Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE
AGREEMENT (the "Agreement"), dated as of March 11, 2020, by and among Genius Brands International, Inc., a
Nevada corporation (the "Company"), and the investors listed on the Schedule of Buyers attached hereto (individually,
a "Buyer" and collectively, the "Buyers").

 

WHEREAS:

 

A.   
The Company and the Buyers desire to enter into this transaction to purchase (i) the Notes (as defined below) pursuant to
an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the "1933 Act"),
afforded by Section 4(a)(2) of the 1933 Act, or Rule 506(b) of Regulation D ("Regulation D") as promulgated
by the United States Securities and Exchange Commission (the "SEC") and (ii) the Warrants (as defined below) pursuant
to an exemption from the registration requirements of Section 5 of the 1933 Act afforded by Section 4(a)(2) of the 1933 Act, or
Rule 506(b) of Regulation D.

 

B.    
The Company has authorized (i) a new series of senior secured convertible notes of the Company, in the aggregate original
principal amount of $13,750,000, in the form attached hereto as Exhibit A (the
"Notes"), which Notes shall be convertible into shares of the Company's voting common stock, par value $0.001
per share (the "Common Stock") in accordance with the terms of the Notes (all shares of Common Stock issued or
issuable pursuant to the terms of the Notes, including, without limitation, upon conversion or otherwise, collectively, the "Note
Conversion Shares") and (ii) warrants, in the form attached hereto as Exhibit B, representing the right to acquire
a number of shares of Common Stock determined in accordance with the terms and conditions set forth therein (the "Warrants")
(such shares issuable upon exercise of the Warrants, collectively, the "Warrant Shares").

 

C.     The Notes, the Note Conversion Shares, the Warrants and the Warrant Shares are collectively referred to herein as the "Securities."

 

D.   
The Notes will rank senior to all outstanding and future indebtedness of the Company, and its Subsidiaries (as defined below),
will be guaranteed by all direct and indirect Subsidiaries of the Company other than Llama Productions LLC, currently formed or
formed in the future (the “Subsidiary Guarantors”), as evidenced by a guarantee agreement, in the form attached
hereto as Exhibit C (as amended or modified from time to time in accordance with its terms, the "Guarantee Agreement"),
and will be secured by a first priority perfected security interest (subject to Permitted Liens under and as defined in the Notes)
in all of the current and future assets of the Company and the Subsidiary Guarantors, currently formed or formed in the future,
as evidenced by a pledge and security agreement, in the form attached hereto as Exhibit D (as amended or modified from time
to time in accordance with its terms, the "Security Agreement" and together with the Guarantee Agreement and any
ancillary documents related thereto, collectively, the "Security Documents").

 

E.     On or prior to the Closing Date (as defined below), the Company and each Buyer, separately, shall enter into a Note Securities
Purchase Agreement, in the form attached hereto as Exhibit E (each as amended, modified, supplemented, extended, renewed,
restated or replaced from time to time, collectively, the "Note Purchase Agreements"), pursuant to which the Company
shall acquire a secured promissory note issued by the applicable Buyer (each, an "Investor Note", and collectively,
the "Investor Notes") as full payment of the Note Purchase Price (as defined below) hereunder.

 

 

 

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F.     On or prior to the Closing Date, the Company and each Buyer, separately, shall enter into that certain Master Netting Agreement,
in the form attached hereto as Exhibit F (the "Master Netting Agreement"), to provide further clarification
of their rights (but not, in the case of each such Buyer only, its obligation) to Net (as defined below) certain Obligations (as
defined in the Master Netting Agreement) arising under and across this Agreement, the Investor Note, the Notes and the Note Purchase
Agreement and to treat the Master Netting Agreement, this Agreement, the Investor Note, the Notes and the Note Purchase Agreement
as a single agreement for the purposes set forth herein and to treat this Agreement and the Note Purchase Agreement each as a "securities
contract" (11 U.S.C. § 741) or other similar agreement.

 

NOW, THEREFORE,
the Company and each Buyer hereby agree as follows:

 

1.     
PURCHASE AND SALE OF NOTES AND WARRANTS.

 

(a)  
Purchase of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6
and 7 below, the Company shall issue and sell to each Buyer, and each Buyer, severally, but not jointly, agrees to purchase from
the Company on the Closing Date, (i) a Note in the original principal amount as is set forth opposite such Buyer's name in column
(8) of the Schedule of Buyers attached hereto and (ii) Warrants to acquire the Warrant Shares as set forth opposite such Buyer's
name in column (9) of the Schedule of Buyers attached hereto (the "Closing").

 

(b)  
Purchase Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer at the
Closing (the "Purchase Price") shall be the amount set forth opposite each Buyer's name in column (7) of the Schedule
of Buyers (less, in the case of the Lead Investor (as defined in the Notes), any amounts withheld pursuant to Section 4(e)). The
Principal of the Notes includes an original issue discount of 20% of the aggregate principal amount of Notes issued and will be
included in the aggregate principal of the Note for no additional consideration. The Buyers shall pay an aggregate of $11,000,000
for an aggregate of $13,750,000 of principal amount of Notes and related Warrants to be purchased by the Buyers at the Closing.
Each Buyer’s Purchase Price shall consist of (i) a cash portion equal to 60% of such Buyer’s Purchase Price (“Cash
Purchase Price”), which amount is set forth opposite each Buyer's name in column (3) of the Schedule of Buyers, and (ii)
the issuance by such Buyer of an Investor Note with an original a principal amount equal to 40% of such Buyer’s Purchase
Price (“Note Purchase Price”), which Note Purchase Price is amount set forth opposite each Buyer's name in column
(5) of the Schedule of Buyers. At the Closing, an authorized person of such Buyer shall certify in a written certificate, in the
form attached hereto as Exhibit G (the "Investor Collateral Certificate"), that as of the Closing Date
the bank account described on Schedule I to such Investor Note, which secures such Investor Note in accordance therewith,
contains at least the Note Purchase Price of Eligible Assets (as defined in the Investor Note) as of the Closing Date. The Buyers
and the Company agree that the Notes and the Warrants constitute an "investment unit" for purposes of Section 1273(c)(2)
of the Internal Revenue Code of 1986, as amended (the "Code"). The Buyers and the Company mutually agree that
the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section 1273(c)(2)
of the Code and Treasury Regulation Section 1.1273-2(h) shall be $100 per $1,000 of Purchase Price to be allocated to the Warrants
and the balance of each $1,000 of Purchase Price to be allocated to the Notes, and neither the Buyers nor the Company shall take
any position inconsistent with such allocation in any tax return or in any judicial or administrative proceeding in respect of
taxes.

 

(c)  
Closing Date. The date and time of the Closing (the "Closing Date") shall be 10:00 a.m., New York
City time, on the date hereof (or such other date and time as is mutually agreed to by the Company and each Buyer) after notification
of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below at the offices of Ellenoff Grossman
& Schole LLP, 1345 Avenue of the Americas, New York, New York 10105. The Closing may also be undertaken remotely by electronic
transfer of Closing documentation.

 

 

 

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(d)  
Form of Payment. On the Closing Date, each Buyer shall acquire the portion of the Notes equal to the original principal
amount as is set forth opposite such Buyer's name in column (8) of the schedule of Buyers attached hereto in accordance with the
instructions of the Company in the Flow of Funds Letter, with each Buyer (or its designee) maintaining physical possession of a
duly executed Investor Note of such Buyer, in such original principal amount as is set forth across from such Buyer's name in column
(5) of the Schedule of Buyers attached hereto, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment for
the Restricted Principal of, and as Collateral (as defined in the Notes) securing, such Notes to be issued and sold to such Buyer
at the Closing. The Company shall deliver to each Buyer (A) a Note in the original principal amount as is set forth opposite such
Buyer's name in column (8) of the schedule of Buyers attached hereto and with an Initial Unrestricted Principal as set forth opposite
such Buyer's name in column (4) of the schedule of Buyers attached hereto and (B) Warrants to acquire the Warrant Shares as set
forth opposite such Buyer's name in column (9) of the Schedule of Buyers attached hereto.

 

(e)  
Securities Contract; Netting Safe Harbor. The Company hereby acknowledges and agrees that the rights and obligations
of each Buyer under the Note Purchase Agreement of such Buyer, under the Investor Note of such Buyer, under the Note to be issued
hereunder to such Buyer and the rights and obligations of the Company hereunder, under each such Investor Note, under each such
Note and under each such Note Purchase Agreement, respectively, arise in a single integrated transaction and constitute related
and interdependent obligations within such transaction. The Company and each Buyer, severally, hereby acknowledge and agree that
this Agreement and the Note Purchase Agreement each are a "securities contract" as defined in 11 U.S.C. § 741 and
that each such Buyer shall have all rights in respect of the Master Netting Agreement, this Agreement, the Investor Note, the Notes
and the Note Purchase Agreement as are set forth in 11 U.S.C. § 555 and 11 U.S.C. § 362(b)(6), including, without limitation,
all rights of credit, deduction, setoff, offset, recoupment, and netting (collectively, "Netting" or "Net")
as are available under the Master Netting Agreement, this Agreement, the Investor Note, the Notes and the Note Purchase Agreement,
and all Netting provisions of the Master Netting Agreement, each Note and each Investor Note, including without limitation the
provisions set forth in Section 7 of each Investor Note, are hereby incorporated in this Agreement and made a part hereof as if
such provisions were set forth herein.

 

2.     
BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and
not jointly, represents and warrants with respect to only itself that, as of the date hereof and as of the Closing Date:

 

(a)  
Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such
Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance
with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

 

(b)  
No Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such
Buyer of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer
or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument
to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of such Buyer to perform its obligations hereunder.

 

(c)    No Public Sale or Distribution. Such Buyer is (i) acquiring the Notes and the Warrants and (ii) will acquire the
Warrant Shares upon exercise of the Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants)), respectively,
for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the 1933 Act; provided, however, that by making the representations
herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right
to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the
1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such Buyer does not presently
have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute any of the Securities.
For purposes of this Agreement, "Person" means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and any government or any department or agency
thereof.

 

 

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(d)    Accredited
Investor Status. Such Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D.

 

(e)    Experience
of Such Buyer. Such Buyer, 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 Buyer 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.

 

(f)     Reliance
on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer's compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.

 

(g)    Information.
Such Buyer acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules
thereto) and such Buyer has had access to the SEC Documents (as defined in Section 3(qq)). Such Buyer and its advisors, if any,
have been furnished with all materials relating to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigations conducted
by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect such Buyer's right to rely on the
Company's representations and warranties contained herein. Such Buyer understands that its investment in the Securities involves
a high degree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities.

 

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

 

(i)     Transfer
or Resale. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder,
(B) such Buyer shall have delivered to the Company an opinion of counsel selected by such Buyer, in a form reasonably acceptable
to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Buyer provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor
rule thereto) (collectively, "Rule 144"); (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the Person) through whom the sale is made may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of
the SEC thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under
the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding
the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement
secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Buyer effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise
make any delivery to the Company pursuant to this Agreement or any other Transaction Document (as defined below), including, without
limitation, this Section 2(i).

 

(j)    
No General Solicitation. Such Buyer represents and warrants that: (i) the Buyer was contacted regarding the sale
of the Securities by the Company (or an authorized agent or representative thereof) with whom the Buyer had a prior substantial
pre-existing relationship and (ii) no Securities were offered or sold to it by means of any form of general advertising or, to
such Buyer's knowledge, general solicitation, and in connection therewith, the Buyer did not (A) receive or review any advertisement,
article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio,
whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees
were invited by any general solicitation or general advertising; or (C) observe any website or filing of the Company with the SEC
in which any offering of securities by the Company was described and as a result learned of any offering of securities by the Company.

 

 

 

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(k)   
Fees. Such Buyer has taken no action that would give rise to any claim by any person for brokerage commissions, finders'
fees or the like relating to this Agreement or the transactions contemplated hereby.

 

(l)    
Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Buyer
has not, nor has any Person acting on behalf of or pursuant to any understanding with such Buyer, directly or indirectly executed
any purchases or sales, including short sales, of the securities of the Company during the period commencing as of the time that
such Buyer 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 Buyer that is a multi-managed investment vehicle whereby separate portfolio managers manage separate
portions of such Buyer's assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Buyer'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 or to such Buyer's representatives, including, without limitation,
its officers, directors, partners, legal and other advisors, employees, agents and affiliates, such Buyer has maintained the confidentiality
of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for the avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude
any actions, with respect to locating or borrowing shares in order to effect short sales or similar transactions in the future.

 

(m)   Residency.
If such Buyer is an entity, such Buyer's principal executive offices are, and if such Buyer is a natural person, such Buyer's
principal residence is, in the jurisdiction set forth immediately below such Buyer's name on the signature page hereto, and all
communications between such Buyer and the Company regarding the transactions contemplated by this Agreement took place within
or from the state of such principal executive offices or principal residence.

