.14.

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Beneficial
Ownership Limitation” shall have the meaning ascribed to such term in Section 4.24.

 

“Board
of Directors” means the board of directors of the Company.

 

“Board
of Directors Shares” shall have the meaning ascribed to such term in Section 4.19.

 

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“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.

 

“Buy-In”
shall have the meaning ascribed to such term in Section 4.1(g).

 

“Closing”
means the Initial Closing and Subsequent Closing, if any, of the purchase and sale of the Securities pursuant to Section 2.1 or
2.4.

 

“Closing
Date” means each of the Initial Closing Date and the Subsequent Closing Date, if any, and is the Trading Day on which
all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent
to (i) the Purchasers’ obligations to pay the Subscription Amount at such Closing and (ii) the Company’s obligations
to deliver the Securities to be issued and sold at such Closing, in each case, have been satisfied or waived, but in no event later
than the third Trading Day following the date hereof in the case of the Initial Closing and not later than the tenth Trading Day
after the Subsequent Closing Option Date in the case of the Subsequent Closing Date.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Company
Counsel” means Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York, NY 10006, Attn:
Harvey Kesner, Esq., facsimile: (212) 930-9725.

 

“Disclosure
Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

“Effective
Date” means the earliest of the date that (a) the Registration Statement has been declared effective by the Commission,
(b) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without volume or manner-of-sale
restrictions or (c) following the one year anniversary of the applicable Closing Date hereunder with respect to such Shares, provided
that a holder of such Shares is not an Affiliate of the Company, all of such Shares may be sold pursuant to an exemption from registration
under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions or the need for the Company to provide current
public information and Company Counsel has delivered to such holders a standing written unqualified opinion that resales may then
be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form and substance reasonably
acceptable to such holders.

 

“Escrow
Agent” means G&M.

 

“Escrow
Agreement” means the escrow agreement entered into at or about the date hereof, by and among the Company, the Escrow
Agent and the Purchasers pursuant to which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to be applied
to the transactions contemplated hereunder. The form of Escrow Agreement is annexed hereto as Exhibit B.

 

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“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Exempt
Issuance” means the issuance of (a) shares of Common Stock and options to officers, employees, directors or consultants
of the Company prior to and after the Initial Closing Date in the amounts and on the terms set forth on Schedule 4.13, and
which holders of such securities, shares or options are not at any time granted registration rights, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder (subject to adjustment for forward and reverse stock splits and
the like that occur after the date hereof) and/or other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that such securities and any term thereof have not
been amended since the date of this Agreement to increase the number of such securities or to decrease the issue price, exercise
price, exchange price or conversion price of such securities (other than in the event of forward and/or reverse stock splits and
the like or by its own terms through anti-dilution or other ratchet or price protection) and which securities are described in
the SEC Reports, (c) securities issued as full or partial consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or other entity which holders of such securities
or debt are not at any time granted registration rights greater than those granted to the Purchasers, (d) as set forth on Schedule
3.1(g), and which holders of such securities, shares or options are not at any time granted registration rights, (e) securities
issued or issuable pursuant to this Agreement, including, without limitation, Section 4.15, or upon exercise of conversion of any
such securities, (f) the issuance on the Acquisition Closing Date of 6,749,175 shares of the Company’s Common Stock to ROAR
LLC as its fee for the engagement of ROAR LLC as an entertainment consultant to the Company commencing on the Acquisition Closing
Date and 1,000,000 shares of the Company’s Common Stock to Girlilla Marketing LLC in as its fee for the engagement of Girlilla
Marketing LLC as a digital and marketing strategy consultant to the Company commencing on the Acquisition Closing Date, (g) the
issuance of an aggregate of 5,000,000 shares of the Company’s Common Stock to its executive offices as further described
in Section 4.19, and which holders of such securities, shares or options are not at any time granted registration rights, (h) securities
issued in connection with strategic license agreements and other partnering arrangements so long as such issuances are not primarily
for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights
greater than those granted to the Purchaser, (i) the issuance of Common Stock or the issuance of grants of options to purchase
Common Stock to employees, directors and consultants, pursuant to plans that have been approved by a
majority of the stockholders and a majority of the independent members of the board of directors of the Company or in existence
as such plans are constituted on the date of this Agreement, and which holders of such securities, shares or options are
not at any time granted registration rights, (j) the Company’s issuance of Common Stock or the
issuances or grants of options to purchase Common Stock to consultants, service providers, creditors and suppliers, (k) shares
or other securities of the Company issued to Company’s management and employees upon such individuals’ conversion of
accrued salaries and wages, and which holders of such securities, shares or options are not at any time granted registration
rights, (l) up to 2,600,000 shares of the Company’s Common Stock issued to third party vendors
in consideration for the cancellation of certain accounts payable; (m) securities in consideration for the acquisition of A Squared
Entertainment LLC, and which holders of such securities, shares or options are not at any time granted registration rights
greater than those granted to the Purchasers (n) up to 3,321,667 shares of the Company’s Common Stock issued in exchange
for the cancellation of outstanding options, (o) up to 380,952 shares of the Company’s Common Stock issued in exchange for
the cancellation of outstanding warrants to purchase Common Stock , (p) shares of the Company’s Common Stock issued pursuant
to agreements with third parties in effect on the Closing Date, that, pursuant to their terms in effect on the Closing Date, are
payable by the Company in either cash or Common Stock, in the Company’s sole discretion and (q)
any and all securities required to be assumed by the Company by the terms thereof as a result of any of the foregoing even if issued
by a predecessor acquired in connection with a business combination, merger or share exchange and which holders of such
securities, shares or options are not at any time granted registration rights,.

 

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“Exercise
Notice” shall have the meaning ascribed to such term in Section 2.4.

 

“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.

 

“Final
Closing Date” shall mean the Subsequent Closing Date if a Subsequent Closing occurs or, if there is no Subsequent Closing,
the Initial Closing Date.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“G&M”
means Grushko & Mittman, P.C., with offices located at 515 Rockaway Avenue, Valley Stream, New York 11581, Fax: (212) 697-3575.

 

“Indebtedness”
shall have the meaning ascribed to such term in Section 3.1(aa).

 

“Initial
Closing” shall have the meaning ascribed to such term in Section 2.1.

 

“Initial
Closing Date” shall mean such date on which the Initial Closing is held.

 

“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Lead
Investor” shall mean Erick Richardson.

 

“Legend
Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

“Liens”
means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Listing
Default” shall have the meaning ascribed to such term in Section 4.9.

 

“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Maximum
Rate” shall have the meaning ascribed to such term in Section 5.21.

 

“Money
Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(r).

 

“OFAC”
shall have the meaning ascribed to such term in Section 3.1(kk).

 

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“Offering”
shall have the meaning ascribed to such term in the Preamble.

 

“Permitted
Indebtedness” means: (x) any liabilities for borrowed money or amounts owed not in excess of $300,000 in the aggregate
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto) not affecting more than $300,000 in the aggregate, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of
any lease payments not in excess of $300,000 due under leases required to be capitalized in accordance with GAAP.

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the business
of the Company or any of its Subsidiaries, such as suppliers’, vendors’, carriers’, warehousemen’s and
mechanics’ Liens, statutory workmen’s, repairmen’s and landlords’ Liens, and other similar Liens arising
in the ordinary course of the business of the Company or any of its Subsidiaries, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
(c) Liens incurred prior to the Closing Date in connection with Permitted Indebtedness, (d) Liens incurred in connection with Permitted
Indebtedness, provided that such Liens are not secured by assets of the Company or its Subsidiaries other than the assets so acquired
or leased, (e) non-exclusive licenses granted by the Company in respect of its intellectual property, and (f) Liens disclosed on
Schedule 3.1(n) to this Agreement.

 

“Per
Share Purchase Price” equals $0.035, subject to appropriate adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

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

 

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

 

“Pro-Rata
Portion” shall have the meaning ascribed to such term in Section 4.12(e).

 

“Protection
Period” shall have the meaning ascribed to such term in Section 4.14.

 

“Public
Information Failure” shall have the meaning ascribed to such term in Section 4.2(b).

 

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“Public
Information Failure Payments” shall have the meaning ascribed to such term in Section 4.2(b).

 

“Purchaser
Party” shall have the meaning ascribed to such term in Section 4.7.

 

“Registration
Expenses” shall have the meaning ascribed to such term in Section 4.23.

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers,
in the form of Exhibit D attached hereto.

 

“Registration
Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale of the Shares by each Purchaser as provided for in the Registration Rights Agreement.

 

“Removal
Date” means the date that all of the issued Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule
144 without the requirement for the Company to be in compliance with the current public information requirements under Rule 144
and without volume or manner-of-sale restrictions.

 

“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Required
Minimum” shall have the meaning ascribed to such term in Section 4.8.

 

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

 

“SEC
Reports” shall mean all reports, schedules, forms, statements and other documents filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof, including the exhibits thereto and documents incorporated by reference therein.

 

“Securities”
means the Shares.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Selling
Expenses” shall have the meaning ascribed to such term in Section 4.23.

 

“Share
Dilution Adjustment” shall have the meaning ascribed to such term in Section 4.14.

 

“Share
Dilutive Issuance” shall have the meaning ascribed to such term in Section 4.14.

 

“Shares”
means (i) the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement, and (ii) Additional Shares
(as provided for in Section 4.14), provided that any such share of Common Stock shall not constitute a Share after such
share has been irrevocably sold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144
without further restrictions or conditions to transfer pursuant to Rule 144. 

 

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“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

“Stock
Option Plan” means the Stock Option Plan of the Company in effect as the date of this Agreement, the principal
terms of which have been disclosed in the SEC Reports.

 

“Subscription
Amount” means, as to each Purchaser at each Closing, the aggregate amount to be paid for Shares purchased hereunder at
such Closing as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription
Amount,” in United States dollars and in immediately available funds.