 

(n)    Legends.
Such Buyer understands that the certificates or other instruments representing the Notes and the Warrants and, until such time
as the resale of the Note Conversion Shares and the Warrant Shares have been registered under the 1933 Act, the stock certificates
representing the Note Conversion Shares and the Warrant Shares, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

[NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN] [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

 

 

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The legend set forth above shall
be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company ("DTC"),
if (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer,
such holder provides the Company with an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that
such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933
Act, or (iii) the Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A. The Company shall be responsible
for the fees of VStock Transfer LLC (including any successor transfer agent, the "Transfer Agent") and all DTC
fees associated with such issuance. The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly
if required by the Transfer Agent, and/or to any Buyer if requested by such Buyer, to effect the removal of the legend hereunder.
If the Company shall fail for any reason or for no reason to issue to the holder of the Securities within two (2) Trading Days
after the occurrence of any of (i) through (iii) above (the initial date of such occurrence, the "Legend Removal Date"),
a certificate without such legend to such holder or to issue such Securities to such holder by electronic delivery at the applicable
balance account at DTC, and if on or after such Trading Day the holder purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the holder of such Securities that the holder anticipated receiving without
legend from the Company (a "Buy-In"), then the Company shall, within three (3) Trading Days after the holder's
request and in the holder's discretion, either (i) pay cash to the holder in an amount equal to the holder's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at
which point the Company's obligation to deliver such unlegended Securities shall terminate, or (ii) promptly honor its obligation
to deliver to the holder such unlegended Securities as provided above and pay cash to the holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) any trading price of the
shares of Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable
Legend Removal Date and the date the Company makes the applicable cash payment. The Company shall be responsible for the fees of
its transfer agent and all DTC fees associated with such issuance.

 

(o)  
Bad Actor Disclosure. Such Buyer hereby acknowledges and agrees that it has received and reviewed the disclosure
set forth on Annex I attached hereto a reasonable time prior to the time that such Buyer has agreed to purchase the Securities.

 

The Company
acknowledges and agrees that each Buyer does not make or has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.

 

3.     
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:

 

(a)  
Organization. The Company has been duly organized and is validly existing as a corporation in good standing under
the laws of the State of Nevada, with corporate power and authority to own or lease its properties and conduct its business as
described in the SEC Documents. The Company has no subsidiaries (which for purposes of this Agreement means any entity in which
the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest) other than Rainbow Rangers
Productions LLC and the subsidiaries as set forth on Exhibit 21.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2018 (collectively, the "Subsidiaries"). Each of the Subsidiaries has been duly organized and is
validly existing as an entity in good standing under the laws of the jurisdiction of its organization, with corporate power and
authority to own or lease its properties and conduct its business as described in the SEC Documents. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company. The Company and each of the Subsidiaries are duly qualified to transact business
in all jurisdictions in which the conduct of their business requires such qualification, except where the failure to be so qualified
would not reasonably be expected to result in any material adverse effect on, or any development that would reasonably be expected
to result in a material adverse effect, in or affecting (i) the business, properties, assets, liabilities, operations, results
of operations, condition (financial or otherwise) or business prospects of the Company and of the Subsidiaries, individually or
taken as a whole, whether or not occurring in the ordinary course of business, or (ii) on the transactions contemplated hereby
or the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith,
or (iii) on the authority or ability of the Company to perform its obligations under the Transaction Documents or (iv) on the legality,
validity, binding effect or enforceability of any of the Transaction Documents (collectively a "Material Adverse Effect").
The outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned by the Company or another Subsidiary free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert
any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding.

 

 

 

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(b)   Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Notes, the Warrants, the Investor Note, the Note Purchase Agreement, the Master
Netting Agreement, the Security Documents, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the Lock-Up
Agreements (as defined in Section 7(xiv)), the Voting Agreement (as defined in Section 4(q)) and each of the other agreements entered
into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "Transaction
Documents") and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of
the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Notes and the Warrants, the reservation for issuance and the issuance of the
Note Conversion Shares issuable pursuant to the terms of the Notes, and the reservation for issuance and the issuance of the Warrant
Shares issuable upon exercise of the Warrants have been duly authorized by the Company's Board of Directors, and no further filing,
consent, or authorization is required by the Company's Board of Directors or its stockholders (other than the Nasdaq Stockholder
Approval (as defined below). This Agreement and the other Transaction Documents have been duly executed and delivered by the Company,
and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors'
rights and remedies. Each of the Subsidiaries party to any of the Transaction Documents has the requisite power and authority to
enter into and perform its obligations under such Transaction Documents, as applicable. The execution and delivery by the Subsidiaries
party to any of the Transaction Documents of such Transaction Documents and the consummation by such Subsidiaries of the transactions
contemplated thereby have been duly authorized by such Subsidiaries' respective boards of directors (or other applicable governing
body) and (other than filings as may be required by state securities agencies) no further filing, consent, or authorization is
required by such Subsidiaries, their respective boards of directors (or other applicable governing body) or stockholders (or other
applicable owners of equity of such Subsidiaries). The Transaction Documents to which any of the Subsidiaries are parties have
been duly executed and delivered by such Subsidiaries, and constitute the legal, valid and binding obligations of such Subsidiaries,
enforceable against them in accordance with their respective terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies.

 

(c)    Issuance
of Securities. The outstanding shares of Common Stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the Securities to be issued and sold by the Company have been duly authorized and when issued and
paid for as contemplated herein in accordance with the terms of the Transaction Documents will be free from all taxes, liens and
charges with respect to the issue thereof, validly issued, fully paid and non-assessable; and no preemptive rights of stockholders
exist with respect to any of the Securities or the issue and sale thereof. The Company has duly authorized and reserved for issuance
a number of shares of Common Stock for the conversion of the Notes and exercise of the Warrants equal to the sum of (i) the number
of shares of Common Stock issuable pursuant to the terms of the Notes assuming a Conversion Price (as defined in each of the Notes)
equal to $1.375 without regard to any limitation on issuances set forth in the Notes and (ii) 100% of the number of shares of
Common Stock as shall be necessary to effect the exercise in full of all of the Warrant then outstanding without regard to any
limitation on exercise set forth therein and assuming that all of the Buyers' Investor Notes have been paid, or deemed to be paid,
in full (the "Required Reserve Amount"). The offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares
of Common Stock. Upon issuance pursuant to the terms of the Notes or exercise in accordance with the Warrants, as the case may
be, the Note Conversion Shares and the Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and
free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.

 

 

 

 

    	 	7	 

     

    

 

(d)    Equity Capitalization. As of the date hereof and as of the Closing Date, the Company has or will have, as the case
may be, an authorized, issued and outstanding capitalization as is set forth in Schedule 3(d) hereto, and such authorized
capital stock conforms in all material respects to the description thereof set forth in the SEC Documents. The Common Stock conform
in all material respects to the description thereof contained in the SEC Documents. If certificated, the form of the Note Conversion
Shares and the Warrant Shares, as applicable, will conform in all material respects to the corporate law of the jurisdiction of
the Company's incorporation. As of the date hereof, the authorized capital stock of the Company as is set forth on Schedule
3(d) hereto. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable.
Except as disclosed on Schedule 3(d) hereto, (i) none of the Company's capital stock is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any shares of capital stock of the Company or any of its Subsidiaries; (iii) there are no material outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness (as defined in
the Notes) of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound;
(iv) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in
connection with the Company or any of its Subsidiaries; (v) there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii) there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities; (viii) the Company does not have any stock appreciation
rights or "phantom stock" plans or agreements or any similar plan or agreement; and (ix) the Company and its Subsidiaries
have no liabilities or obligations required to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company's or any of its Subsidiary's respective businesses and which, individually
or in the aggregate, do not or would not have a Material Adverse Effect. Schedule 3(d) set forth the material terms of any
outstanding warrants of the Company, including, without limitation, the exercise price, put rights or other special features and
expiration date thereof.

 

(e)    Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with
any information that constitutes or would reasonably be expected to constitute material, nonpublic information concerning the
Company or any of its Subsidiaries which is not otherwise disclosed in the SEC Documents or that will not be included in the 8-K
Filing (as defined in Section 4(i)). The Company understands and confirms that each of the Buyers will rely on the foregoing representations
in effecting transactions in securities of the Company. As of the date of this Agreement, all disclosure provided to the Buyers
regarding the Company or any of its Subsidiaries, their business and the transactions contemplated hereby, including the Schedules
to this Agreement, furnished by or on behalf of the Company 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 the light of the circumstances under which
they were made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve (12) months
preceding the date hereof did not at the time of release contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make such statements therein, in the light of the circumstances in
which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company
or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including results thereof)
or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or prior
to the date hereof or announcement by the Company but which has not been so publicly announced or disclosed or will be disclosed
in the 8-K Filing. The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction Documents.

 

(f)     Weaknesses or Changes in Internal Accounting Controls. Except as set forth in Schedule 3(f) hereto, neither
the Company nor any of the Subsidiaries is aware of (i) any material weakness in its internal control over financial reporting
or (ii) change in internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.

 

 

 

    	 	8	 

     

    

 

(g)    Sarbanes-Oxley. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
promulgated by the SEC and The Nasdaq Capital Market (the "Principal Market"), if applicable, thereunder (collectively,
the "Sarbanes-Oxley Act") has been applicable to the Company, there is and has been no failure on the part of
the Company to comply in all respects with any provision of the Sarbanes-Oxley Act. The Company has taken all necessary actions
to ensure that it is in compliance in all respects with all provisions of the Sarbanes-Oxley Act that are in effect with respect
to which the Company is required to comply and is actively taking steps to ensure that it will be in compliance with the other
provisions of the Sarbanes-Oxley Act which will become applicable to the Company.

 

(h)   Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal
Market, any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or its Subsidiaries' officers or directors, whether of a civil or criminal nature or otherwise, in their capacities
as such, except as set forth in Schedule 3(h). The matters set forth in Schedule 3(h) would not reasonably be expected
to have a Material Adverse Effect.

 

(i)     Title. The Company and the Subsidiaries have good and marketable title to all of the material properties and assets
reflected in the consolidated financial statements hereinabove described or described in the SEC Documents, subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements or described in the SEC
Documents or which are not material in amount or would not materially interfere with the use to be made of such properties or assets.
The Company and the Subsidiaries occupy their leased properties under valid and binding leases conforming in all material respects
to the description thereof set forth in the SEC Documents.

 

(j)     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 each of its Subsidiaries (i) has timely made or filed all foreign, federal
and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii)
has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any amount claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Company and its Subsidiaries know of no basis for any such claim, which has had or would reasonably be expected
to have a Material Adverse Effect.

 

(k)     Absence of Certain Changes. Except as disclosed in Schedule 3(k), since December 31, 2018, neither the Company
nor any of its Subsidiaries has, (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, in
excess of $100,000 or (iii) had capital expenditures, individually or in the aggregate, in excess of $100,000. The Company and
the Subsidiaries have no material contingent obligations which are not disclosed in the Company's consolidated financial statements
which are included in the SEC Documents. Neither the Company nor any of its Subsidiaries
has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis, after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Agreement,
"Insolvent" means, with respect to any Person, (i) the present fair saleable value of such Person's assets is
less than the amount required to pay such Person's total Indebtedness, (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to
incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed
to be conducted.

 

 

 

 

    	 	9	 

     

    

 

(l)      No Conflicts. Neither the Company nor any of the Subsidiaries is, or with the giving of notice or lapse of time or
both, will be after giving effect to the execution, delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of
the Securities), (i) in violation of its certificate of incorporation, bylaws, any certificate of designations or other organizational
documents or (ii) in violation of or in default (or an event which with notice or lapse of time or both would become a default)
in any respect under, or give to others any rights of termination, amendment, acceleration or cancellation of under any agreement,
indenture, mortgage, deed of trust, lease, contract, indenture or other agreement or instrument or obligation to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary, or any of their respective properties, is bound that have
not been waived or (iii) in violation of any law, rule, regulation, order, judgment, writ or decree of any court or of any government,
regulatory body or administrative agency or other governmental body having jurisdiction (including U.S. federal and state securities
laws and regulations and the rules and regulations of the Principal Market applicable to the Company or any of its Subsidiaries)
or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, and, solely with respect to clauses
(ii) and (iii), which violation, conflict, breach or default, individually or in the aggregate, would have a Material Adverse Effect.

 

(m)    Contracts. There is no document, contract or other agreement required to be described in the SEC Documents which
is not described or filed as required by the 1933 Act or the Rules and Regulations. Each description of a contract, document or
other agreement in the SEC Documents accurately reflects in all material respects the terms of the underlying contract, document
or other agreement. Each contract, document or other agreement described in the SEC Documents is in full force and effect and is
valid and enforceable by and against the Company in accordance with its terms (except as rights to indemnity and contribution thereunder
may be limited by federal or state securities laws and matter of public policy and except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principle). Neither the Company nor any of its Subsidiaries nor, to the Company's knowledge,
any other party is in default in the observance or performance of any term or obligation to be performed by it under any such agreement
or any other agreement or instrument to which the Company or its Subsidiaries is a party or by which the Company or its Subsidiaries
or their respective properties or businesses may be bound, and no event has occurred which with notice or lapse of time or both
would constitute such a default, in any such case in which the default or event, individually or in the aggregate, would have a
Material Adverse Effect.

 

(n)    Regulatory Approvals. Each approval, consent, order, authorization, designation, declaration or filing by or with
any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company
of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required
by the SEC, the Financial Industry Regulatory Authority, Inc. (FINRA) or such additional steps as may be required under state securities
or Blue Sky laws) has been obtained or made and is in full force and effect.

 

(o)    Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term
of or in default under the articles of incorporation of the Company ("Articles of Incorporation"), bylaws of the
Company (the "Bylaws"), any certificate of designations, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or their organizational charter, certificate of formation or certificate
of incorporation or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation applicable to the Company or its Subsidiaries and neither the Company nor
any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations
which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has satisfied
all eligibility requirements necessary to enable its Common Stock to be listed or quoted on one or more Eligible Markets (as defined
in the Warrants). During the one (1) year prior to the date hereof, (i) the Common Stock has been listed or designated for quotation
on the Principal Market or another Eligible Market, (ii) trading in the Common Stock has not been suspended by the SEC or the Principal
Market and (iii) except as disclosed in Schedule 3(o), the Company has received no communication, written or oral, from
the SEC or the Principal Market (or other Eligible Market on which the Common Stock was previously listed) regarding the suspension
or delisting of the Common Stock from such Principal Market or other Eligible Market. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. Without
limiting the generality of the foregoing, except as set forth on Schedule 3(u), neither the Company not any of its Subsidiaries
is in violation of any of the rules, regulations or requirements of the Principal Market and has no knowledge of any facts or circumstances
that would reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the foreseeable future.

 

 

 

    	 	10	 

     

    

 

(p)    Intellectual Property. Except as set forth on Schedule 3(p), the Company and each of the Subsidiaries hold
all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their businesses
in the manner in which they are being conducted; the Company and the Subsidiaries each own or possess sufficient rights to use
all patents, patent rights, trademarks, trade names, service marks, service names, copyrights, know-how (including trade secrets
and other unpatented and unpatentable proprietary or confidential information, systems or procedures) and other intellectual property
or proprietary rights, including licenses to any of the foregoing ("Intellectual Property") necessary to carry
on their business in all material respects in the manner in which it is being conducted. Except as set forth on Schedule 3(p),
none of the Company's or its Subsidiaries' registered Intellectual Property that is material to their businesses has expired, terminated
or been abandoned. The Company has taken all steps reasonably necessary to secure ownership interests in Intellectual Property
created for it by any contractors. There are no outstanding options, licenses or agreements of any kind relating to the Intellectual
Property of the Company or its Subsidiaries that are required to be described in the SEC Documents and are not described therein
in all material respects. Neither the Company nor any of its Subsidiaries is a party to or bound by any options, licenses or agreements
with respect to the Intellectual Property of any other person or entity that are required to be set forth in the SEC Documents
and are not described therein in all material respects. None of the Intellectual Property used by the Company or any of its Subsidiaries
and material to their businesses has been obtained or is being used by the Company or any of its Subsidiaries (i) in material violation
of any contractual obligation binding on the Company or any of its Subsidiaries, or to the Company's knowledge, any of the Company's
or any of its Subsidiaries' officers, directors or employees, or (ii) otherwise in violation of the rights of any persons; neither
the Company nor any of its Subsidiaries has infringed or conflicted with any Intellectual Property of any person or entity; the
Company has not received any written communications alleging that the Company or any of its Subsidiaries has violated, infringed
or conflicted with, or, by conducting their businesses as set forth in the SEC Documents, would violate, infringe or conflict with,
any of the Intellectual Property of any other person or entity. The Company knows of no infringement by others of Intellectual
Property owned by or licensed to the Company. The Company and each of its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their Intellectual Property.

 

(q)    Manipulation of Prices. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken or may
take, directly or indirectly, any action designed to cause or to result, or that would reasonably be expected to cause or 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) other than the Agent (as defined in Section 3(ee)), sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) other than the Agent, paid or agreed to pay to any person any compensation for soliciting
another to purchase any other securities of the Company.

 

(r)     Investment Company Act. Neither the Company nor any of its Subsidiaries is, and upon consummation of the sale of
the Securities will not be, an "investment company," an affiliate of an "investment company," a company controlled
by an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended.

 

(s)   
Internal Accounting Controls.

 

(i)    
Except as disclosed in Schedule 3(s) hereto, the Company and each of the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP consistently applied throughout the periods involved and to maintain accountability for assets and liabilities;
(iii) access to assets or incurrence of liabilities is permitted only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets and liabilities is compared with existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any differences.

 

 

 

    	 	11	 

     

    

 

(ii)  
The Company has established and maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e)
and 15d-15(e) under the 1934 Act); except as disclosed in Schedule 3(s)(ii) hereto, the Company's "disclosure controls
and procedures" are effective in ensuring that all information (both financial and non-financial) required to be disclosed
by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated
and communicated to the Company's management, including its principal executive officer or officers and its principal financial
officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Except as disclosed in the SEC Documents,
during the twelve (12) months prior to the date hereof neither the Company nor any of its Subsidiaries has received any notice
or correspondence from any accountant relating to any material weakness in any part of the system of internal accounting controls
of the Company or any of its Subsidiaries.

 

(t)     Industry and Market Data. The statistical, industry-related and market-related data included in the SEC Documents
are based on or derived from sources which the Company reasonably and in good faith believes are reliable and accurate, and such
data agree in all material respects with the sources from which they are derived.

 

(u)    Compliance with Anti-Money Laundering Laws. The operations of the Company and
its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting
requirements and all other applicable U.S. and non-U.S. anti-money laundering laws, rules
and regulations, including, but not limited to, those of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the United States Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and the United States Money Laundering Control
Act of 1986 (18 U.S.C. §§1956 and 1957), as amended, as well as the implementing
rules and regulations promulgated thereunder, and the applicable money laundering statutes of all applicable jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced
by any governmental agency or self-regulatory body (collectively, the "Anti-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 of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

(v)    No Conflicts with Sanctions Laws. Neither the Company nor any of its Subsidiaries,
nor any director, officer, employee, affiliate, nor to the Company's knowledge, any agent or other person associated with or acting
on behalf of the Company or any of its Subsidiaries or affiliates is, or is directly or indirectly owned or controlled by, a Person
that is currently the subject or the target of any sanctions administered or enforced by the U.S. government including, without
limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC") or the U.S. Departments
of State or Commerce and including, without limitation, the designation as a "Specially Designated National" or on the
"Sectoral Sanctions Identifications List" (collectively, "Blocked Persons"), the United Nations Security
Council, the European Union, Her Majesty's Treasury or any other relevant sanctions authority (collectively, "Sanctions
Laws"); neither the Company, any of its Subsidiaries, nor any director, officer, employee, agent, affiliate or other person
associated with or acting on behalf of the Company or any of its Subsidiaries or affiliates, is located, organized or resident
in a country or territory that is the subject or target of a comprehensive embargo or Sanctions Laws prohibiting trade with the
country or territory, including, without limitation, Crimea, Cuba, Iran, North Korea, Sudan and Syria (each, a "Sanctioned
Country"); the Company maintains in effect and enforces policies and procedures designed to ensure compliance by
the Company and its Subsidiaries with applicable Sanctions Laws; neither the Company, any
of its Subsidiaries, nor any director, officer, employee, agent, affiliate or other person associated with or acting on behalf
of the Company or any of its Subsidiaries or affiliates, acting in any capacity in connection with the operations of the Company,
conducts any business with or for the benefit of any Blocked Person or engages in making or receiving any contribution of
funds, goods or services to, from or for the benefit of any Blocked Person, or deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked or subject to blocking pursuant to any applicable Sanctions Laws; no
action of the Company or any of its Subsidiaries in connection with (i) the execution, delivery and performance of this Agreement
and the other Transaction Documents, (ii) the issuance and sale of the Securities, or (iii) the direct or indirect use of proceeds
from the Securities or the consummation of any other transaction contemplated hereby or by the other Transaction Documents or the
fulfillment of the terms hereof or thereof, will result in the proceeds of the transactions contemplated hereby and by the other
Transaction Documents being used, or loaned, contributed or otherwise made available, directly or indirectly, to any Subsidiary,
joint venture partner or other person or entity, for the purpose of (i) unlawfully funding or facilitating any activities of or
business with any person that, at the time of such funding or facilitation, is the subject or target of Sanctions Laws, (ii) unlawfully
funding or facilitating any activities of or business in any Sanctioned Country or (iii) in any other manner that will result in
a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or
otherwise) of Sanctions Laws. For the past five (5) years, the Company and its Subsidiaries have not knowingly engaged in and are
not now knowingly engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or
was the subject or the target of Sanctions Laws or with any Sanctioned Country.

 

 

 

    	 	12	 

     

    

 

(w)    Anti-Bribery. Neither the Company nor any of the Subsidiaries has made
any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any
law which violation is required to be disclosed in the SEC Documents. Neither the Company,
nor any of its Subsidiaries or affiliates, nor any director, officer, employee, nor to the Company's knowledge, any agent or other
person associated with or acting on behalf of the Company, or any of its Subsidiaries or affiliates, has (i) used any funds for
any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or employee, to any employee or agent of a private entity
with which the Company does or seeks to do business or to foreign or domestic political parties or campaigns, (iii) violated or
is in violation of any provision of any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions or any applicable provision of the U.S. Foreign Corrupt Practices Act of
1977, as amended (the "FCPA"), the U.K. Bribery Act 2010, or any other similar law of any other jurisdiction in
which the Company operates its business, including, in each case, the rules and regulations thereunder (the "Anti-Bribery
Laws"), (iv) taken, is currently taking or will take any action in furtherance of an offer, payment, gift or anything
else of value, directly or indirectly, to any person while knowing that all or some portion of the money or value will be offered,
given or promised to anyone to improperly influence official action, to obtain or retain business or otherwise to secure any improper
advantage or (v) otherwise made any offer, bribe, rebate, payoff, influence payment, unlawful kickback or other unlawful payment;
the Company and each of its respective Subsidiaries has instituted and has maintained, and will continue to maintain, policies
and procedures reasonably designed to promote and achieve compliance with the laws referred to in (iii) above and with this representation
and warranty; none of the Company, nor any of its Subsidiaries or affiliates will directly or indirectly use the proceeds of the
convertible securities or lend, contribute or otherwise make available such proceeds to any subsidiary, affiliate, joint venture
partner or other person or entity for the purpose of financing or facilitating any activity that would violate the laws and regulations
referred to in (iii) above; there are, and have been, no allegations, investigations or inquiries with regard to a potential violation
of any Anti-Bribery Laws by the Company, its Subsidiaries or affiliates, or any of their respective current or former directors
and officers, current employees, or to the Company's knowledge, any of their respective former employees, stockholders, representatives
or agents, or other persons acting or purporting to act on their behalf.

 

(x)     Insurance. The Company and each of the Subsidiaries carry, or are covered by, insurance by insurers of recognized
financial responsibility in such amounts and covering such losses and risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for companies engaged in similar businesses. Neither
the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any
such Subsidiary has any reason to believe 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, in each case, as may be necessary to continue its business at a cost
that, individually or in the aggregate, do not or would not reasonably be expected to have a Material Adverse Effect.

 

(y)     Employee Benefits. The Company and each Subsidiary is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension
plan" (as defined in ERISA) for which the Company and each Subsidiary would have any material liability; the Company and each
Subsidiary has not incurred and does not expect to incur material liability under (i) Title IV of ERISA with respect to termination
of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Code; and each "pension plan"
for which the Company or any Subsidiary would have any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the
loss of such qualification.

 

(z)  
  Employee Relations.

 

(i)    
Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member
of a union. The Company and its Subsidiaries believe that their relations with their employees are good. Except as set forth on
Schedule 3(z), no executive officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act)
has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer's employment with the Company or any such Subsidiary. No current executive officer or other key employee
of the Company or any of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement
or any restrictive covenant, and the continued employment of each such executive officer or other key employee (as the case may
be) does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters, except
where such violation would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.

 

 

 

    	 	13	 

     

    

 

(ii) 
The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.

 

(aa)   Transactions with Affiliates. Except as set forth on Schedule 3(aa), none of the officers, directors or employees
of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other
than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any
corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or
is an officer, director, employee, trustee or partner.

 

(bb)  Environmental Laws. The Company and its Subsidiaries (A) are in compliance in all material respects with all Environmental
Laws (as defined below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (C) are in compliance in all material respects with all terms and conditions of
any such permit, license or approval where, in each of the foregoing clauses (A), (B) and (C), the failure to so comply could be
reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term "Environmental Laws"
means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well
as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

(cc)   1934 Act Registration. The Company has taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the 1934 Act, nor has the Company received any notification that the SEC is contemplating
terminating such registration.