 

“Subsequent
Closing” shall have the meaning ascribed to such term in Section 2.4.

 

“Subsequent
Closing Date” shall have the meaning ascribed to such term in Section 2.4 hereof.

 

“Subsequent
Closing Option Date” means the date that is not later than the Acquisition Closing Date.

 

“Subsidiary”
means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable and with regard to future events,
also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Termination
Date” shall have the meaning ascribed to such term in Section 2.1(a).

 

“Trading
Day” means a day on which the principal Trading Market is open for trading; provided, that in the event that the Common
Stock is not listed or quoted for trading on a Trading Market on the date in question, then Trading Day shall mean a Business Day.

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange, the OTC Bulletin Board or the OTCQB (or any successors to any of the foregoing).

 

“Transaction
Documents” means this Agreement, the Registration Rights Agreement, the Escrow Agreement, all exhibits and schedules
thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer
Agent” means Globex Transfer LLC and any successor transfer agent of the Company.

 

“Variable
Rate Transaction” shall have the meaning ascribed to such term in Section 4.20.

 

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“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on
a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the Common Stock is not then
listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported on the OTC Pink Marketplace
maintained by OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the
most recent closing price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a
share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest
of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Initial
Closing.  On the Initial Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent
with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each of the Purchasers,
severally and not jointly, agrees to purchase Shares for an aggregate purchase price of a minimum of $1,000,000 (“Minimum
Offering Amount”) and up to a maximum of $1,500,000 (such maximum amount of $1,500,000 , the “Maximum Offering
Amount” and such purchase and sale of at least the Minimum Offering Amount being the “Initial Closing”).
Prior to the Initial Closing, each Purchaser shall deliver to the Escrow Agent such Purchaser’s Initial Closing Subscription
Amount as set forth on the signature page hereto executed by such Purchaser by a wire transfer of immediately available funds,
such amount to be held in a non-interest-bearing escrow account, and the Company shall, on the Initial Closing Date, deliver to
each Purchaser a certificate representing the number of Shares purchased by such Purchaser at the Initial Closing as determined
pursuant to Section 2.2(a). The Company and each Purchaser shall also deliver the other items set forth in Section 2.2 deliverable
at the Initial Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3 and receipt of the
Minimum Offering Amount into escrow, the Initial Closing shall occur at the offices of G&M or such other location as the parties
shall mutually agree. Notwithstanding anything herein to the contrary, the Initial Closing Date shall occur on or before
November 30, 2013 (such outside date, “Termination Date”). If the Initial Closing is not held on or before the
Termination Date, the Escrow Agent shall cause (i) all subscription documents executed by the Company or a Purchaser to be returned
to the Company or such Purchaser, as applicable, and (ii) each Subscription Amount to be returned, without interest or deduction
to the Purchaser who delivered such Subscription Amount.

 

2.2          Deliveries.

 

(a)           On
or prior to the Initial Closing Date, the Company shall deliver or cause to be delivered to the Escrow Agent the following:

 

(i)           (x)
this Agreement duly executed by the Company, (y) the Escrow Agreement duly executed by the Company and (z) the Registration Rights
Agreement duly executed by the Company;

 

(ii)         
legal opinion of Company Counsel substantially in the form of Exhibit A attached hereto; and

 

(iii)         a
certificate evidencing a number of Shares equal to such Purchaser’s Initial Closing Subscription Amount divided by the Per
Share Purchase Price, registered in the name of such Purchaser.

 

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(b)          On
or prior to the Initial Closing Date, each Purchaser shall deliver or cause to be delivered to the Escrow Agent the following:

 

(i)          this
Agreement, the Registration Rights Agreement and the Escrow Agreement each duly executed by such Purchaser; and

 

(ii)         such
Purchaser’s Initial Closing Subscription Amount by wire transfer to the account specified in the Escrow Agreement.

  

2.3           Closing
Conditions.

 

(a)           The
obligations of the Company hereunder in connection with the Initial Closing are subject to the following conditions being met:

 

(i)          the
accuracy in all material respects on the Initial Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)         all
obligations, covenants and agreements of each Purchaser under this Agreement required to be performed at or prior to the Initial
Closing Date shall have been performed in all material respects;

 

(iii)      the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement;

 

(iv)
the Escrow Agent shall have received executed signature pages to this Agreement and the Escrow Agreement from Purchasers and the
Escrow Agent shall have received payment of readily of available funds representing corresponding Subscription Amounts equal to
a least the Minimum Offering Amount, in the aggregate, from such Purchasers in cash.

 

(b)          The
respective obligations of the Purchasers hereunder in connection with the Initial Closing are subject to the following conditions
being met:

 

(i)           the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) when made and on the Initial Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)          all
obligations, covenants and agreements of the Company under this Agreement required to be performed at or prior to the Initial Closing
Date shall have been performed;

 

(iii)         the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv)         there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;

 

(v)         from
the date hereof to the Initial Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the
Company’s principal Trading Market and, at any time from the date hereof prior to the Initial Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established
on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in,
any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing; and

 

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(vi)        the
Escrow Agent shall have received executed signature pages to this Agreement from Purchasers and the Escrow Agent shall have received
corresponding Subscription Amounts from such Purchasers in cash.

 

2.4           Subsequent
Closing Option. In the event, and only in the event, the Maximum Offering Amount is not fully subscribed for, each Purchaser
shall have the option, within 10 days of the Initial Closing Date, to purchase and if such option is exercised, the Company shall
sell to each Purchaser exercising such option for the same Per Share Purchase Price up to such number of shares as shall equal
the balance of the unsold Maximum Offering Amount, in the aggregate. In the event that, on the 10th day following the
Initial Closing Date, the Company receives Exercise Notices (as defined below) from multiple Purchasers, the balance of the unsold
Maximum Offering Amount shall be divided pro rata to such Purchasers based on their aggregate purchase price in the Initial Closing
(or such lesser amount as may be indicated in such Purchaser’s Exercise Notice). To exercise the option provided for in this
subsection 2.4, the Purchasers shall provide written notice of the exercise of the option to the Company (the “Exercise
Notice”) on or before the Subsequent Closing Option Date, which Exercise Notice shall specify the Subsequent Closing
Subscription Amount of each Purchaser. In connection with the Subsequent Closing, Escrow Agent, Purchasers purchasing Securities
at the Subsequent Closing and Company will enter into an escrow agreement on substantially the same terms as contained in the Escrow
Agreement (the “Subsequent Closing Escrow Agreement”). Each Purchaser shall be entitled to one closing of the
purchase and sale of Shares upon exercise of the option provided in this subsection 2.4 (the “Subsequent Closing”)
and the Subsequent Closing shall occur promptly after the date the Exercise Notice is given, but not later than ten Trading Days
thereafter (“Subsequent Closing Date”). Notwithstanding the foregoing, no Purchaser may exercise a Subsequent
Closing Option, and the Company will not be obligated to honor any Exercise Notice relating to a Subsequent Closing Option exercised
by any Purchaser after the Acquisition Closing Date.

 

2.5           Subsequent
Closing Deliveries.

 

(a)           On
or prior to the Subsequent Closing Date, the Company shall deliver or cause to be delivered to the Escrow Agent the following:

 

(i)bring
down legal opinion of Company Counsel to the legal opinion delivered at the Initial Closing; and

 

(ii)a
certificate evidencing a number of Shares equal to such Purchaser’s Subsequent Closing Subscription Amount divided by the
Per Share Purchase Price, registered in the name of such Purchaser.

 

(b)          On
or prior to the Subsequent Closing Date, each Purchaser shall deliver or cause to be delivered to the Escrow Agent, the following:

 

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(i)          the
Subsequent Closing Escrow Agreement duly executed by such Purchaser; and

 

(ii)         to
Escrow Agent, such Purchaser’s Subscription Amount by wire transfer to the account specified in the Subsequent Closing Escrow
Agreement.

 

2.6           Subsequent
Closing Conditions.

 

(a)           The
obligations of the Company hereunder in connection with the Subsequent Closing are subject to the following conditions being met:

 

(i)          the
accuracy in all material respects on the Subsequent Closing Date of the representations and warranties of the Purchasers contained
herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)         all
obligations, covenants and agreements of each Purchaser under this Agreement required to be performed at or prior to the Subsequent
Closing Date shall have been performed in all material respects;

 

(iii)      the
delivery by each Purchaser of the items set forth in Section 2.5(b) of this Agreement;

 

(iv)
the Escrow Agent shall have received Subsequent Closing Subscription Amounts from Purchasers in cash, as designated in the Exercise
Notice.

 

(b)          The
respective obligations of the Purchasers hereunder in connection with the Subsequent Closing are subject to the following conditions
being met:

 

(i)           the
accuracy in all material respects (determined without regard to any materiality, Material Adverse Effect or other similar qualifiers
therein) when made and on the Subsequent Closing Date of the representations and warranties of the Company contained herein (unless
as of a specific date therein in which case they shall be accurate as of such date);

 

(ii)          all
obligations, covenants and agreements of the Company under this Agreement required to be performed at or prior to the Subsequent
Closing Date shall have been performed;

 

(iii)         the
delivery by the Company of the items set forth in Section 2.5(a) of this Agreement;

 

(iv)         there
shall have been no Material Adverse Effect with respect to the Company since the date hereof;

 

(v)           from
the date hereof to the Subsequent Closing Date, trading in the Common Stock shall not have been suspended by the Commission or
the Company’s principal Trading Market, and, at any time from the date of this Agreement and prior to the Subsequent Closing
Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices
shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on,
or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Subsequent Closing; and

 

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(vi)        the
Company shall have received Exercise Notices and the Escrow Agent shall have received the Subscription Amounts designated on such
Exercise Notices from such Purchasers in cash.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or warranty made herein only to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each
Purchaser as of the Closing Date:

 

(a)           Subsidiaries. 
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, other than Permitted
Liens, subject to restrictions under applicable laws, and all of the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(b)           Organization
and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing,
as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c)           Authorization;
Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder.  The execution and delivery of each of this Agreement and the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on
the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders
in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction
Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other laws of general application affecting enforcement of creditors’ rights
generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies.