 

(dd)  No
Integrated Offering. The Company has not sold or issued any securities that would be integrated with the offering of the Securities
contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC.
None of the Company, its Subsidiaries, any of their affiliates, and any Person acting on their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the 1933 Act which would require
the registration of the Securities under the 1933 Act, or (ii) to require approval of stockholders of the Company for purposes
of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or designated.

 

(ee)   Brokerage Fees; Commissions. Except as described in Schedule 3(ee) hereto, neither the Company nor any of
its Subsidiaries is a party to any contract, agreement or understanding with any person that would give rise to a valid claim against
the Company or the Buyers for a brokerage commission, finder's fee or like payment in connection with the offering and sale of
the Securities. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for persons engaged by any Buyer or its investment advisor) relating to or arising out of the transactions
contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, attorney's fees and out-of-pocket expenses) arising in connection with such claim (other than for claims made by Persons
engaged by the Buyers). The Company acknowledges that it has engaged The Special Equities Group, LLC a division of Bradley Woods
& Co. Ltd. (the "Agent") as placement agent in connection with the sale of the Securities. Other than the
Agent, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale
of the Securities.

 

 

 

    	 	14	 

     

    

 

(ff)    Consents. Other than as described in Section 3(b) hereof, or as have been previously obtained, filed or made, neither
the Company nor any of its Subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration
with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute,
deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the
terms hereof or thereof. The Company and its Subsidiaries are unaware of any facts
or circumstances that might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant
to the preceding sentence.

 

(gg)  Acknowledgment Regarding Buyer's Purchase of Securities. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding, the Company acknowledges and agrees that each Buyer is acting solely in the capacity of an arm's length purchaser
with respect to the Transaction Documents and the transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an "affiliate" of the Company or any of its Subsidiaries
(as defined in Rule 405 of the 1933 Act) or (iii) to the knowledge of the Company, a "beneficial owner" of more than
10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that
no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any
of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to such Buyer's purchase of the Securities. The Company further represents to each Buyer that the Company's
decision to enter into the Transaction Documents has been based solely on the independent evaluation by the Company and its representatives.

 

(hh)  Dilutive Effect. The Company understands and acknowledges that the number of Note Conversion Shares issuable pursuant
to the terms of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants will increase in certain circumstances.
The Company further acknowledges that its obligations to issue (i) Note Conversion Shares in accordance with this Agreement and
the Notes and (ii) Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants are, in each
case, absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.

 

(ii)     Application of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary
action, if any, in order to render inapplicable the Company's issuance of the Securities and any Buyer's ownership of the Securities
from the provisions of any control share acquisition, interested stockholder, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation or the laws
of the state of its incorporation which is or could become applicable to any Buyer as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company's issuance of Securities and each Buyer's ownership of the Securities.
Except as set forth in the SEC Documents, the Company does not have any stockholder rights plan or similar arrangement relating
to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

 

(jj)     Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.

 

(kk)   Off Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and
an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and
is not so disclosed or that otherwise would be reasonably likely to have a Material Adverse Effect.

 

(ll)     Transfer Taxes. On the Closing Date, all stock transfer or other similar taxes (other than income or similar taxes)
which are required to be paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will
be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied
with.

 

 

 

    	 	15	 

     

    

 

(mm)  Acknowledgement Regarding Buyers' Trading Activity. The Company acknowledges and agrees (i) that none of the Buyers
has been asked to agree, nor has any Buyer 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) that past or future open market or other transactions by any Buyer, including, without limitation, short sales or "derivative"
transactions, before or after the closing of the transactions contemplated by this Agreement or future transactions, may negatively
impact the market price of the Company's publicly-traded securities; (iii) that any Buyer, and counter parties in "derivative"
transactions to which any such Buyer is a party, directly or indirectly, presently may have a "short" position in the
Common Stock; and (iv) that such Buyer 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 (a) one or more Buyers may engage
in hedging and/or trading activities at various times during the periods that the Securities are outstanding, including, without
limitation, during the period that the value of the Note Conversion Shares and the Warrant Shares deliverable with respect to Securities
are being determined and (b) such hedging and/or trading activities (if any) could reduce the value of the existing stockholders'
equity interests in the Company at and after the time that the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes,
the Warrants or any of the documents executed in connection herewith.

 

(nn)   U.S. Real Property Holding Corporation. Neither the Company, nor any of its Subsidiaries, is or has ever been a U.S.
real property holding corporation within the meaning of Section 897 of the Code and the Company and each Subsidiary shall so certify
upon any Buyer's request.

 

(oo)  Shell Company Status. The Company is not, and has not been since August 1, 2008, an issuer identified in Rule 144(i)(1)
of the 1933 Act.

 

(pp)  Bank Holding Company. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding
Company Act of 1956, as amended (the "BHCA") and to regulation by the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). Neither the Company nor any of its Subsidiaries or affiliates owns or controls
directly or indirectly, five percent or more of the outstanding shares of any class of voting securities or twenty-five percent
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

 

(qq)  SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Company has timely filed
all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date hereof, and all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents, at the time they were filed with the SEC, 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. As of their respective filing dates, the financial statements of the Company included
in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with GAAP, consistently
applied during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

(rr)    Placement Agent Agreement. The Company has entered into a Placement Agent Agreement, dated as of March 10, 2020,
with the Agent that contains certain representations, warranties, covenants and agreements of the Company. Such representations,
warranties, covenants and agreements are for the benefit of and may be relied upon by the Buyers, each of which shall be a third-party
beneficiary thereof.

 

 

 

    	 	16	 

     

    

 

(ss)   Indebtedness and Other Contracts. Except as set forth on Schedule 3(ss), neither the Company nor any of its
Subsidiaries, (i) has any outstanding Indebtedness, (ii) is a party to any contract, agreement or instrument, the violation of
which, or default under which, by the other party(ies) to such contract, agreement or instrument would reasonably be expected to
result in a Material Adverse Effect, (iii) is in violation of any term of, or in default under, any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in
a Material Adverse Effect, or (iv) is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. Schedule 3(ss)
provides a detailed description of the material terms of any such outstanding Indebtedness, including, without limitation, descriptions
of any defaults, forbearances, accounts receivable and accounts payable thereunder.

 

(tt)    Stock Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the
applicable Company stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock
on the date such stock option would be considered granted under GAAP consistently applied during the periods involved and applicable
law. No stock option granted under the Company's stock option plan has been backdated. 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.

 

(uu)  No Disagreements with Accountants and Lawyers. There are no material 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.

 

(vv)  Private Placement. Assuming the accuracy of the Buyers' representations and warranties set forth in Section 2, no
registration under the 1933 Act is required for the offer and sale of the Securities by the Company to the Buyers as contemplated
hereby.

 

(ww)  No General Solicitation. Neither the Company nor 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 Buyers and certain other "accredited investors" within the meaning of Rule 501 under the 1933 Act.

 

(xx)    No Disqualification Events. Except as disclosed on Annex I attached hereto, with respect to Securities to be offered
and sold hereunder in reliance on Rule 506(b) under the 1933 Act, none of the Company, any of its predecessors, any affiliated
issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner
of 20% or more of the Company's outstanding voting equity securities, calculated on the basis of voting power, nor any promoter
(as that term is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each,
an "Issuer Covered Person" and, together, "Issuer Covered Persons") is subject to any of the
"Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a "Disqualification
Event"), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided
in Annex I.

 

(yy)   Other Covered Persons. The Company is not aware of any Person (other than the Agent) that has been or will be paid
(directly or indirectly) remuneration for solicitation of Buyers or potential purchasers in connection with the sale of any Securities.

 

(zz)   Ranking of Notes. Except for existing indebtedness set forth on Schedule 3(zz), no Indebtedness of the Company, at
the Closing, will be senior to, or pari passu with, the Notes in right of payment, whether with respect to payment or redemptions,
interest, damages, upon liquidation or dissolution or otherwise.

 

 

 

    	 	17	 

     

    

 

4.     
COVENANTS.

 

(a)   
Best Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to
be satisfied by it as provided in Sections 6 and 7 of this Agreement.

 

(b)   
 Form D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, 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 Buyers at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the
states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action
so taken to the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following
the Closing Date.

 

(c)  
 Use of Proceeds. The Company will use the proceeds from the sale of the Securities solely as set forth on Schedule
4(c).

 

(d)  
 Listing. The Company shall promptly secure the listing of all of the Warrant Shares, Note Conversion Shares and any
capital stock of the Company issued or issuable with respect to the Warrant Shares, the Warrants, the Note Conversion Shares or
the Notes, in each case as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise
without regard to any limitations on the exercise of Warrants and on the conversion of the Note Conversion Shares (the "Underlying
Shares") on the Principal Market or on any other Eligible Market (as defined in the Warrants) on which the Common Stock
is then listed or quoted (subject to official notice of issuance) and during the Reporting Period shall maintain the listing of
all Underlying Shares from time to time issuable under the terms of the Transaction Documents on the Principal Market or any other
Eligible Market on which the Common Stock is then listed or quoted. During the Reporting Period the Company shall maintain the
authorization for quotation of the Common Stock on the Principal Market or any other Eligible Market on which the Common Stock
is then listed or quoted. During the Reporting Period, the Company shall not take any action which would be reasonably expected
to result in the delisting or suspension of the Common Stock on the Principal Market or on any other Eligible Market on which the
Common Stock is then listed or quoted. The Company shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(d).

 

(e)     Fees. The Company shall pay an expense allowance to the Lead Investor or its designee(s) for all costs and expenses
incurred in connection with the transactions contemplated by the Transaction Documents (including all legal fees and disbursements
in connection therewith, documentation and implementation of the transactions contemplated by the Transaction Documents and due
diligence in connection therewith) not reimbursed by the Company on or prior to the Closing, which amount shall not exceed in the
aggregate $75,000 and which amount, at the option of such Buyer, may be withheld by such Buyer from its Cash Purchase Price at
the Closing. The Company shall be responsible for the payment of any placement agent's fees, financial advisory fees, or broker's
commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees or commission payable to the Agent. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney's fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in the Transaction Documents, each party to this Agreement
shall bear its own expenses in connection with the sale of the Securities to the Buyers.

 

(f)   
Pledge of Securities. The Company acknowledges and agrees that the Securities may be pledged by any holder of Securities
(an "Investor") in connection with a bona fide margin agreement or other loan or financing arrangement that is
secured by the Securities. Any such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities
hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees
to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by an Investor.

 

(g)   
Reporting Status. Until the date on which the Investors shall have sold all of the Note Conversion Shares and the
Warrant Shares and none of the Notes or the Warrants are outstanding (the "Reporting Period"), the Company shall
timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status
as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no
longer require or otherwise permit such termination.

 

 

 

    	 	18	 

     

    

 

(h)   
Financial Information. The Company agrees to send the following to each Investor during the Reporting Period (i)
unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one
(1) Business Day after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, any Quarterly Reports on Form
10-Q, any Current Reports on Form 8-K (or any analogous reports under the 1934 Act) and any registration statements (other than
on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies
of all press releases issued by the Company or any of its Subsidiaries and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof
to the stockholders. As used herein, "Business Day" means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(i)    
Disclosure of Transactions and Other Material Information. On or before the Disclosure Time (as defined below), the
Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents
in the form required by the 1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement
(and all schedules and exhibits to this Agreement), the form of Notes, the form of Warrants, the form of Lock-Up Agreement, the
form of Voting Agreement, the Security Documents, the form of Investor Note, the form of Master Netting Agreement and the form
of Note Purchase Agreement) as exhibits to such filing (including all attachments, the "8-K Filing"). As of immediately
following the filing of the 8-K Filing with the SEC, no Buyer shall be in possession of any material, nonpublic information received
from the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that
is not disclosed in the 8-K Filing or in prior filings with the SEC. In addition, effective upon the filing of the 8-K Filing,
the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written
or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or
agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate and be of no further
force or effect. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers,
directors, employees, affiliates and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company
or any of its Subsidiaries from and after the date hereof without the express written consent of such Buyer and agreement of Buyer
to keep such information confidential. If a Buyer has, or believes it has, received any such material, nonpublic information regarding
the Company or any of its Subsidiaries provided in breach of the preceding sentence, it shall provide the Company with written
notice thereof in which case the Company shall, within two (2) Trading Days (as defined in the Warrants) of receipt of such notice,
make public disclosure of any such material, nonpublic information provided in breach of the preceding sentence. In the event of
a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors,
employees, affiliates and agents, in addition to any other remedy provided herein or in the Transaction Documents, a Buyer shall
have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material,
nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates or agents; provided, however that the Company shall not be in breach of the foregoing
as it relates to Section 4(o)(iii) so long as the Company satisfies its obligations under Section 4(o)(iii)(8). No Buyer shall
have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, affiliates
or agents for any such disclosure. To the extent that the Company, its Subsidiaries or any
of its or their respective officers, directors, employees, affiliates or agents delivers any material, nonpublic information
to a Buyer without such Buyer's prior written consent, the Company hereby covenants and agrees that such Buyer shall not have any
duty of confidentiality to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates
or agents with respect to, or a duty to the Company, any of its Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents not to trade on the basis of, such material, nonpublic information. Subject to the foregoing, neither the
Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions
contemplated hereby (other than filings required by a Buyer pursuant to Section 13 or Section 16 of the 1934 Act), without the
prior consent of the Company, with respect to any press release of any Buyer, or without the prior consent of each Buyer, with
respect to any press release of the Company; provided, however, that the Company shall be entitled, without the prior
approval of any Buyer, to make any press release or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law, regulation or any Eligible
Market on which the Company's securities are then listed or quoted (provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without the
prior written consent of any applicable Buyer, neither the Company nor any of its Subsidiaries or affiliates shall disclose the
name of such Buyer in any filing, announcement, release or otherwise other than disclosure relating to a Buyer solely on information
disclosed from such Buyer's filings made pursuant to Section 13 of the 1934 Act. As used herein, "Disclosure Time"
means, (i) if this Agreement is signed after 8:30 a.m. (New York City time) and before midnight (New York City time) on any Trading
Day, 8:31 a.m. (New York City time) on the second (2nd) Trading Day immediately following the date hereof, unless otherwise instructed
as to an earlier time by the Agent, or (ii) if this Agreement is signed between midnight (New York City time) and 8:30 a.m. (New
York City time) on any Trading Day, no later than 8:31 a.m. (New York City time) on the Trading Day immediately following the date
hereof, unless otherwise instructed as to an earlier time by the Agent.