 

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(d)           No
Conflicts.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby
and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default) by the Company, any Subsidiary or, any third party
under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others
any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected,
or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including securities laws), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)           Filings,
Consents and Approvals.  Other than consents required for the amending of the Company’s articles of incorporation
to increase the number of shares authorized thereunder, the Company is not required to obtain any consent, waiver, authorization
or order of, give any notice to, or make any filing or registration with, any court or other provincial or foreign or domestic
federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance
by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii)
the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Shares for trading thereon in the time and manner required thereby, if any, all of which, if any, shall have been effectuated
prior to each Closing, and (iii) the filing of a Form D with the Commission and such filings as are
required to be made under applicable securities laws (collectively, the “Required Approvals”).

 

(f)           Issuance
of the Securities.  Upon the filing of the certificate of amendment to the Company’s articles of Incorporation (as
described below), the Securities will be duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens other than restrictions on
transfer provided for in the Transaction Documents and Liens resulting from the activities of any Purchaser. Upon the filing of
a certificate of amendment to the Company’s articles of incorporation, as described in the Company’s Definitive Proxy
Statement on Schedule 14A, filed with the Commission on September 23, 2013, which must be completed no later than January 15, 2014,
the Company will have reserved from its duly authorized capital stock the maximum stated number of shares of Common Stock issuable
pursuant to this Agreement.

 

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(g)           Capitalization. 
The capitalization of the Company is as set forth in Schedule 3.1(g). Except as set forth on Schedule 3.1(g),
the Company has not issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options under the Stock Option Plans, the issuance of
shares of Common Stock to employees pursuant to the Stock Option Plans and pursuant to the conversion and/or exercise of Common
Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any
right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated
by the Transaction Documents. Except as disclosed on Schedule 3.1(g), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible
into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock,
or any material contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become
bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as set forth on Schedule 3.1(g), the
issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable, have been issued in material compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase
securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance
and sale of the Securities other than consents required for the amending of the Company’s articles
of incorporation to increase the number of shares authorized thereunder. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge
of the Company, between or among any of the Company’s stockholders.

 

(h)          Form
8-K; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied
in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
 The Form 8-K described in Section 4.4, upon its filing, will comply in all material respects with
the requirements of the Securities Act and the Exchange Act, as applicable, and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The latest audited financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP and are subject to normal, immaterial, year-end audit adjustments, and fairly present
in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

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(i)           Material
Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed not later than five Trading Days
prior to the date hereof or not later than five Trading Days prior to the applicable Closing Date as of which this representation
and warranty is being made and except as set forth in Schedule 3.1(i): (i) there has been no
event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, and accrued expenses incurred
in the ordinary course of business consistent with past practice, (B) transaction expenses incurred in connection with the Transaction
Documents, and (C) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed
in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except as set forth on Schedule 3.1(g) pursuant to existing Company stock option plans which issuances
prior to the date of this Agreement are described on Schedule 3.1(g). The Company does not have pending before the Commission
any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement,
the Acquisition, and as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development
has occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least
two (2) Trading Days prior to the date that this representation is made.

 

(j)           Litigation. 
Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county,
local or foreign) (collectively, an “Action”) that would, if there were an unfavorable decision, have or reasonably
be expected to result in a Material Adverse Effect, nor to the knowledge of the Company is there any reasonable basis for any such
Action that would, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. 
Neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission
involving the Company or, to the knowledge of the Company, any current or former director or officer of the Company, nor to the
knowledge of the Company is there any reasonable basis for any of the foregoing. The Commission has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

 

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(k)           Labor
Relations.  No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s
or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no
executive officer of the Company or any Subsidiary, is, or is now expected by the Company to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any
other contract or agreement or any restrictive covenant in favor of any third party, which could reasonably be expected to result
in a Material Adverse Effect and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all applicable U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(l)           Compliance. 
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)          Regulatory
Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as actually conducted
and as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result
in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any
notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n)           Title
to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by
them and good and, except as set forth on Schedule 3.1(n), marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Permitted Liens. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance, except where the non-compliance would not reasonably
be expected to result in a Material Adverse Effect.

 

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(o)           Intellectual
Property.

 

(i)           The
term “Intellectual Property Rights” includes:

 

		1.	the name of the Company, all fictional business names, trading names, registered and unregistered trademarks, service marks,
and applications (collectively, “Marks'');
	 	 	 

		2.	all patents, patent applications, and inventions and discoveries that may be patentable (collectively, “Patents'');
	 	 	 

		3.	all copyrights in both published works and unpublished works (collectively, “Copyrights”);
	 	 	 

		4.	all rights in mask works (collectively, “Rights in Mask Works''); and
	 	 	 

		5.	all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, “Trade Secrets''); owned, used, or licensed by the Company as licensee
or licensor.

 

(ii)           Agreements.
Schedule 3.1(o) contains a complete and accurate list of all contracts relating to the Intellectual Property Rights to
which the Company is a party or by which the Company is bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less than $10,000 under which the Company is the licensee.
There are no outstanding and, to Company’s knowledge, no threatened disputes or disagreements with respect to any such agreement.

 

(iii)           Know-How
Necessary for the Business. To the Company’s knowledge: the Intellectual Property Rights are all those necessary for
the operation of the Company’s businesses as it is currently conducted or as represented, in writing, to the Purchasers
to be conducted. To the Company’s knowledge: the Company is the owner of all right, title, and interest in and to each of
the Intellectual Property Rights, free and clear of all liens, security interests, charges, encumbrances, equities, and other
adverse claims, and has the right to use all of the Intellectual Property Rights, subject in each case to Permitted Liens. To
the Company’s knowledge, no employee of the Company has entered into any contract that restricts or limits in any way the
scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than of the Company.

 

(iv)           Patents.
Schedule 3.1(o) contains a complete and accurate list of all Patents. The Company is the owner of all right, title and
interest in and to each of the Patents, free and clear of all Liens and other adverse claims other than Permitted Liens. All of
the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance
fees and proofs of working or use), are valid and enforceable, and, except as set forth on Schedule 3.1(o), are not subject
to any maintenance fees or taxes or actions falling due within ninety days after the Initial Closing Date. No Patent has been
or is now involved in any interference, reissue, reexamination, or opposition proceeding. To the Company’s knowledge: (1)
there is no potentially interfering patent or patent application of any third party, and (2) no Patent is infringed or has been
challenged or threatened in any way. To the Company’s knowledge, none of the products manufactured and sold, nor any process
or know-how used, by the Company infringes or is alleged to infringe any patent or other proprietary right of any other Person.

 

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(v)           Trademarks.
Schedule 3.1(o) contains a complete and accurate list and summary description of all Marks. The Company is the owner of
all right, title, and interest in and to each of the Marks, free and clear of all Liens and other adverse claims other than Permitted
Liens. All Marks that have been registered with the United States Patent and Trademark Office are currently in compliance with
all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety
days after the Initial Closing Date. Except as set forth in Schedule 3.1(o), no Mark has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company’s knowledge, no such action is threatened with respect to any of the Marks.
To the Company’s knowledge: (1) there is no potentially interfering trademark or trademark application of any third party,
and (2) no Mark is infringed or has been challenged or threatened in any way. To the Company’s knowledge, none of the Marks
used by the Company infringes or is alleged to infringe any trade name, trademark, or service mark of any third party. 

 

(vi)           Copyrights.
Schedule 3.1(o) contains a complete and accurate list of all Copyrights. The Company is the owner of all right, title, and
interest in and to each of the Copyrights, free and clear of all Liens and other adverse claims other than Permitted Liens. Except
as set forth on Schedule 3.1(o), all the Copyrights have been registered and are currently in compliance with formal requirements,
are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after
the date of the Initial Closing. No Copyright is infringed or, to the Company’s knowledge, has been challenged or threatened
in any way. To the Company’s knowledge, none of the subject matter of any of the Copyrights infringes or is alleged to infringe
any copyright of any third party or is a derivative work based on the work of a third party. All works encompassed by the Copyrights
have been marked with the proper copyright notice.

 

  (vii)           Trade Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. The Company has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets. The Company has good title and an absolute (but not necessarily exclusive) right to use the Trade Secrets subject to Permitted Liens. The Trade Secrets are not part of the public knowledge or literature, and, to the Company’s knowledge, have not been used, divulged, or appropriated either for the benefit of any Person (other than the Company) or to the detriment of the Company. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way.

 

    	18

    	 

    

 

(p)           Insurance. 
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged
including but not limited to directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither
the Company nor any Subsidiary believes that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

 

(q)           Transactions
With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the
Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently
a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $100,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company except as disclosed on Schedule 3.1(g).

 

(r)         Money
Laundering.  The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge
of the Company or any Subsidiary, threatened, nor is there any reasonable basis for any of the foregoing.

 

(s)           Certain
Fees.  No brokerage, finder’s fees, commissions or due diligence fees are or will be payable by the Company
or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction Documents except as set forth on Schedule 3.1(s). The Purchasers
shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees
of a type contemplated in this Section 3.1(s) that may be due in connection with the transactions contemplated by the Transaction
Documents.

 

(t)           Private
Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(u)           Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its business in a manner so that it will not become an “investment company”
subject to registration under the Investment Company Act of 1940, as amended.

 

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(v)           Registration
Rights.  Other than each of the Purchasers or in connection with the Acquisition, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(w)          Listing
and Maintenance Requirements.  The Common Stock is quoted on the Over-the-Counter Bulletin Board under the symbol GNUS.
The Company has not, in the twenty-four (24) months preceding the date hereof, received notice from any Trading Market on which
the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.

 

(x)           Application
of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to
render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s articles of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(y)           Disclosure.  Except
with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents and as otherwise
disclosed pursuant to a non-disclosure, confidentiality or similar agreement between the Company and any Purchaser, if applicable,
the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that it believes constitutes or might constitute material, non-public information.   The
Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities
of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its
Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, taken as a whole is true and correct and does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made,
not misleading. For the avoidance of doubt, information disclosed in one section of the Disclosure Schedule shall not be deemed
disclosed in any other section of the Disclosure Schedule unless there is an explicit cross reference to such other section. The
Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(z)           No
Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2,
neither the Company, nor, to the knowledge of the Company, any of its Affiliates, nor any Person
acting on its or, to the knowledge of the Company, their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities by the Company to be integrated with prior offerings by the Company for purposes of (i) the Securities
Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

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(aa)         Solvency. 
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Shares hereunder: (i) the fair saleable value of the assets of the Company
and its Subsidiaries taken as a whole exceeds the amount that will be required to be paid on or in respect
of the existing debts and other liabilities (including known contingent liabilities) of the Company and its Subsidiaries
as they mature, (ii) the assets of the Company and its Subsidiaries do
not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the business conducted by the Company and its Subsidiaries,
consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company
and its Subsidiaries, together with the proceeds the Company and its Subsidiaries would receive, were they to liquidate all of
their assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect
of their liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). 
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(aa)
sets forth as of the date hereof all Liens and outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
means (x) any liabilities for borrowed money or amounts owed in excess of $200,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness
of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of business; and (z) the present value of any lease payments in excess of $200,000 due under leases required to be capitalized
in accordance with GAAP.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

(bb)        Tax
Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all required United States federal,
state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction
to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company or of any Subsidiary know of no reasonable basis for any such claim.

 

(cc)         No
General Solicitation.  Neither the Company nor, to the knowledge of the Company, any person acting on behalf of the Company
has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered
the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule
501 under the Securities Act.

 

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(dd)        Foreign
Corrupt Practices.  Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary,
any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties
or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made
by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material
respect any provision of FCPA.

 

(ee)         Accountants. 
The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules. To the knowledge
and belief of the Company, such accounting firm is registered with the Public Company Accounting Oversight Board, and shall express
its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending
December 31, 2013.

 

(ff)         No
Disagreements with Accountants and Lawyers.  There are no disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect
the Company’s ability to perform any of its obligations under any of the Transaction Documents.

 

(gg)        Acknowledgment
Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice
given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further
represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents
has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(hh)        Acknowledgment
Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding
(except for Sections 3.2(f), 3.2(j) and 4.21 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities
for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without
limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and
counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently
have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands
and acknowledges that (y) one or more Purchasers may engage in hedging activities in accordance with all applicable laws at various
times during the period that the Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of
the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted. 
The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

  

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(ii)           Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement
agent in connection with the placement of the Securities, if any.

 

(jj)           Stock
Option Plans. Except as set forth on Schedule 3.1(jj), as of the date hereof, no stock options have been granted, nor
any commitments made to grant stock options, under the Stock Option Plan, and neither the Company nor any Subsidiary has ever had
an option plan other than the Stock Option Plan. The Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.

 

(kk)         Office
of Foreign Assets Control.  Neither the Company nor any Subsidiary  nor, to the Company's knowledge, any director,
officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(ll)         Reporting
Company/Shell Company. The Company is a publicly-held company subject to reporting obligations pursuant to Sections 12(g) and
13 of the Exchange Act. Pursuant to the provisions of the Exchange Act, except as set forth on Schedule 3.1(ll), the Company
has timely filed all reports and other materials required to be filed by the Company thereunder with the SEC during the preceding
twelve months. As of the Closing Date, the Company is not a “shell company” nor a “former shell company”
as those terms are employed in Rule 144 under the Securities Act.

 

(mm)         Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in material compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The
Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect
to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to
ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s
certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries
as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation
Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined
in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries.

 

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3.2          Representations
and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

(a)           Organization;
Authority.  Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership,
limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents
and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

(b)           Understandings
or Arrangements. Such Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to a registration
statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)           Purchaser
Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is either:
(i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act
or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange Act. Such Purchaser has the authority and is duly
and legally qualified to purchase and own the Securities. Such Purchaser is able to bear the risk of such investment for an indefinite
period and to afford a complete loss thereof. Such Purchaser has provided the information in the Accredited Investor Questionnaire
attached hereto as Exhibit C (the “Investor Questionnaire”). The information set forth on the
signature pages hereto and the Investor Questionnaire regarding such Purchaser is true and complete in all respects. Except as
disclosed in the Investor Questionnaire, such Purchaser has had no position, office or other material relationship within the past
three years with the Company or Persons (as defined below) known to such Purchaser to be affiliates of the Company, and is not
a member of the Financial Industry Regulatory Authority or an “associated person” (as such term is defined under the
FINRA Membership and Registration Rules Section 1011).

 

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(d)           Experience
of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

(e)           Information
on Company. Such Purchaser has been furnished with or has had access to the EDGAR Website of the Commission to the Company’s
filings made with the Commission during the period from the date that is two years preceding the date hereof through the tenth
business day preceding the Initial Closing Date in which such Purchaser purchases Securities hereunder, including but not limited
to the Risk Factor section of the Company’s Annual Report on Form 10-K filed with the Commission for the fiscal year ended
December 31, 2012 (hereinafter referred to collectively as the “Reports”).  Purchasers are
not deemed to have any knowledge of any information not included in the Reports unless such information is delivered in the manner
described in the next sentence.  In addition, such Purchaser may have received in writing from the Company such other
information concerning its operations, financial condition and other matters as such Purchaser has requested, identified thereon
as OTHER WRITTEN INFORMATION (such other information is collectively, the “Other Written Information”),
and considered all factors such Purchaser deems material in deciding on the advisability of investing in the Securities.  Such
Purchaser was afforded (i) the opportunity to ask such questions as such Purchaser deemed necessary of, and to receive answers
from, representatives of the Company concerning the merits and risks of acquiring the Securities; (ii) the right of access to information
about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient
to enable such Purchaser to evaluate the Securities; and (iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with
respect to acquiring the Securities.

 

(f)           Certain
Transactions and Confidentiality.  Such Purchaser understands and agrees that the Securities have not been registered
under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require
registration under the 1933 Act, and that such Securities must be held indefinitely unless a subsequent disposition is registered
under the 1933 Act or any applicable state securities laws or is exempt from such registration. Such Purchaser understands and
agrees that the Securities are being offered and sold to such Purchaser in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and regulations and that the Company is relying in part upon the
truth and accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility
of such Purchaser to acquire the Securities.

 

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(g)           Communication
of Offer. Such Purchaser is not purchasing the Securities as a result of any “general solicitation” or “general
advertising,” as such terms are defined in Regulation D, which includes, but is not limited to, any advertisement, article,
notice or other communication regarding the Securities published in any newspaper, magazine or similar media or on the internet
or broadcast over television, radio or the internet or presented at any seminar or any other general solicitation or general advertisement.

 

(h)           No
Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental or
state agency has passed on or made recommendations or endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(i)           No
Conflicts. The execution, delivery and performance of this Agreement and performance under the other Transaction Documents
and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto or thereto do not
and will not (i) result in a violation of such Purchaser’s charter documents, bylaws or other organizational documents,
if applicable, (ii) conflict with nor constitute a default (or an event which with notice or lapse of time or both would become
a default) under any agreement to which such Purchaser is a party, nor (iii) result in a violation of any law, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such
Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or perform under the other Transaction Documents nor to purchase the Securities in accordance with the terms hereof, provided
that for purposes of the representation made in this sentence, such Purchaser is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.

 

(j)           Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not
directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed
any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time
that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence
and terms of this transaction). The Purchaser will not engage in any net Short Sales until the earlier of the Effective Date and
the six month anniversary of the Initial Closing Date. Notwithstanding the foregoing, for avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability
of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions after the Initial Closing
Date.

 

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(k)           Survival.
The foregoing representations and warranties shall survive the Closing Date.

 

The Company acknowledges and agrees that
the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.

 

ARTICLE
IV.

OTHER
AGREEMENTS OF THE PARTIES

 

4.1          Transfer
Restrictions.

 

(a)           The
Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer
of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser
or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of
such transferred Securities under the Securities Act.  As a condition of such transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and the other applicable Transaction Documents and shall have the rights and
obligations of a Purchaser under this Agreement.

 

(b)          The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on the Securities in the following
form:

 

THIS SECURITY
HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND APPLICABLE STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  TO THE EXTENT PERMITTED BY APPLICABLE
SECURITIES LAWS, THIS SECURITY [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

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The Company
acknowledges and agrees that, a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement
and the other applicable Transaction Documents and, if required under the terms of such arrangement, such Purchaser may transfer
pledged or secured Securities into the name of the pledgees or secured parties, in their respective capacities as such.  Such
a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At
the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or transfer of the Securities.