 

 

    	 	19	 

     

    

 

(j)    
Additional Notes and Warrants; Variable Securities. For so long as any Notes or Warrants remain outstanding, the
Company will not issue any Notes or Warrants other than to the Buyers as contemplated hereby and the Company shall not issue any
other securities that would cause a breach or default under the Notes or the Warrants. For so long as any Notes or Warrants remain
outstanding, the Company shall not, in any manner, (i) issue or sell any rights, warrants or options to subscribe for or purchase
Common Stock or directly or indirectly convertible into or exchangeable or exercisable for Common Stock at a price which varies
or may vary with the market price of the Common Stock, including by way of one or more reset(s) to any fixed price, unless the
conversion, exchange or exercise price of any such security cannot be less than the then applicable Conversion Price with respect
to the Common Stock into which any Notes are convertible or redeemable or the then applicable Exercise Price (as defined in the
Warrants) with respect to the Common Stock into which any Warrant is exercisable or (ii) enter into, or effect any transaction
under, any agreement, including, but not limited to, an equity line of credit, an "at-the-market" offering or similar
agreement, whereby the Company may issue securities at a future determined price. Any Buyer 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.

 

(k)    
Corporate Existence. For so long as any Notes or Warrants remain outstanding, the Company shall maintain its corporate
existence and shall not be party to any Fundamental Transaction (as defined in the Notes and the Warrants) unless the Company is
in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and the Warrants.

 

(l)    
Reservation of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at
all times have authorized, and reserved for issuance the applicable Required Reserve Amount. Upon any increase in the number of
authorized or unreserved shares of Common Stock of the Company following the date hereof, the Company shall use such increased
number of authorized shares to satisfy its obligations to keep the Final Required Reserve Amount of shares reserved for the Securities
before reserving or using shares for any other purpose. The initial number of shares of Common Stock reserved for conversion or
redemption of the Notes and for exercise of the Warrants and each increase in the number of shares so reserved shall be allocated
pro rata among the Buyers, based on the total number of shares of Common Stock issuable upon conversion pursuant to the terms of
the Notes and upon exercise of the Warrants (without regard to any limitations in exercise) issued to each Buyer on the Closing
Date (the "Authorized Share Allocation"). In the event that a Buyer shall sell or otherwise transfer any of its
Notes or Warrants, each transferee shall be allocated a pro rata portion of such holder's Authorized Share Allocation. Any shares
of Common Stock reserved and allocated to any Person which ceases to hold any Notes or Warrants shall be allocated to the holders
of the remaining Notes and Warrants, pro rata based on the Note Conversion Shares issuable pursuant to the terms of the Notes and
the Warrant Shares issuable upon exercise of the Warrants then held by such holders (without regard to any limitations on the conversion
or redemption of the Notes or on the exercise of the Warrants).

 

(m)    Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, including, without limitation, FCPA and other applicable Anti-Bribery Laws, OFAC regulations
and other applicable Sanctions Laws, and Anti-Money Laundering Laws.

 

(i)     Neither
the Company, nor any of its Subsidiaries or affiliates, directors, officers, employees, representatives or agents shall:

 

(a)       conduct
any business or engage in any transaction or dealing with or for the benefit of any Blocked Person, including the making or receiving
of any contribution of funds, goods or services to, from or for the benefit of any Blocked Person;

 

(b)       deal
in, or otherwise engage in any transaction relating to, any property or interests in property blocked or subject to blocking pursuant
to the applicable Sanctions Laws;

 

(c)       use
any of the proceeds of the transactions contemplated by this Agreement to finance, promote or otherwise support in any manner any
illegal activity, including, without limitation, any Anti-Money Laundering Laws, Sanctions Laws, or Anti-Bribery Laws; or

 

(d)       violate,
attempt to violate, or engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, any of the Anti-Money Laundering Laws, Sanctions Laws, or Anti-Bribery Laws.

 

(ii)    The Company shall maintain in effect and enforce policies and procedures designed to ensure compliance by the Company and
its Subsidiaries and their directors, officers, employees, agents representatives and affiliates with the Sanctions Laws and Anti-Bribery
Laws.

 

 

    	 	20	 

     

    

 

(iii)   The Company will promptly notify the Buyers in writing if any of the Company,
or any of its Subsidiaries or affiliates, directors, officers, employees, representatives or agents, shall become
a Blocked Person, or become directly or indirectly owned or controlled by a Blocked Person.

 

(iv)  The Company shall provide such information and documentation as the Buyers or any of their affiliates may require to satisfy
compliance with the Anti-Money Laundering Laws, Sanctions Laws, or Anti-Bribery Laws.

 

(v)    The covenants set forth above shall be ongoing for so long as any Notes or Warrants remain outstanding. The Company shall
promptly notify the Buyers in writing should it become aware (a) of any changes to these covenants, or (b) if it cannot comply
with the covenants set forth herein. The Company shall also promptly notify the Buyers in writing should they become aware of an
investigation, litigation or regulatory action relating to an alleged or potential violation of the Anti-Money Laundering Laws,
Sanctions Laws, and Anti-Bribery Laws.

 

(n)   
Lock-Up. The Company shall not amend or waive any provision of the Lock-Up Agreements except to extend the term of
the lock-up period contained therein and shall enforce the provisions of the Lock-Up Agreements in accordance with their terms.
If any party to a Lock-Up Agreement breaches any provision of a Lock-Up Agreement, the Company shall promptly use its best efforts
to seek specific performance of the terms of such Lock-Up Agreement.

 

(o)   
Additional Issuances of Securities.

 

(i)     For purposes of this Section 4(o), the following definitions shall apply.

 

(1)       "Approved Stock Plan" means any employee benefit plan which has been approved by the Board of Directors
of the Company, pursuant to which the Company's securities may be issued to any employee, officer or director for services provided
to the Company.

 

(2)       "Convertible Securities" means any stock or securities (other than Options (as defined below)) convertible
into or exercisable or exchangeable for shares of Common Stock.

 

(3)       "Excluded
Securities" means any Common Stock issued or issuable: (i) under any Approved Stock Plan, (ii) upon exercise of the
Warrants; provided, that the terms of such Warrants are not amended, modified or changed on or after the date hereof,
(iii) upon conversion, exercise or exchange of any Options or Convertible Securities which are outstanding on the day
immediately preceding the date hereof; provided, that such issuance of Common Stock upon exercise of such Options or
Convertible Securities is made pursuant to the terms of such Options or Convertible Securities in effect on the date
immediately preceding the date hereof or in accordance with the terms of the Transaction Documents and such Options or
Convertible Securities are not amended, modified or changed to decrease the exercise price, exchange price or conversion
price of such Options or Convertible Securities or otherwise increase the number of shares issuable under such Options or
Convertible Securities (in each case, other than in connection with stock splits or distributions) on or after the date
hereof other than in accordance with the terms of the Transaction Documents and (iv) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that
such securities are issued as "restricted securities" (as defined in Rule 144) and carry no registration rights
that require or permit the filing of any registration statement in connection therewith during the prohibition period in
Section 4(o)(ii) herein, and provided that any such issuance shall only be to a Person (or to the equityholders of a Person)
which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities, (v) securities issued as payment for investment banking services
provided to the Company, including warrants to purchase shares of Common Stock to the placement agent relating to the
offering of the Securities, (vi) securities issued to third party vendors as payment for goods and services, the
Company’s consultants, vendors and animation partners, provided that such securities are issued as "restricted
securities" (as defined in Rule 144) and carry no registration rights that require or permit the filing of any
registration statement in connection therewith during the prohibition period in Section 4(o)(ii) herein, and (vii) shares of
Common Stock and warrants to purchase Common Stock in an equity financing sold at a purchase price equal to or greater than
the “Minimum Price” as defined under the rules of the Principal Market, and (viii) securities issued or issuable
to the Buyers and their assigns pursuant to this Agreement, the Notes or the Warrants and other Transaction Documents or upon
exercise, conversion or exchange of any such securities, provided, that such issuance of Common Stock upon exercise of
such Options or Convertible Securities is made pursuant to the terms of such Options or Convertible Securities in effect on
the date immediately preceding the date hereof or in accordance with the terms of the Transaction Documents and such Options
or Convertible Securities are not amended, modified or changed to decrease the exercise price, exchange price or conversion
price of such Options or Convertible Securities or otherwise increase the number of shares issuable under such Options or
Convertible Securities (in each case, other than in connection with stock splits or distributions) on or after the date
hereof other than in accordance with the terms of the Transaction Documents.

 

 

 

    	 	21	 

     

    

 

(4)       "Options" means any rights, warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.

 

(5)       "Common Stock Equivalents" means, collectively, Options and Convertible Securities.

 

(ii)        From the date hereof until the date that the Notes are no longer outstanding, the Company will not (A) directly or indirectly,
file any registration statement with the SEC other than registration statements on Form S-8, (B) directly or indirectly, offer,
sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into
or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition
or announcement being referred to as a "Subsequent Placement"), or (C) be party to any solicitations, negotiations
or discussions with regard to the foregoing unless (A) Nasdaq Stockholder Approval has been obtained prior thereto and (B) (i)
at least 75% of the gross proceeds in excess of the first $2,000,000 of gross proceeds of all Subsequent Placements consummated
prior to the six month anniversary of the Closing Date are first applied to the redemption of the Notes (pro-rata based on a Buyer’s
Purchase Price which redemption may be waived by a Buyer and it will not increase the pro-rata percentage of any other Buyers)
or (ii) at least 75% of the gross proceeds of any such Subsequent Placement consummated after the six month anniversary of the
Closing Date are first applied to the redemption of the Notes (pro-rata based on a Buyer’s Purchase Price which redemption
may be waived by a Buyer and it will not increase the pro-rata percentage of any other Buyers). Notwithstanding the foregoing,
the restrictions above shall not apply with respect to issuances of Excluded Securities (other than clause (vii) therein).

 

(p)   
Stockholder Approvals.

 

(i)     As promptly as practicable after the date hereof, the Company shall provide each stockholder entitled to vote at the next
special or annual meeting of stockholders of the Company (the "Stockholder Meeting"), which shall be promptly
called and held not later than May 15, 2020 (the "Stockholder Meeting Deadline"), a proxy statement, substantially
in the form which has been previously reviewed by the Buyers, soliciting each such stockholder's affirmative vote at the Stockholder
Meeting for approving the Company's issuance or potential issuance of the Note Conversion Shares and the Warrant Shares as described
in the Transaction Documents and the other actions requiring stockholder approval as described in the Transaction Documents in
accordance with applicable law, the provisions of the Bylaws and the rules and regulations of the Principal Market (such affirmative
approval being referred to herein as the "Nasdaq Stockholder Approval"), and the Company shall use its reasonable
best efforts to solicit its stockholders' approval of such resolutions and to cause the Board of Directors of the Company to recommend
to the stockholders that they approve such resolutions. The Company shall be obligated to use its reasonable best efforts to obtain
the Nasdaq Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company's reasonable best efforts the Nasdaq
Stockholder Approval is not obtained on or prior to the Stockholder Meeting Deadline, the Company shall cause an additional Stockholder
Meeting to be held every ninety (90) days thereafter until such Nasdaq Stockholder Approval is obtained.

 

(q)    Voting
Agreement. The Company shall use its best efforts to effectuate the transactions contemplated by the Voting Agreement, in
the form attached hereto as Exhibit H (the "Voting Agreement"), executed by the Company and the stockholders
set forth on Schedule 4(q) (collectively, the "Principal Stockholders") who hold in the aggregate a percentage
of the outstanding shares of Common Stock that is acceptable to the Required Holders (as defined below). The Company hereby covenants
to use reasonable best efforts to cause additional stockholders to execute the Voting Agreement (or sign additional voting agreements
on substantially the same form as the Voting Agreement, which when executed will be deemed for purposes of this Agreement to be
included in the definition of Voting Agreement) and to promptly notify the Buyers of any such additional stockholders signing
the Voting Agreement or such additional Voting Agreements. The Company shall not amend or waive any provision of the Voting Agreement
and shall enforce the provisions of the Voting Agreement in accordance with its terms. If any of the Principal Stockholders breach
any provisions of the Voting Agreement, the Company shall promptly use its best efforts to seek specific performance of the terms
of the Voting Agreement in accordance with Section 4.02 thereof. In addition, if the Company receives any notice from any of the
Principal Stockholders pursuant to the Voting Agreement, the Company shall promptly, but in no event later than two (2) Business
Days, deliver a copy of such notice to each Buyer.

 

(r)   
 FAST Compliance. While any Securities are outstanding, the Company shall maintain a transfer agent that participates
in the DTC Fast Automated Securities Transfer Program.

 

 

 

    	 	22	 

     

    

 

(s)   
Company's Operations. While any Notes or Warrants are outstanding, the Company and each of its Subsidiaries shall
(i) not be an "investment company," and affiliate of an "investment company," a company controlled by an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940, as amended; (ii) not become a U.S. real property
holding corporation within the meaning of Section 897 of the Code (and the Company and each Subsidiary shall so certify upon any
Buyer's request); (iii) not become subject to the BHCA or regulation by the Federal Reserve; (iv) not own or control, directly
or indirectly, five percent or more of the outstanding shares of any class of voting securities or twenty-five percent or more
of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve; and (v) not exercise
a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by
the Federal Reserve.

 

(t)    
Integration. None of the Company, its Subsidiaries, their affiliates and any Person acting on their behalf shall
sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the
1933 Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under
the 1933 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 Eligible Market such that it would require shareholder approval prior to the closing of such other
transaction.

 

(u)  
  Public Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date
and ending at such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities,
may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a "Public Information Failure") then, as partial relief for the damages to any holder
of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to two
percent (2.0%) of the Purchase Price of such holder's Securities on the day of a Public Information Failure and on every thirtieth
day (pro-rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information
Failure is cured and (ii) such time that such Public Information Failure no longer prevents a holder of Securities from selling
such Securities pursuant to Rule 144 without any restrictions or limitations. The payments to which a holder shall be entitled
pursuant to this Section 4(u) 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 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.

 

(v)    
Notice of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i)
any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become
a Disqualification Event relating to any Issuer Covered Person.

 

(w)    Certain
Transactions and Confidentiality. Each Buyer, severally and not jointly with the other Buyers, 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 announced pursuant to the 8-K Filing as described in Section
4(i). Each Buyer, severally and not jointly with the other Buyers, covenants that until such time as the transactions contemplated
by this Agreement are publicly disclosed by the Company pursuant to the 8-K Filing as described in Section 4(i), such Buyer will
maintain the confidentiality of the existence and terms of this transaction and the information included in the disclosure schedules,
if any. Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) no Buyer 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 first publicly
announced pursuant to 8-K Filing as described in Section 4(i), (ii) no Buyer 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 publicly announced pursuant to the 8-K Filing as described in Section 4(i) and (iii) no
Buyer shall have any duty of confidentiality or duty not to trade in the securities of the Company to the Company or its Subsidiaries
after the issuance of the 8-K Filing as described in Section 4(i). Notwithstanding the foregoing, in the case of a Buyer that is
a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Buyer's assets and the
portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Buyer'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.

 

 

    	 	23	 

     

    

 

(x)    
Collateral Agent.

 

(i)     Each Buyer hereby (a) appoints Anson Investments Master Fund LP, a Buyer, as the collateral agent hereunder and under the
Security Documents (in such capacity, the "Collateral Agent"), and (b) authorizes the Collateral Agent (and its
officers, directors, employees and agents) to take such action on such Buyer's behalf in accordance with the terms hereof and thereof.
The Collateral Agent shall not have, by reason hereof or pursuant to any Security Documents, a fiduciary relationship in respect
of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to
any Buyer for any action taken or omitted to be taken in connection hereof or the Security Documents except to the extent caused
by its own gross negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral
Agent and all of its officers, directors, employees and agents (collectively, the "Collateral Agent Indemnitees")
from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses
(including, without limitation, reasonable attorneys' fees, costs and expenses) incurred by such Collateral Agent Indemnitee, whether
direct, indirect or consequential, arising from or in connection with the performance by such Collateral Agent Indemnitee of the
duties and obligations of Collateral Agent pursuant hereto or any of the Security Documents.

 

(ii)    The
Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person,
and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder
or thereunder, upon advice of counsel selected by it.

 

(iii)   The
Collateral Agent may resign from the performance of all its functions and duties hereunder and under the Notes and the Security
Documents at any time by giving at least ten (10) Business Days prior written notice to the Company and each holder of the Notes.
Such resignation shall take effect upon the acceptance by a successor Collateral Agent of appointment as provided below. Upon
any such notice of resignation, the holders of a majority of the outstanding principal amount of Notes shall appoint a successor
Collateral Agent. Upon the acceptance of the appointment as Collateral Agent, such successor Collateral Agent shall succeed to
and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral
Agent shall be discharged from its duties and obligations under this Agreement, the Notes and the Security Agreement. After any
Collateral Agent's resignation hereunder, the provisions of this Section 4(x) shall inure to its benefit. If a successor Collateral
Agent shall not have been so appointed within said ten (10) Business Day period, the retiring Collateral Agent shall then appoint
a successor Collateral Agent who shall serve until such time, if any, as the holders of a majority of the outstanding principal
amount of Notes appoints a successor Collateral Agent as provided above.

 

(iv)  The Company hereby covenants and agrees to take all actions as promptly as practicable reasonably requested by either the
holders of a majority of the outstanding principal amount of Notes or the Collateral Agent (or its successor), from time to time
pursuant to the terms of this Section 4(y), to secure a successor Collateral Agent satisfactory to such requesting part(y)(ies),
in their sole discretion, including, without limitation, by paying all fees of such successor Collateral Agent, by having the Company
agree to indemnify any successor Collateral Agent and by each of the Company executing a collateral agency agreement or similar
agreement and/or any amendment to the Security Documents reasonably requested or required by the successor Collateral Agent.

 

(y)    Within ten (10) Business Days after Closing, if requested by the Collateral Agent, the Collateral Agent shall have received
the results of searches (including comparable searches in any jurisdiction outside the United States) for any effective UCC financing
statements, tax liens or judgment liens filed against the Company or any of the Subsidiary Guarantors or any property of any of
the foregoing, which results shall not show any such liens (other than Permitted Liens acceptable to the Collateral Agent).

 

(z)     Within thirty (30) Business Days after Closing, the Company shall provide to the Buyers evidence of (i) the termination
of any security interest in Intellectual Property filed with the United States Patent and Trademark Office or the United States
Copyright Office and covering any intellectual property of the Company and the Subsidiary Guarantors, and (ii) UCC-3 termination
statements for all UCC-1 financing statements covering any portion of the Collateral.

 

 

 

    	 	24	 

     

    

 

(aa)   Within thirty (30) calendar days after Closing (or such later date as determined by the Collateral Agent in its sole discretion),
the Collateral Agent shall have received control agreements, in form and substance satisfactory to the Collateral Agent, with respect
to all deposit accounts of the Grantors (as defined in the Security Agreement) as required by Section 5(i) of the Security Agreement,
duly executed by the applicable Grantors and the applicable bank or financial institution.

 

(bb)  Closing Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver,
or cause to be delivered, to each Buyer a complete closing set (which may be solely in electronic format) of the executed copies
of the Transaction Documents, Securities and other documents required to be delivered to any party pursuant to Section 7 hereof.

 

(cc)   Existing Warrants. Immediately following the date that the Nasdaq Stockholder Approval is obtained, the Company shall
reduce the exercise price of the Existing Warrants held by each Buyers to equal $0.21 (subject to adjustment for forward and reverse
stock splits and the like after the date hereof). “Existing Warrants” means those certain common stock purchase
Warrants issued by the Company and held by certain Purchasers as set forth in column 10 of the Schedule of Buyers attached hereto.

 

(dd)  Most
Favored Nation Provision. Following the date that Nasdaq Stockholder Approval is obtained until such time as no Buyer
holds any of the Notes, in the event of any issuance by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent
Financing”), upon written notice to the Company by such Buyer within five (5) Trading Days after the consummation
of such Subsequent Financing, each Buyer (together with its Affiliates) having an aggregate Purchase Price at the Closing of
at least $1,000,000 shall have the right to tender, all or in part, the principal amount of Notes held by such Buyer (but not
the Warrants, which shall remain outstanding) to the Company in lieu of a cash subscription for such Common Stock or Common
Stock Equivalents. By way of example, if the Company undertakes a Subsequent Financing of Senior Secured Convertible Notes
and warrants, each Buyer shall have the right to participate in such Subsequent Financing and use the surrender of its Notes
as consideration, on a $1 for $1 basis, in lieu of cash consideration. Nothing hereunder shall prohibit the Buyer from
converting its Notes into Conversion Shares up until the time that such Notes are tendered. Additionally, in the event that
any warrants or options (or any similar security or right) issued in a Subsequent Financing include any terms more favorable
to the holders thereof (less favorable to the Company) than the terms of the Warrants, the Warrants shall be automatically
amended to include such more favorable terms. This Section 4(dd) shall not apply with respect to any Excluded Securities
(other than clause (vii) therein). Between the time period of 4:00 pm (New York City time) and 6:00 pm (New York City time) on the
Trading Day immediately prior to the Trading Day of the expected announcement of the Subsequent Financing (or, if the Trading
Day of the expected announcement of the Subsequent Financing is the first Trading Day following a holiday or a weekend
(including a holiday weekend), between the time period of 4:00 pm (New York City time) on the Trading Day immediately prior
to such holiday or weekend and 2:00 pm (New York City time) on the day immediately prior to the Trading Day of the expected
announcement of the Subsequent Financing), the Company shall deliver to each Buyer a written notice of the Company’s
intention to effect a Subsequent Financing, which notice shall describe in reasonable detail the proposed terms of such
Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom
such Subsequent Financing is proposed to be effected and shall include a term sheet and transaction documents relating
thereto as an attachment. The Company obligation under this Section 4(dd) may be waived by written waivers of at least 51% in
interest of such Buyers that are eligible to participate hereunder.

 

(ee)   Llama Productions LLC, Bank Leumi USA. The Company agrees that it will not amend or modify any of the terms of the
Loan and Security Agreement by and among the Company, Llama Productions LLC and Bank Leumi USA, or any of the other agreements
or instruments entered in connection therewith, without first obtaining the prior written consent of the Required Holders.

 

(ff)    Heyward Producer Fees.  Until the Notes are no longer outstanding, Andrew Heyward shall not be paid, or accrue,
any executive producer fees (or similar or like types of compensation or arrangements), directly or indirectly, from the Company
with respect to any project undertaken, directly or indirectly, by the Company.

 

 

 

    	 	25	 

     

    

 

5.     
REGISTER; TRANSFER AGENT INSTRUCTIONS.

 

(a)    Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name
and address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each transferee),
the number of Notes held by such Person, the number of Note Conversion Shares issued and issuable pursuant to the terms of the
Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep the
register open and available at all times during business hours for inspection of any Buyer or its legal representatives.

 

(b)   
Transfer Agent Instructions. The Company shall issue irrevocable instructions to the Transfer Agent to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s),
for the Note Conversion Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company
pursuant to the terms of the Notes or exercise of the Warrants, in the form attached hereto as Exhibit I (the "Irrevocable
Transfer Agent Instructions"). The Company represents and warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5 will be given by the Company to the Transfer Agent, and any subsequent transfer
agent with respect to the Securities, and that the Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement and the other Transaction Documents. In the event that such sale, assignment
or transfer involves the Note Conversion Shares or the Warrant Shares sold, assigned or transferred pursuant to an effective registration
statement or pursuant to Rule 144, the Transfer Agent shall issue such Note Conversion Shares or the Warrant Shares to the Buyer,
assignee or transferee, as the case may be, without any restrictive legend. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyers. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Section 5 will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 5, that the Buyers shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

 

6.     
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

 

The obligation
of the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:

 

(i)    Such Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.