 

(c)           Certificates
evidencing the Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof), (i) following any
sale of such Shares pursuant to Rule 144 or pursuant to an effective registration statement, including the Registration Statement,
or (ii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions or (iii)
if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements
issued by the staff of the Commission).  The Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly for any Security after the Removal Date if required by the Transfer Agent to effect the removal of the legend hereunder
upon the occurrence of the sale of the Shares, if a sale is so required in such circumstances.  If all or any portion of the
Shares are included in an effective registration statement to cover the resale of such Shares (and the Purchaser provides
the Company or the Company’s counsel with any reasonable certifications requested by the Company with respect to future sales
of such Shares) or the Shares may be sold under Rule 144 without the requirement for the Company to
be in compliance with the current public information and any other limitations or requirements set forth in Rule 144, including,
without limitation, volume or manner-of-sale restrictions, or if a legend is not otherwise required
under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff
of the Commission) then such Shares will be reissued without the legend. The Company agrees that following the Removal Date or
at such time as such legend is no longer required under this Section 4.1(c), it will, no later than seven Trading Days following
the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Shares issued with a restrictive
legend, together with any reasonable certifications requested by the Company, the Company’s counsel or the Transfer Agent
(such seventh Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates
for Securities subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the
account of the Purchaser’s prime broker with the Depository Trust Company System through its Deposit or Withdrawal
at Custodian system (“DWAC”) as directed by such Purchaser if the Transfer
Agent is then a participant in such system, it is commercially reasonable for the Company to do so and either (i) there is an effective
registration statement permitting the resale of such Securities by the Purchaser (and the Purchaser provides the Company or the
Company’s counsel with any requested certifications with respect to future sales of such Securities) or (ii) the shares are
eligible for resale by the Purchaser without further volume limitations or manner-of-sale restrictions and may be sold without
the requirement for the Company to be in compliance with Rule 144(c)(1) of the Securities Act (and the Purchaser provides the Company
or the Company’s counsel with any requested certifications with respect to the sale of such Securities).

 

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(d)           In
addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Shares (based on the greater of the VWAP of the Common Stock on the date such
Securities are submitted to the Transfer Agent or the purchase price of such Shares) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages
have begun to accrue) for each Trading Day following the Legend Removal Date until such certificate is delivered without a legend.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(e)           DWAC.
In lieu of delivering physical certificates representing the unlegended shares, upon request of a Purchaser, so long as the certificates
therefor do not bear a legend and the Purchaser is not obligated to return such certificate for the placement of a legend thereon
and provided it is commercially reasonable for the Company to do so, the Company shall cause its transfer agent to electronically
transmit the unlegended shares by crediting the account of Purchaser’s prime broker with the Depository Trust Company through
its Deposit Withdrawal At Custodian system, provided that the Company’s Common Stock is DTC eligible and the Company’s
transfer agent participates in the Deposit Withdrawal at Custodian system. Such delivery must be made on or before the Legend Removal
Date.

 

(f)           Injunction.
In the event a Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required
to deliver such unlegended shares, the Company may not refuse to deliver unlegended shares based on any claim that such Purchaser
or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction
Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and
or enjoining delivery of such unlegended shares shall have been sought and obtained by the Company and the Company has posted a
surety bond for the benefit of such Purchaser in the amount of the greater of (i) 120% of the amount of the aggregate purchase
price of the Shares which is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock on
the trading day before the issue date of the injunction multiplied by the number of unlegended shares to be subject to the injunction,
which bond shall remain in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall
be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.

 

(g)           Buy-In.
In addition to any other rights available to Purchaser, if the Company fails to deliver to a Purchaser unlegended shares as required
pursuant to this Agreement and after the Legend Removal Date the Purchaser, or a broker on the Purchaser’s behalf, purchases
(in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of the
shares of Common Stock which the Purchaser was entitled to receive in unlegended form from the Company (a “Buy-In”),
then the Company shall promptly pay in cash to the Purchaser (in addition to any remedies available to or elected by the Purchaser)
the amount, if any, by which (A) the Purchaser’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (B) the aggregate purchase price of the shares of Common Stock delivered to the Company for
reissuance as unlegended shares together with interest thereon at a rate of 15% per annum accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example, if a Purchaser
purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of purchase
price of Shares delivered to the Company for reissuance as unlegended shares, the Company shall be required to pay the Purchaser
$1,000, plus interest, if any. The Purchaser shall provide the Company written notice indicating the amounts payable to the Purchaser
in respect of the Buy-In.

 

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4.2           Furnishing
of Information; Public Information.

 

(a)           Until
no Purchaser owns any outstanding Securities, the Company covenants to maintain the registration of the Common Stock under Section
12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.

 

(b)           At
any time commencing on the Initial Closing Date and ending at such time that all of the Securities may be sold without the requirement
for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability
to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s
Securities held by such Purchaser on the day of a Public Information Failure and on every thirtieth (30th) day (pro-rated for periods
totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144.
The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of
the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after
the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law
or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

4.3           Integration. 
The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined
in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities by the Company in a manner
that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent
transaction.

 

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4.4           Securities
Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m. (New York City time) on the third (3rd)
Trading Day immediately following each Closing Date, issue a press release disclosing the material terms of the transactions contemplated
hereby, and shall file a Current Report on Form 8-K including the Transaction Documents as exhibits thereto within the time period
proscribed by the Exchange Act. From and after the issuance of such press release and Form 8-K, the Company represents to the Purchasers
that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or
any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press
releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press
release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release
of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party
shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market unless the name of such Purchaser is already included in the body of the
Transaction Documents, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the Commission, (b) as required to be included in the Registration
Statement; and c) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under this clause (c).

 

4.5           Non-Public
Information.  Except for the schedules and exhibits to this Agreement and the Transaction Documents, and except to the
extent the Company has entered into a non-disclosure, confidentiality or similar agreement with such Purchaser, the Company covenants
and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public information, unless (i) prior thereto such Purchaser
shall have entered into a written agreement with the Company regarding the confidentiality and use of such information, or (ii)
such Purchaser receives such information in connection with serving as an officer and/or director of the Company.  The Company
understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities
of the Company. 

 

4.6           Use
of Proceeds.  The Company will use the net proceeds to the Company from the sale of the Shares hereunder as set forth
on Schedule 4.6. The Company shall not use such proceeds: (a) for the satisfaction of any portion of the Company’s
debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) for
the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of the law, including FCPA or OFAC.

 

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4.7           Indemnification
of Purchasers.   Subject to the provisions of this Section 4.7, the Company will indemnify and hold each Purchaser
and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser
(within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”)
harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or
agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not
an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless
such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such
Purchaser Party of securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct
or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume
the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of such Purchaser Party’s counsel, a material
conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for all Purchaser Parties. 
The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed; or (z) to
the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach
of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents. The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any
liabilities the Company may be subject to pursuant to law.

 

4.8          Reservation
of Common Stock. Upon the obtaining of the requisite shareholder approval and the subsequent amendment to its articles of incorporation
to increase the number of shares of Common Stock authorized for issuance thereunder and which must be accomplished no later than
the Acquisition Closing Date, the Company will have reserved and the Company shall continue to reserve and keep available
at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company
to issue Shares pursuant to this Agreement (other than Section 4.14 but only to the extent the number of shares of Common Stock
issuable under Section 4.14 is not known) (such amount being the “Required Minimum”). If, on any date,
the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles
of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such
time, as soon as possible and in any event not later than the 60th day after such date.

 

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4.9          Listing
of Common Stock. The Company hereby agrees to maintain the listing or quotation of the Common Stock on the Trading Market on
which it is currently listed, and concurrently with each Closing, the Company, if applicable, shall apply to list or quote all
of the Shares on such Trading Market and promptly secure the listing of all of the Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application
all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed or quoted on such other
Trading Market as promptly as possible. The Company will then take all action necessary to continue the listing or quotation and
trading of its Common Stock on a Trading Market until five years after the Final Closing Date and will comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market at least until five
years after the Final Closing Date. In the event the aforedescribed listing is not continuously maintained for five years
after the date of such listing (a “Listing Default”), then in addition to any other rights the Purchasers may
have hereunder or under applicable law, on the first day of a Listing Default and on each monthly anniversary of each such Listing
Default date (if the applicable Listing Default shall not have been cured by such date) until the applicable Listing Default is
cured, the Company shall pay to each Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to
2% of the aggregate Subscription Amount of the Securities then held by such Purchaser on the day of a Listing Default and on every
thirtieth day (pro-rated for periods less than thirty days) thereafter until the date such Listing Default is cured. If the Company
fails to pay any liquidated damages pursuant to this Section in a timely manner, the Company will pay interest thereon at a rate
of 1.5% per month (pro-rated for partial months) to the Purchaser.

 

4.10        Reimbursement.
If any Purchaser becomes involved in any capacity in any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by such Purchaser to or with any current stockholder),
solely as a result of such Purchaser’s acquisition of the Securities under this Agreement, the Company will reimburse such
Purchaser for its reasonable legal and other expenses (including the cost of any investigation preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and
conditions to any Affiliates of the Purchasers who are actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may be, of the Purchasers and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the
Purchasers and any such Affiliate and any such Person. The Company also agrees that neither the Purchasers nor any such Affiliates,
partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims
on behalf of or in right of the Company solely as a result of acquiring the Securities under this Agreement.

 

4.11         Equal
Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or
paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless
the same consideration is also offered to all of the Purchasers that are parties to such Transaction Document. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers
acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.12         Management
Lockup. Each of the officers and directors of the Company who will continue to be officers and directors of the Company shall
execute and deliver a lockup agreement on the Initial Closing Date, in the form attached hereto as Exhibit E.

 

4.13        Acknowledgment
of Dilution.  The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares
of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including, without limitation, its obligation to issue the Shares pursuant to the Transaction
Documents, are unconditional and absolute, but subject to the terms and conditions of the Transaction Documents, and not subject
to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company
may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.