 

(ii)    Such Buyer shall have duly executed and delivered to the Company an Investor Collateral Certificate and issued an Investor
Note to the Company in such original principal amount as is set forth across from such Buyer's name in column (5) of the Schedule
of Buyers attached hereto, which shall be held by such Buyer as Collateral for the obligations of the Company under the Note issued
to such Buyer hereunder

 

(iii)   Such Buyer and each other Buyer shall have delivered to the Company the Cash Purchase Price (less, in the case of the Lead
Investor, the amounts withheld pursuant to Section 4(e)) by wire transfer of immediately available funds pursuant to the wire instructions
provided by the Company.

 

(iv)  The representations and warranties of such Buyer shall be true and correct in all respects as of the date when made and
as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date), and such Buyer shall have performed, satisfied and complied in all
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by
such Buyer at or prior to the Closing Date.

 

(v)    No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization
having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

 

 

    	 	26	 

     

    

 

7.     
CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

 

The obligation
of each Buyer hereunder to purchase the Notes and the related Warrants at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may
be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:

 

(i)     The Company shall have duly executed and delivered to such Buyer (i) each of the Transaction Documents, (ii) the Notes (allocated
in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement, and (iii)
the Warrants (allocated in such amounts as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this
Agreement.

 

(ii)    Such Buyer shall have received the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., the Company's counsel,
dated as of the Closing Date, in the form attached hereto as Exhibit J.

 

(iii)   The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, which instructions shall have
been delivered to and acknowledged in writing by the Transfer Agent.

 

(iv)  The Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and
each of its Subsidiary Guarantors in such entity's jurisdiction of formation issued by the Secretary of State (or comparable office)
of such jurisdiction, as of a date within ten (10) days of the Closing Date.

 

(v)    The Company shall have delivered to such Buyer a certificate evidencing the Company's qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of the State of California, as of a date within ten (10)
days of the Closing Date.

 

(vi)  The Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary
of State of the State of Nevada (or a fax or pdf copy of such certificate) within ten (10) days of the Closing Date.

 

(vii)  The Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the
Closing Date, as to (i) the resolutions consistent with Section 3(d) as adopted by the Company's Board of Directors in a form reasonably
acceptable to such Buyer, (ii) the Company's Articles of Incorporation and (iii) the Company's Bylaws, each as in effect at the
Closing, in the form attached hereto as Exhibit K.

 

(viii)  The representations and warranties of the Company shall be true and correct in all respects as of the date when made and
as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such Buyer shall have received a certificate, executed by the
Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect and as
to such other matters as may be reasonably requested by such Buyer in the form attached hereto as Exhibit L.

 

(ix)   The Company shall have delivered to such Buyer a letter from the Transfer Agent certifying the number of shares of Common
Stock outstanding as of a date within five (5) days before the Closing Date.

 

(x)    The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market, nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market
or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

 

(xi)   The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for
the sale of the Securities and the transactions contemplated by the Transactions Documents and all payments thereunder.

 

 

 

    	 	27	 

     

    

 

(xii)   No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization
having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

(xiii)  Since the date of this Agreement, no event or series of events shall have occurred that reasonably could be expected to
result in a Material Adverse Effect.

 

(xiv)  The Company shall have delivered to each Buyer a lock-up agreement, in the form attached hereto as Exhibit M, executed
and delivered by each of the Persons listed on Schedule 7(xv) (collectively, the "Lock-Up Agreements").

 

(xv)   The Voting Agreement shall have been executed and delivered to such Buyer by the Company and each of the Principal Stockholders
representing in the aggregate a percentage of the outstanding shares of Common Stock acceptable to the Required Holders.

 

(xvi)   The Company shall have delivered a letter on the letterhead of the Company (the "Flow of Funds Letter")
(x) duly executed by the Chief Executive Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer
instructions of the Company with respect to the Cash Purchase Price set forth in column (3) of the Schedule of Buyers attached
hereto and (y) directing each Buyer (or its designee) to maintain physical possession of a duly executed Investor Note of such
Buyer, in such original principal amount as is set forth across from such Buyer's name in column (5) of the Schedule of Buyers
attached hereto, issued pursuant to the Note Purchase Agreement of such Buyer, both as payment for, and as Collateral securing,
such Note to be issued and sold to such Buyer at the Closing.

 

(xvii)  Each of the Subsidiary Guarantors shall have executed and delivered to such Buyer the Guarantee Agreement.

 

(xviii)  The Collateral Agent shall have received evidence satisfactory to the Collateral Agent of the filing of appropriate financing
statements on Form UCC-1 in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests purported to be created by the Security Agreement.

 

(xix)   The Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of the Subsidiary
Guarantors, together with (A) the original stock certificates representing all of the equity interests and all promissory notes
required to be pledged thereunder, accompanied by undated stock powers and allonges executed in blank and other proper instruments
of transfer and (B) any copyright, patent and trademark agreements required by the terms of the Security Agreement.

 

(xx)   The Company shall have delivered to such Buyer a perfection certificate, in the form attached hereto as Exhibit N,
duly completed and executed by the Company and each of the Subsidiary Guarantors (the "Perfection Certificate").

 

(xxi)  The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement
as such Buyer or its counsel may reasonably request.

 

8.     
TERMINATION. In the event that the Closing shall not have occurred
with respect to a Buyer on or before five (5) Business Days from the date hereof due to the Company's or such Buyer's failure to
satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business
on such date by delivering a written notice to that effect to each other party to this Agreement and without liability of any party
to any other party; provided, however, that if this Agreement is terminated
pursuant to this Section 8, the Company shall remain obligated to reimburse the Lead Investor or its designee(s), as applicable,
for the expenses described in Section 4(e) above.

 

 

 

    	 	28	 

     

    

 

9.     
MISCELLANEOUS.

 

(a)     Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State 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, 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 brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. 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 to such party at the address for such notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)   
Counterparts. This Agreement may be executed in two or more identical counterparts, all of which 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; provided that a facsimile or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto
with the same force and effect as if the signature were an original, not a facsimile or .pdf signature.

 

(c)   
Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(d)   
Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations
or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(e)     Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No
provision of this Agreement may be amended or waived other than by an instrument in writing signed by the Company and the holders
of at least 66% of the aggregate number of shares of Common Stock issued and issuable under the Notes and the Warrants (without
regard to any restriction or limitation on the conversion or redemption of the Notes or on the exercise of the Warrants contained
therein) and shall include the Lead Investor so long as the Lead Investor or any of its affiliates holds Notes with a principal
amount not less than $1 million (the "Required Holders"), and any amendment or waiver to this Agreement made
in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities as applicable;
provided, that the provisions of Sections 4(z) and 4(aa) cannot be amended without the additional prior written approval
of the Collateral Agent or its successor. No such amendment shall be effective to the extent that it applies to less than all
of the holders of the applicable Securities then outstanding. No consideration 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 (other
than the reimbursement of legal fees) also is offered to all of the parties to the Transaction Documents, the holders of the Notes
and holders of the Warrants, as the case may be. The Company has not, directly or indirectly, made any agreements with any Buyers
relating to the terms or conditions of the transactions contemplated by the Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this Agreement, no Buyer has made
any commitment or promise or has any other obligation to provide any financing to the Company or otherwise.

 

 

    	 	29	 

     

    

 

(f)     Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon delivery, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Business Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall
be:

 

If to the Company:

 

Genius Brands International, Inc.

190 N. Canon Drive, 4th Fl.

Beverly Hills, CA 90210

Telephone: (310) 273-4222

Attention: Robert Denton, CFO

E-mail: bdenton@gnusbrands.com

 

with a copy (for informational purposes only) to:

 

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

666 Third Avenue

New York, New York 10017

Telephone: (212) 692-6732

Attention: Jeffrey Schultz, Esq.

E-mail:
jschultz@mintz.com

 

If to the Transfer Agent:

 

VStock Transfer LLC

18 Lafayette Place

Woodmere, New York 11598

Telephone: (212) 828-8436

Attention: Allison Niccolls

E-mail:
info@vstocktransfer.com

 

If to a Buyer, to its address, facsimile
number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer's representatives as set forth on the
Schedule of Buyers,

 

with a copy (for informational purposes only) to:

 

Telephone:

Facsimile:

Attention:

E-mail:

 

or to such other address, facsimile
number and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's
facsimile machine or e-mail containing the time, date, recipient facsimile number and an image of the first page of such transmission
or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

 

 

    	 	30	 

     

    

 

(g)    Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any purchasers of the Notes or the Warrants. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Transaction
(unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes and
the Warrants). A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such assignee
shall be deemed to be a Buyer hereunder with respect to such assigned rights.

 

(h)   
No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, except for the Agent who is expressly permitted to rely on the representations and warranties
set forth herein, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the
Indemnitees (as defined below) referred to in Section 9(k), who shall have the right to enforce the obligations of the Company
with respect to such section, or the Agent.

 

(i)    
Survival. Unless this Agreement is terminated under Section 8, the representations and warranties of the Company
and the Buyers contained in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the
Closing until such time as Buyer no longer holds Notes and Warrants. Each Buyer shall be responsible only for its own representations,
warranties, agreements and covenants hereunder.

 

(j)    
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as are reasonably necessary
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

(k)   
Indemnification.

 

(i)     In consideration
of each Buyer's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to
all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless
each Buyer and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees
and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including, without limitation,
those retained in connection with the transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation
or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made
against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure made by such Buyer pursuant
to Section 4(i) or (iv) the status of such Buyer or holder of the Securities as an investor in the Company pursuant to the transactions
contemplated by the Transaction Documents. To the extent that the foregoing undertaking by the Company may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.

 

 

 

    	 	31	 

     

    

 

(ii)    Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification
in respect thereof is to be made against any indemnifying party under this Section 9(k), deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee shall have
the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the
indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the Indemnitee and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence shall be
selected by the Required Holders. The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Indemnified Liabilities by the indemnifying party and shall furnish to the indemnifying party
all information reasonably available to the Indemnitee that relates to such action or Indemnified Liabilities. The indemnifying
party shall keep the Indemnitee fully apprised at all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable to any Indemnitee for (a) any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent or (b) to the extent, but only to the extent that a loss, claim, damage or liability is
solely attributable to any Indemnitee's breach of any of the representations, warranties, covenants or agreements made by such
Indemnitee in this Agreement or in the other Transaction Documents. No indemnifying party shall, without the prior written consent
of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect
to such Indemnified Liabilities or litigation. Following indemnification as provided for hereunder, the indemnifying party shall
be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section
9(k), except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

(iii)    The indemnification required by this Section 9(k) 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 Indemnified Liabilities are incurred.

 

(iv)  The indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.

 

(l)    
No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party.

 

(m)    Remedies.
Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or
other security.

 

(n)   
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any
similar provisions of) the Transaction Documents, whenever any Buyer 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 Buyer 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.

 

 

    	 	32	 

     

    

 

(o)   
Payment Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant
to any of the other Transaction Documents or the Buyers enforce or exercise their rights hereunder or 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, foreign, 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.

 

(p)   
Independent Nature of Buyers' Obligations and Rights. The obligations of each Buyer under any Transaction Document
are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance
of the obligations of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document,
and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges,
and each Buyer confirms, that the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Buyers are in any way acting in concert or as a group, and the Company will not assert
any such claim with respect to such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges,
and each Buyer confirms, that the Buyers are not acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. The Company acknowledges and each Buyer confirms that it has independently participated
in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement
or out of any other Transaction Documents, and it shall not be necessary for any other Buyer to be joined as an additional party
in any proceeding for such purpose.

 

[Signature Page Follows]

 

 

 

    	 	33	 

     

    

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.

 

	 	
        COMPANY:

         

	 	
        GENIUS BRANDS INTERNATIONAL, INC.

        

	 	 
	 	By: ____________________________
	 	Name:
	 	Title:

 

 

 

 

 

 

[Signature Page
to Securities Purchase Agreement]

 

 

 

 

    	 	34	 

     

    

 

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.