 

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4.14         Purchase
Price Reset. From the date of this Agreement until the sooner of (i) the Purchaser and his permitted assigns no longer holds
any Securities, and (ii) three years after the Initial Closing Date (the “Protection Period”), in the event
that the Company issues or sells any shares of Common Stock or any Common Stock Equivalent (calculated on an as converted, as exercised
basis) pursuant to which shares of Common Stock may be acquired at a price less than the Per Share Purchase Price (a “Share
Dilutive Issuance”) (adjusted as described in Section 5.23), then the Company shall promptly issue additional shares
of Common Stock to the Purchasers who held outstanding Shares on the date of such Share Dilutive
Issuance, for no additional consideration, in an amount sufficient that (a) the aggregate Subscription Amount paid at the Initial
Closing and the Subsequent Closing, if any, for such outstanding Shares held by Purchasers on
the date of such Share Dilutive Issuance (whether or not such Purchasers were the Purchasers at the Initial Closing or the Subsequent
Closing, if any), when divided by (x) the sum of (i) the total number of outstanding Shares held
by the Purchasers on the date of such Share Dilutive Issuance, (ii) any other shares of Common Stock then or theretofore issued
in respect of such outstanding Shares (by stock split, stock dividend or otherwise) that resulted
in an adjustment to the Per Share Purchase Price referred to above pursuant to Section 5.23, and (iii) all Additional Shares issued
with respect to such outstanding Shares held by the Purchasers on the date of such Share Dilutive
Issuance that were issued as a result of Share Dilutive Issuances that occurred prior to such Share Dilutive Issuance, will equal
the price per share of Common Stock in such Share Dilutive Issuance, (each such adjustment, a “Share Dilution Adjustment”,
and such shares, the “Additional Shares”). The Additional Shares to be issued in a Share Dilution Adjustment
shall be issued by the Company to the Purchasers who held outstanding Shares on the date of the
applicable Share Dilutive Issuance (in proportion to the number of such Shares held by such Purchasers on the date of such Share
Dilutive Issuance). Such Share Dilution Adjustment shall be made successively whenever such an issuance is made. Such Additional
Shares must be delivered to the applicable Purchasers not later than the date the Share Dilutive Issuance occurs.

 

Notwithstanding
the foregoing, this Section 4.14 shall not apply in respect of an Exempt Issuance. No adjustment shall be made hereunder which
would require the Purchaser to surrender any shares to the Company. The holder of outstanding Additional Shares is granted the
same rights and benefits as a holder of outstanding Shares pursuant to the Transaction Documents, except the rights and benefits
of this Section 4.14 and except that such rights and benefits shall not apply to a holder of outstanding Additional
Shares after such outstanding Additional Share has been irrevocably sold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 without further restrictions or conditions to
transfer pursuant to Rule 144. 

 

4.15         Most
Favored Nation Provision. From the date hereof until the earlier of (i) such time as no Purchaser holds any outstanding Securities
and (ii) the end of the Protection Period, in the event that the Company issues or sells any Common Stock, if a Purchaser then
holding outstanding Securities reasonably believes that any of the terms and conditions appurtenant to such issuance or sale are
more favorable to such investors than are the terms and conditions granted to the Purchasers hereunder, upon notice to the Company
by such Purchaser within five Trading Days after disclosure of such issuance or sale, the Company shall amend the terms of this
transaction as to such Purchaser only so as to give such Purchaser the benefit of such more favorable terms or conditions. This
Section 4.15 shall not apply with respect to an Exempt Issuance.

 

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4.16         DTC Program. From the
date hereof until such time as no Purchaser holds any outstanding Securities, the Company will employ as the transfer agent for
the Common Stock a participant in the Depository Trust Company Automated Securities Transfer Program and cause the Common Stock
to be transferable pursuant to such program, if it is determined by the Company to be commercially reasonable to do so.

 

4.17         Form D; Blue Sky Filings. 
The Company agrees to timely file a Form D with respect to the sale of the Securities by the Company under this Agreement as required
under Regulation D. 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 Securities for, sale to the Purchasers 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.

 

4.18         Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including
any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

4.19         Board
of Directors Shares. The Company will issue up to an aggregate of 6,500,000 shares (1,000,000 shares to each executive other
than Saul Hyatt who will get 500,000 shares) to the following executives of the Company pursuant to new employment and/or consulting
agreements to be delivered to Purchasers prior to the Initial Closing: Howard Balaban, Larry Balaban, Jeanene Morgan, Denise Kovac,
Michael Meader, Saul Hyatt and Klaus Moeller. For the avoidance of doubt, shares of Common Stock issuable pursuant to this Section
4.19 shall be deemed an “Exempt Issuance” under the terms of this Agreement.

 

4.20         Variable
Rate Transaction. From the date hereof until the date that is the one year anniversary of the Final Closing Date, the
Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries
of Common Stock or Common Stock Equivalents for cash consideration (or a combination of units thereof) involving a Variable Rate
Transaction. “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt
or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares
of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies
with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or
equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after
the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock other than in connection with a stock split or similar
event, or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section
4.20 shall not apply in respect of (i) any rights offering, or (ii) any Exempt Issuance, except that no Variable Rate Transaction,
shall be an Exempt Issuance.

 

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4.21         Certain Transactions
and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales,
of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time
that the transactions contemplated by this Agreement are first publicly disclosed or required to be disclosed, whichever occurs
first, in the Form 8-K described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants
that until such time as the transactions contemplated by this Agreement are publicly disclosed or required to be publicly disclosed,
whichever occurs first, by the Company in such Form 8-K, such Purchaser will maintain the confidentiality of the existence and
terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding
the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and
agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions
in any securities of the Company after the time that the transactions contemplated by this Agreement are required to be disclosed
in the Form 8-K described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in
any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated
by this Agreement are first disclosed or required to be disclosed, whichever occurs first, in the Form 8-K described in Section
4.4, and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the filing of such
Form 8-K or after the date such Form 8-K is required to have been filed, whichever occurs first.  Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to
the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by
this Agreement.

 

4.22         Intentionally
Omitted.  

 

4.23         Intentionally Omitted.

 

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4.24         Purchaser’s
Exercise Limitations. The Company shall not effect any exercise of the rights granted to each Purchaser in Sections 4.14 and
4.15 of this Agreement, and a Purchaser shall not have the right to exercise nor enforce any such right, pursuant to Section 4.14
and 4.15, to the extent that after giving effect to the application of such rights, the Purchaser (together with the Purchaser’s
Affiliates, and any other Persons acting as a group together with the Purchaser or any of the Purchaser’s Affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Purchaser and its Affiliates shall include the number of shares
of Common Stock issuable upon application of Section 4.14 and 4.15 with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a
limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Purchaser or any of
its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 4.24, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Purchaser that the Company is not representing to the Purchaser that such calculation is in compliance with
Section 13(d) of the Exchange Act and the Purchaser is solely responsible for any schedules required to be filed in accordance
therewith. To ensure compliance with this restriction, upon the Company’s notification to a Purchase that an event has occurred
or been consummated which would result in the issuance of additional securities of the Company to the Purchaser pursuant to Section
4.14 and/or Section 4.15, a Purchaser will be deemed to represent to the Company that such issuance has not violated the restrictions
set forth in this paragraph if such Purchaser does not provide to the Company a written statement to the contrary, within five
(5) Trading Days of such notification , and the Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4.24, in determining the
number of outstanding shares of Common Stock, a Purchaser may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number
of shares of Common Stock outstanding.  Upon the written or oral request of a Purchaser, the Company shall within three Trading
Days confirm orally and in writing to the Purchaser the number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities
of the Company (subject to any beneficial ownership limitations contained therein, by the Purchaser or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 9.99%, (unless a Purchaser elects on its signature page hereto a different amount as its own Beneficial Ownership Limitation)
of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon application of Sections 4.14 and 4.15 which would not exceed at such time the Beneficial Ownership Limitation. The
Purchaser, upon not less than 61 days’ prior notice to the Company, may increase the Beneficial Ownership Limitation provisions
of this Section 4.24 (for the avoidance of doubt, a Purchaser may on its signature page hereto to waive such Beneficial Ownership
Limitation in its entirety (which such waiver shall be effective 61 days’ after the Closing Date) or set a different amount
as its own Beneficial Ownership Limitation) of the number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock upon application of Sections 4.14 and 4.15 which would not exceed at such time the Beneficial
Ownership Limitation and the provisions of this Section 4.24 shall continue to apply. Any such increase will not be effective until
the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section 4.24 to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to
make changes or supplements necessary or desirable to properly give effect to such limitation. In the event the limitations in
this Section 4.24 would prevent the application of a Purchaser’s rights under Sections 4.14 or 4.15, then such Purchaser
may exercise all such rights and comply with all obligations applicable thereto except that the delivery of Common Stock will be
deferred until such time as such Purchaser provides notice to the Company that such Purchaser may receive or beneficially own such
Common Stock which exceeds the Beneficial Ownership Limitation applicable to such Purchaser without exceeding such then applicable
Beneficial Ownership Limitation.

 

    	37

    	 

    

 

4.25         Maintenance
of Property. The Company shall keep all of its property, which is necessary or useful to the conduct of its business, in good
working order and condition, ordinary wear and tear excepted.

 

4.26         Preservation of Corporate
Existence. The Company shall preserve and maintain its corporate existence, rights, privileges and franchises in the jurisdiction
of its incorporation, and qualify and remain qualified, as a foreign corporation in each jurisdiction in which such qualification
is necessary in view of its business or operations and where the failure to qualify or remain qualified might reasonably have a
Material Adverse Effect upon the financial condition, business or operations of the Company taken as a whole.

 

4.27         Acquisition.
On or before the Acquisition Closing Date, the Company will acquire the assets of A Squared Entertainment (“A2”)
(“Acquisition”). As a condition to such Acquisition, as of the Acquisition Closing Date, A2 must have net positive
cash reflected on its balance sheet equal to the Company’s net cash balance on the Acquisition Closing Date, calculated basedon
the mutual agreement of the Company and A2.

 

ARTICLE V.

MISCELLANEOUS

 

5.1         Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by written notice given at any time to the Company,
if the Initial Closing has not been consummated on or before November 30, 2013; provided, however, that such termination
will not affect the right of any party to sue for any breach by any other party (or parties). In the event of any termination by
a Purchaser under this Section 5.1, the Company shall promptly (and in any event within two (2) Business Days of such termination)
send a Subscription Termination Notice (as defined in the Escrow Agreement) to the Escrow Agent with respect to all of such Purchaser’s
subscription amount.

 

5.2         Fees
and Expenses.  Except as expressly set forth in the Transaction Documents and on Schedule 3.1(s) to the contrary,
each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The
Company shall pay all Transfer Agent fees, stamp taxes and other similar taxes and duties levied in connection with the delivery
of any Securities to the Purchasers. At the Initial Closing the Company agrees to pay pursuant to the Escrow Agreement reasonable
legal and Escrow Agent fees of G&M in the amount of $25,000, counsel to some of the Purchasers, incurred in connection with
the negotiation, preparation, execution and delivery of the Transaction Documents.

 

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

 

5.4         Notices. 
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Genius Brands International Inc., 3111 Camino del Rio North, Suite 400,
San Diego, CA 92108, Attn: Jeanene Morgan, Chief Financial Officer, facsimile: (619) 281-2503 with a copy by fax
only to (which shall not constitute notice): Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd Floor, New York,
NY 10006, Attn: Harvey Kesner, Esq., facsimile: (212) 930-9725, and (ii) if to the Purchasers, to: the addresses and fax numbers
indicated on the signature pages hereto, with an additional copy by fax only to (which shall not constitute notice): Grushko &
Mittman, P.C., 515 Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.

 

    	38

    	 

    

 

5.5           Amendments;
Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Lead Investor Erick Richardson provided such modification or amendment
shall not result in the Lead Investor or any other Purchaser becoming a control person as defined in Rule 405 of the Securities
Act of 1933 nor cause the Lead Investor or any other Purchaser to exceed the Beneficial Ownership Limitation, in which case, such
modification or amendment must be signed by the Company and the Purchasers holding at least a majority in interest of the component
of the affected Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise
of any such right.

 

5.6           Headings. 
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7           Successors
and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent
of each Purchaser (other than by merger or as a result of the Acquisition).  Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to
the “Purchasers.” 

 

5.8           No
Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.7.

 

5.9           Governing
Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents
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, partners, members, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan 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 any of the Transaction Documents), 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.  If
either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then in addition to
the obligations of the Company under Section 4.7, the prevailing party in such action, suit or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

    	39

    	 

    

 

5.10         Survival. 
The representations and warranties contained herein shall survive the Closing and the delivery of the Securities at the Closings
for the applicable statute of limitations.

 

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

 

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

 

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

 

5.14         Replacement
of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and upon surrender and cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft, destruction, or mutilation, and of the ownership of such Security. 
The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including
customary indemnity and bonds) associated with the issuance of such replacement Securities.

 

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

 

    	40

    	 

    

 

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

 

5.17         Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document
are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained
herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereof or thereto, 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 with respect to such obligations or the transactions contemplated
by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary
for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented
by its own separate legal counsel in its review and negotiation of the Transaction Documents.  For reasons of administrative
convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through G&M. 
G&M does not represent all of the Purchasers.  The Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.
It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction Document
is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and
among the Purchasers.

 

5.18         Liquidated
Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other
amounts due thereunder have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

5.19         Saturdays,
Sundays, Holidays, etc.     If the last or appointed day for the taking of any action or the expiration
of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised
on the next succeeding Business Day.

 

5.20         Construction.
The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and
every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.

 

    	41

    	 

    

 

5.21         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the Initial Closing Date
thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess
of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser’s election.

 

5.22         WAIVER
OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY,
THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

5.23         Equitable
Adjustment. Trading volume amounts, price/volume amounts and similar figures in the Transaction Documents shall be equitably
adjusted (but without duplication) to offset the effect of stock splits, similar events and as otherwise described in this Agreement.

 

(Signature Pages Follow)

 

 

 

 

 

 

 

    	42

    	 

    

 

 

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

 

 

	
        GENIUS BRANDS INTERNATIONAL
        INC.

         

         
	
        Address for Notice:

         

        3111 Camino del Rio North, Suite 400

        San Diego, CA 92108

        Fax: (619) 281-2503

	
        By:__________________________________________

        Name:

        Title: Chief Executive Officer

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

         

        Sichenzia Ross Friedman Ference LLP

        61 Broadway, 32nd Floor

        New York, NY 10006

        Attn: Harvey Kesner, Esq.

        Fax: (212) 930-9725

         
	 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

 

 

 

 

 

 

 

 

 

    	43

    	 

    

 

[PURCHASER SIGNATURE PAGES TO GENIUS BRANDS
INTERNATIONAL INC.

SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF,
the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.

 

Name of Purchaser: ________________________________________________________________

 

Signature of Authorized Signatory of Purchaser: __________________________________________

 

Name of Authorized Signatory: _______________________________________________________

 

Title of Authorized Signatory: ________________________________________________________

 

Address for Notice of Purchaser:

 

 

 

 

Address for Delivery of Common Stock for Purchaser (if not same
as address for notice):

 

 

 

Initial Closing Subscription Amount: US$________________

 

Initial Closing Shares: ___________________

 

Subsequent Closing Subscription Amount: US$ _______________________________

 

Subsequent Closing Shares: _______________________________

 

EIN Number, if applicable, will be provided under separate cover:
________________________

 

Beneficial Ownership Limitation

 

£         If this box is checked, then pursuant to Section 4.24 of the Securities Purchase
Agreement, the above identified Purchaser elects to waive the Beneficial Ownership limitation in its entirety which waiver shall
be effective 61 days from the Closing Date.

 

 

_____________________________________

Signature of Authorized Signatory of Purchaser

 

 

Pursuant to Section 4.24 of the Securities Purchase Agreement,
the above identified Purchaser elects for itself as its Beneficial Ownership Limitation ______%.[Please complete]

 

If no number is imprinted above the initial Beneficial Ownership
Limitation shall be 9.99%.

 

    	44Exhibit 10.4

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights
Agreement (this “Agreement”) is made and entered into as of October __ 2013, between Genius Brands International
Inc., a Nevada corporation (the “Company”), and each of the several purchasers signatory hereto (each such purchaser,
a “Purchaser” and, collectively, the “Purchasers”).

 

This Agreement is made
pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “Purchase
Agreement”).

 

The Company and each
Purchaser hereby agrees as follows:

 

1. Definitions.

 

Capitalized terms
used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the
Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

“Advice”
shall have the meaning set forth in Section 6(d).

 

“Effectiveness
Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 125th
calendar day following the Filing Date of the Initial Registration Statement and with respect to any additional Registration Statements
which may be required pursuant to Section 2(c) or Section 3(c), the 100th calendar day following the date on which an
additional Registration Statement is required to be filed hereunder; provided, however, that in the event the Company
is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject
to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following
the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such
Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

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

 

“Event”
shall have the meaning set forth in Section 2(d).

 

“Event
Date” shall have the meaning set forth in Section 2(d).

 

“Filing
Date” means (i) with respect to the Initial Registration Statement required hereunder, (ii) the 90th calendar
day after the Initial Closing Date, and (iii) with respect to any additional Registration Statements which may be required pursuant
to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional
Registration Statement related to the Registrable Securities.

 

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

 

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

 

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

 

    	1

    	 

    

 

“Initial
Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

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

 

“Plan
of Distribution” shall have the meaning set forth in Section 2(a).

 

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

 

“Registrable
Securities” means, as of any date of determination, (a) all of the Shares issued on the Initial Closing Date, (b) after
issuance, all of the Shares issued on a Subsequent Closing Date, (c) any Additional Shares and shares of Common Stock issuable
in connection with any anti-dilution provisions in Section 5.23 of the Purchase Agreement, (d) any additional shares of Common
Stock issued prior to the Effectiveness Date in connection with any anti-dilution provisions set forth in the Purchase Agreement,
and (e) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable
Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement
hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities
is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder
in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance
with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions as set forth in
a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent (assuming that such securities
and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued
or are issuable, were at no time held by any Affiliate of the Company).

 

“Registration
Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional
registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements
to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

    	2

    	 

    

 

“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Selling
Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

 

“SEC
Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements
or requests of the Commission staff and (ii) the Securities Act.

 

“Shares”
means the Shares of Common Stock issued or issuable to each Purchaser on the Initial Closing Date and Subsequent Closing Date pursuant
to the Purchase Agreement.

 

2. Company Registration.

 

(a)On
or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale
of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement
filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions
of Section 2(e)) and shall contain (unless otherwise directed by Holders of at least a majority in interest of the Registrable
Securities then outstanding) substantially the “Plan of Distribution” attached hereto as Annex A. Subject
to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement
(including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after
the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration
Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions
pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement
under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise,
conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held
by any Affiliate of the Company) (the “Effectiveness Period”). The Company shall telephonically request
effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall immediately notify the
Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically
confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement.
The Company shall, by 9:30 a.m. Eastern Time on the within the time constraints proscribed by Rule 424 of the Securities Act, after
the effective date of such Registration Statement, file a final Prospectus with the Commission if so required by Rule 424. Failure
to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus
(if required) as foresaid shall be deemed an Event under Section 2(d).

 

(b) Notwithstanding
the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities
cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement,
the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments
to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted
to be registered by the Commission, on Form S-1 or such other form available to register for resale the Registrable Securities
as a secondary offering, subject to the provisions of Section 2(e); provided, however, that prior to filing such
amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of
the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.

 

    	3

    	 

    

 

(c)Notwithstanding
any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission
or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular
Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by
a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement
shall reduce or eliminate any securities to be included by any Person other than a Holder.

 

In the event of a cutback hereunder,
the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s
allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will
use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company
or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register
for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

 

Anything herein to the contrary
notwithstanding, in no event may the Registrable Securities included for registration in the Initial Registration Statement be
fewer than the amount of Shares issued to the Holders on the Initial Closing Date, as same may be increased pursuant to the Transaction
Documents.

 

(d)If:
(i) a Registration Statement is not filed on or prior to its Filing Date) (if the Company files a Registration Statement without
affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be
deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration
of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five
Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such
Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective
date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments
made by the Commission in respect of such Registration Statement within twenty (20) calendar days after the receipt of comments
by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective,
or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission
by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration Statement, such
Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than ten (10) consecutive calendar days or more than an aggregate of thirty (30) calendar days (which need
not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”,
and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which
such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) Trading Day period is
exceeded, and for purpose of clause (v) the date on which such ten (10) or thirty (30) calendar day period, as applicable, is exceeded
being referred to as “Event Date”), then, in addition to any other rights the Holders may have hereunder or
under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as partial liquidated damages and not as a penalty, equal to 1% of the aggregate (not to exceed 6% of the aggregate, in total)
purchase price paid by such Holder pursuant to the Purchase Agreement for the Registrable Securities. If the Company fails to pay
any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay
interest thereon at a rate of 12% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the
Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion
of a month prior to the cure of an Event.

 

    	4

    	 

    

 

(e)If
Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.

 

3. Registration
Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)Not
less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior
to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated
or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review
of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation
within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders
advance copies of any universal shelf registration statement registering securities in addition to those required hereunder, or
any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided
that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished
copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus
or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached
to this Agreement as Annex B (a “Selling Stockholder Questionnaire”) on a date that is not less than
two (2) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading Day following the date on which
such Holder receives draft materials in accordance with this Section.

 

    	5

    	 

    

 

(b)(i)
Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements
in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented
or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the
Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to
the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided
that, the Company shall excise any information contained therein which would constitute material non-public information regarding
the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during
the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders
thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c)If
during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common
Stock then registered in a Registration Statement (other than for reasons relating to Rule 415 as set out in Section 2(c) or as
otherwise determined by the Commission), then the Company shall file as soon as reasonably practicable, but in any case prior to
the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number
of such Registrable Securities.

 

(d)Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible
(and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement
or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that
makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a
Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case
of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect
to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best
interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however,
in no event shall any such notice contain any information which would constitute material, non-public information regarding the
Company or any of its Subsidiaries.

 

    	6

    	 

    

 

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

 

(f)Furnish
to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent
requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical form.

 

(g)Subject
to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

 

(h) The
Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting
a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and such broker-dealer
shall pay the filing fee required by such filing within two (2) Business Days of request therefor.

 

(i)Prior
to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate
with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification)
of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition
in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not
be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such
jurisdiction.

 

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

 

    	7

    	 

    

 

(k)Upon
the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into
account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall
be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement and Prospectus,
subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60
calendar days (which need not be consecutive days) in any 12-month period.

 

(l)Comply
with all applicable rules and regulations of the Commission.

 

(m)From
and after the date the Company becomes eligible to use Form S-3, the Company shall use its best efforts to maintain eligibility
for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

 

(n)The
Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive
control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration
of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s
request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise
occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

 

4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred
to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made
with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then
listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in
writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications
or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing,
with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable
Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission
in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions
of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

 

    	8

    	 

    

 

5. Indemnification.

 

(a)Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal
as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material
fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance
of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein,
or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this
purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder
of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus
is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated
in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise
to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of
any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.
Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person
and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h).

 

    	9

    	 

    

 

(b)Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or
(y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the
extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company
expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such
information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence
of an event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only to the extent, related to the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement
or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder under this
Section 5(b) be greater in amount than the dollar amount of the net proceeds actually received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.

 

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

 

    	10

    	 

    

 

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

 

Subject to
the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses
to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and
expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

 

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

 

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

 

    	11

    	 

    

 

The indemnity
and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to
the Indemnified Parties.

 

6. Miscellaneous.

 

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

 

(b)No
Piggyback on Registrations; Prohibition on Filing Other Registration Statements. Neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements
other than the Registrable Securities. The Company shall not file any other registration statements (other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s
stock option or other employee benefit plans which are Exempt Issuances) until all Registrable Securities are registered pursuant
to a Registration Statement that is declared effective by the Commission. The prohibitions of this Section 6(b) shall not be applicable
to any registration rights obligations the Company may have or will have in connection with the Acquisition.

 

(c)Compliance.
Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable
to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration
Statement.

 

(d)Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company
will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees
and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities
hereunder shall be subject to the provisions of Section 2(d).

 

(e)Piggy-Back
Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all
of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection
with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written
notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable
Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without the requirement for the Company
to be in compliance with current public information under Rule 144 and without volume restrictions or current public information
requirements) promulgated by the Commission pursuant to the Securities Act (assuming that such securities and any securities issuable
upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were
at no time held by any Affiliate of the Company.

 

    	12

    	 

    

 

(f)Amendments
and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed
by the Company and the Holders of a majority of the then outstanding Registrable Securities (for purposes of clarification, this
includes any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not
register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then
the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder
shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the
rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only
by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent to a waiver
or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement.

 

(g)Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as
set forth in the Purchase Agreement.

 

(h)Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may
assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

 

(i)No
Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions
hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its Subsidiaries has previously entered into
any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied
in full.

 

    	13

    	 

    

 

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

 

(k)Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.

 

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

 

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

 

(n)Headings.
The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit
or affect any of the provisions hereof.

 

(o)Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the
obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations
of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association,
a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert
or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters,
and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such
claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as
an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company
contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience
of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders
collectively and not between and among Holders.

 

********************

 

(Signature
Pages Follow)

 

 

    	14

    	 

    

 

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

 

	 	GENIUS BRANDS INTERNATIONAL INC., 

a Nevada corporation 

 

 

	 	By:	
        

	 	 	Name:
	 	 	Title:

 

 

 

 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

 

 

 

 

 

    	15

    	 

    

 

 

[SIGNATURE
PAGE OF HOLDERS TO GENIUS BRANDS

INTERNATIONAL
INC. RRA]

 

 

Name of Purchaser: _____________________________________________________________

 

 

Signature of Authorized Signatory of Purchaser: ________________________________________

 

 

Name of Authorized Signatory: _____________________________________________________

 

 

Title of Authorized Signatory: ______________________________________________________

 

Address for Notice of Purchaser: ___________________________________________________

 

____________________________________________________________________________

 

____________________________________________________________________________

 

  

 

 

 

 

 

 

 

[SIGNATURE PAGES CONTINUE]

 

 

 

 

 

 

 

    	16

    	 

    

 

 

Annex A

 

Plan of Distribution

 

Each Selling Stockholder
(the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their securities covered hereby on the OTC Bulletin Board, OTCQB or any other stock
exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed
or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

 

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

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

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

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

		·	privately negotiated transactions;
	 	 	 

		·	settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a
part;
	 	 	 

		·	in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities
at a stipulated price per security;
	 	 	 

		·	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
	 	 	 

		·	a combination of any such methods of sale; or
	 	 	 

		·	any other method permitted pursuant to applicable law.

 

The Selling Stockholders
may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”),
if available, rather than under this prospectus.

 

Broker-dealers engaged
by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.

 

    	17

    	 

    

 

In connection with
the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions
they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions,
or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter
into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which
securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).

 

The Selling Stockholders
and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement
or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive
fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

The Company is required
to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed
to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.

 

Because Selling Stockholders
may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus
delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.
The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed
sale of the resale securities by the Selling Stockholders.

 

We agreed to keep this
prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of
similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or
any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if
required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be
sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

 

Under applicable rules
and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and
sales of securities of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser
at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

    	18

    	 

    

 

Annex B

 

GENIUS
BRANDS INTERNATIONAL INC.

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial
owner of common stock (the “Registrable Securities”) of Genius Brands International Inc., a Nevada corporation
(the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration statement (the “Registration Statement”) for
the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”),
of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company
upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

 

Certain legal consequences
arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial
owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities
owned by it in the Registration Statement.

 

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

 

QUESTIONNAIRE

 

	1. Name. 	 
	 	 	 
	 	(a)	Full
Legal Name of Selling Stockholder
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	(b)	Full
Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	(c)	Full
Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to
vote or dispose of the securities covered by this Questionnaire):
	 	 	 
	 	 	 

 

 

    	19

    	 

    

 

2. Address for Notices to Selling
Stockholder:

	 
	 
	 
	 
	 
	 
	 	 
	Telephone:	 
	 	 
	Fax:	 
	 	 
	Contact Person:	 

 

 

	3. Broker-Dealer Status:
	 	 	 
	 	(a)	Are
you a broker-dealer?
	 	 	 
	 	 	Yes £          No £
	 	 	 
	 	(b)	If
“yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services
to the Company?
	 	 	 
	 	 	Yes £          No £
	 	 	 
	 	(c)	Are
you an affiliate of a broker-dealer?
	 	 	 
	 	 	Yes £          No £
	 	 	 
	 	(d)	If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of
business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings,
directly or indirectly, with any person to distribute the Registrable Securities?
	 	 	 
	 	 	Yes £          No £
	 	 	 
	 	Note:	If
“no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in
the Registration Statement.

 

 

	4. Beneficial Ownership of Securities
of the Company Owned by the Selling Stockholder.
	 	 	 
	 	Except as set forth below
in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.
	 	 	 
	 	(a)	Type
and Amount of other securities beneficially owned by the Selling Stockholder:
	 	 	 
	 	 	 

 

    	20

    	 

    

 

 

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

 

 

The undersigned agrees
to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.

 

By signing below, the
undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion
of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus and any amendments or supplements thereto.

 

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

 

	Date:	 	 	Beneficial Owner:	 
	 	 	 	 	 	 	 
	 	 	 	By:	 	 	 
	 	 	 	 	Name:		 
	 	 	 	 	Title:		 

 

 

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY)
OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

 

    	21

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