 

	 	
        BUYERS:

         

	 	
        

	 	By: __________________________
	 	Name:
	 	Title:

 

 

	 	Maximum Percentage:	☐    4.99%
	 	 	☐    9.99%

 

 

 

 

 

 

 

 

 

 

    	 	35	 

     

    

 

SCHEDULE OF BUYERS

 

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)
	
        Buyer
	
        Address,

        Facsimile Number and Email
	
        Cash Purchase Price
	

        Initial Unrestricted Principal 

        (col (3) x 1.25 plus 0.25 x column col (5)

	

        Note Purchase Price

         

	

        Initial Restricted Principal 

        (col (5))

	

        Aggregate Purchase Price

         

	

        Principal Amount

        (col (7) x1.25)

         

	

        Warrants

        (col. (8)/$0.21 

         

	

        Existing Warrants

         

         

	

        Legal Representative’s Address and Emails

         

	 	 	 	 	 	 	 	 	 	 	 
	 	
         

         

         
	 	 	 	 	 	 	 	 	 
	 	
         

         
	 	 	 	 	 	 	 	 	 
	 	
         

         

         
	 	 	 	 	 	 	 	 	 
	TOTAL	 	 	 	 	 	 	 	 	 	 

 

 

 

 

 

    	 	36	 

     

    

 

 

EXHIBITS

 

	Exhibit A	Form of Note
	Exhibit B	Form of Warrant
	Exhibit C	Form of Guarantee Agreement
	Exhibit D	Form of Security Agreement
	Exhibit E	Form of Note Purchase Agreement
	Exhibit F	Form of Master Netting Agreement
	Exhibit G	Form of Investor Collateral Certificate
	Exhibit H	Form of Voting Agreement
	Exhibit I	Form of Irrevocable Transfer Agent Instructions
	Exhibit J	Form of Opinion of Company's Counsel
	Exhibit K	Form of Secretary's Certificate
	Exhibit L	Form of Officer's Certificate
	Exhibit M	Form of Lock-Up Agreement
	Exhibit N	Form of Perfection Certificate

 

 

SCHEDULES

 

	Schedule 3(d)	Equity Capitalization
	Schedule 3(f)	Weaknesses or Changes in Internal Accounting Controls
	Schedule 3(h)	Absence of Litigation
	Schedule 3(k)	Absence of Certain Changes
	Schedule 3(o)	Conduct of Business; Regulatory Permits
	Schedule 3(p)	Intellectual Property
	Schedule 3(s)	Internal Accounting Controls
	Schedule 3(s)(ii)	Disclosure Controls
	Schedule 3(z)	Employee Relations
	Schedule 3(aa)	Transactions with Affiliates
	Schedule 3(ee)	Brokerage Fees; Commissions
	Schedule 3(ss)	Indebtedness and Other Contracts
	Schedule 3(zz)	Ranking of Notes
	Schedule 4(c)	Use of Proceeds
	Schedule 4(q)	Principal Stockholders
	Schedule 7(xv)	Parties to Lock-Up Agreement

 

  

 

    	 	37	 

     

    

 

Annex 1 – No Disqualification Events

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	38	 

     

    

 

Schedule 3(d) – Equity Capitalization

 

As of March 9, 2020:

 

Common Stock, $0.001 par value, 233,333,334 shares authorized.
25,549,152 shares issued and outstanding.

 

Preferred Stock, $0.001 par value, 10,000,000 shares authorized.
430 shares issued and outstanding.

 

Warrants to purchase 11,174,620 shares of Common Stock as follows:

 

	 	 	 	Registered
    or Unregistered	 	 	 	Grant
    Date	 	 	 	Expiration
    Date	 	 	 	Term
    in Year	 	 	 	Exercise
    Price	 	 	 	Vesting
    Date	 	 	 	Warrants
    Outstanding	 	 	 	Warrants
    Exercisable	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total	 	 	R	 	 	 	11/02/15
	 	 	 	11/03/20	 	 	 	5	 	 	$	3.30	 	 	 	10/29/15	 	 	 	380,006 	 	 	 	380,006	 
	Total	 	 	U	 	 	 	02/10/17	 	 	 	08/11/22	 	 	 	5	 	 	$	5.30	 	 	 	02/10/17	 	 	 	1,294,190	 	 	 	1,294,190	 
	Total	 	 	U	 	 	 	01/10/18	 	 	 	01/10/23	 	 	 	5	 	 	$	3.00	 	 	 	01/10/18	 	 	 	685,000	 	 	 	685,000	 
	Total	 	 	R	 	 	 	08/17/18	 	 	 	08/17/23	 	 	 	5	 	 	$	3.00	 	 	 	08/17/18	 	 	 	239,950	 	 	 	239,950	 
	Total	 	 	U	 	 	 	02/19/19	 	 	 	02/19/24	 	 	 	5	 	 	$	2.55	 	 	 	02/19/19	 	 	 	1,800,000	 	 	 	1,800,000	 
	Total	 	 	U	 	 	 	07/22/19	 	 	 	01/22/25	 	 	 	5	 	 	$	1.14

                                  
	 	 	 	07/22/19	 	 	 	1,800,000	 	 	 	1,800,000	 
	Total	 	 	R	 	 	 	10/28/19	 	 	 	10/28/24	 	 	 	5	 	 	$	0.76	 	 	 	10/28/19	 	 	 	477,474	 	 	 	477,474	 
	Total	 	 	U	 	 	 	10/28/19	 	 	 	10/28/24	 	 	 	5	 	 	$	0.76	 	 	 	10/28/19	 	 	 	46,421	 	 	 	–	 
	Total	 	 	U	 	 	 	01/23/20	 	 	 	07/24/25	 	 	 	5	 	 	$	0.34	 	 	 	07/27/20	 	 	 	3,951,364	 	 	 	–	 

 

Options to purchase 2,166,667 shares authorized. 1,314,662 shares
issued and outstanding. 852,005 options available for future grant.

 

The Company is contemplating issuing $1 million worth of common
stock to Arnold Schwarzenegger as advance payment against future royalties for his participation in the production, distribution
and marketing of Stan Lee’s Superhero Kindergarten.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	39	 

     

    

 

Schedule 3(f) – Weakness or Changes in Internal Accounting
Controls

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	40	 

     

    

 

Schedule 3(h) – Absence of Litigation

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	41	 

     

    

 

Schedule 3(k) – Absence of Certain Changes

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	42	 

     

    

 

Schedule 3(o) – Conduct of Business: Regulatory Permits

 

On September 4, 2019, the Company received
a notification letter from The Nasdaq Stock Market (“Nasdaq”) informing the Company that for the last 30 consecutive
business days, the bid price of the Company’s Common Stock had closed below $1.00 per share, which is the minimum required
closing bid price for continued listing on The Nasdaq Capital Market pursuant to Listing Rule 5550(a)(2).

 

 

On March 3, 2020, the Company received
a notification letter from Nasdaq informing the Company that it is eligible for an additional 180 calendar day period, or until
August 31, 2020 to regain compliance. The determination was based on the Company meeting the continued listing requirement for
market value of publicly held shares and all other applicable requirements for initial listing on the Capital Market with the exception
of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second
compliance period by effecting a reverse stock split, if necessary.

 

To regain compliance, the closing bid price
of the Company’s Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days. If the Company
does not regain compliance by August 31, 2020, the Company may be eligible for additional time to regain compliance or if
the Company is otherwise not eligible, the Company may request a hearing before a Hearings Panel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	43	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Children's Songs	PA0001646055
	Baby Genius	Genius Products, Inc.	NA	Favorite Nursery Rhymes	PA0001323783
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Counting Songs	PA0001646050
	Baby Genius	Pacific Entertainment Corp.	NA	Baby Animals	PA0001646047
	Baby Genius	Genius Products, Inc.	NA	Mozart & Friends	PA0001079721
	Baby Genius	Genius Products, Inc.	NA	Mozart & Friends Sleepytime	PA0001086678
	Baby Genius	Pacific Entertainment Corp.	NA	Trip to San Diego Zoo	PA0001646075
	Baby Genius	Genius Products, Inc.	NA	Animal Adventures	PA0001323782
	Baby Genius	Genius Products, Inc.	NA	Underwater Adventures	PA0001323784
	Baby Genius	Genius Products, Inc.	NA	Four Seasons	PA0001080040
	Baby Genius	Pacific Entertainment Corp.	NA	Baby Animals	PA0001646048
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Singalongs	SR0000628484
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Children's Songs	SR0000628480
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Singalongs	SR0000628482
	Baby Genius	Pacific Entertainment Corp.	NA	Trip to San Diego Zoo	SR0000628479
	Baby Genius	Pacific Entertainment Corp.	NA	Favorite Counting Songs	SR0000628481
	Baby Genius	Genius Products, Inc.	NA	Mozart & Friends	PA0001080157
	Baby Genius	Genius Products, Inc.	NA	Mozart & Friends Sleepytime	PA0001086366
	Baby Genius	Genius Products, Inc.	NA	Four Seasons	PA0001079713
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Acid Rain	PA0001797735
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Bloomin' Algae	PA0001797737
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Creeping Development	PA0001797773
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Cynical E-Cycler	PA0001797734
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Degraded Grassland	PA0001797732
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Factory Fishing Fiasco	PA0001797739
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Flammable Forest	PA0001797781
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Flying Fly Ash	PA0001797738
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Green Gig	PA0001797777
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Illicit Arsenic	PA0001797776
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Invasive Vector	PA0001797774
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Lawless Loggers	PA0001797770

 

 

 

    	 	44	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Leopard Elixir	PA0001797771
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Migration Menace	PA0001797762
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Missing March	PA0001797768
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Nuclear Waste Conundrum	PA0001797765
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Pacific Plastic	PA0001797764
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Pernicious Plan	PA0001797780
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Pesticide Pest	PA0001797763
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Plundered Paradise	PA0001797772
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Poisonous Pollen	PA0001797733
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Ransacked Reef	PA0001797761
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Storm Drain Sludge	PA0001797778
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Strip-Mined Mountain	PA0001797769
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Tundra Thaw	PA0001797736
	Gisele and the Green Team (web)	A Squared Entertainment LLC	Xing Xing Digital	The Case of the Watery Diversion	PA0001797779
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama Lemonade and Stage Fright	PA0002107443
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Coach Llama Llama and Jealous Nelly	PA0002096466
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Zoom Zoom Zoom and Lost Tooth	PA0002105918
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Last Day of Summer and Bully Goat	PA0002105901
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Forgotten Fuzzy and Home with Mama	PA0002105922
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama Red Pajama and Time to Share	PA0002105920
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama Shopping Drama and Lucky Pajamas	PA0002105915
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Snow Show and Secret Santa	PA0002105909
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Spring Fever and Happy Birthday Llama Llama	PA0002105912
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Sleepover at Gilroy's and Noisy Neighbor	PA0002096467
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Beach Day and Mama Llama's Mother's Day	PA0002096463
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Saving Luna's Necklace and Let's Go Camping	PA0002096462
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama and the Babysitter and Job Day	PA0002096461
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama Loves to Read and I Heart You!	PA0002096460
	Llama Llama	Genius Brands International, Inc.	Telegael Teoranta	Llama Llama Trick or Treat and Boat Float	PA0002096464
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Back to School	PA0001786400

 

 

 

    	 	45	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the Christmas Tree	PA0001786405
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the Magnificent Egg	PA0001786404
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha's Fourth	PA0001786401
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha's Halloween	PA0001786402
	Martha & Friends (TV)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Thanksgiving	PA0001786406
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Cool Craft Armoire	PA0001787819
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Cupcake Calendar	PA0001787149
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Dinner Table Dilemma	PA0001787824
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Eggstravaganza	PA0001787830
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Fab Felt Holiday	PA0001787823
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Family Game Night	PA0001787821
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Francesca and Sharkey's Party	PA0001787808
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the Allergic Kids	PA0001787829
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the Fashion Statement	PA0001787815
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the New Old Jeans	PA0001786404
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha and the Pumpkin Shortage	PA0001787155
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Martha's Kitchen Science	PA0001787812
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Rockin' Regatta	PA0001787811
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Scrappy Birthday	PA0001787809
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Sew What?	PA0001787810
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Spa Sleepover	PA0001787826
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Sweet Charity Craft Sale	PA0001787818
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Thanksgiving Trivia	PA0001787152
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	The Puppet Show	PA0001787827
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	To Snow Days	PA0001787825
	Martha & Friends (web)	A Squared Elxsi Entertainment LLC	Xing Xing Digital	Valentine's Day	PA0001787822
	Rainbow Rangers	Genius Brands International, Inc.	NA	Meet the Team	TX0008823916
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Go with the Rainbow Floe; Northern Lights	PA0002185039
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Tree Hugger; Turtle in a Net	PA0002185055

 

 

 

    	 	46	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	When Beetles Bark; Pollution Island	PA0002185043
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Monarch Migration; That Sinking Feeling	PA0002185072
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Rabbit Roundup; Uninvited Guest	PA0002185049
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Sludge Stream/Lost Island	PA0002185074
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Duck Duck Oops; Lost Island	PA0002175931
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Divided We Fall; White-Nosed Bats	PA0002185077
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Land Ho; The Strongest Spider	PA0002185064
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Flash Flood; Steer Me in the Right Direction	PA0002185061
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Rangers Raise a Condor; Pony Party	PA0002185071
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Case of the Missing Class Pet; Bee Safe	PA0002185079
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Chimp in Kaleidoscopia; Pigeon Problems	PA0002185054
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Henpecked; Rangers in Space	PA0002185047
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	Rockin' Rainbow Colors	TX0008823940
	Rainbow Rangers	Genius Brands International, Inc.	Telegael Teoranta	To the Rescue	TX0008823934
	Rainbow Rangers	Genius Brands International, Inc.	NA	The Quest for the Confetti Crystal	TX0008838107
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	A Gift Shop Too Far	PA0001981655
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Big Things Come in Micro Packages	PA0001981687
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Camp Bigfoot	PA0001981684
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Down and Out in Beijing	PA0001981651
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Far Out Future	PA0001981675
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	For Pete's Pets Sake	PA0001981686
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Get a Clue, Dude	PA0001981670
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Gooooooooaaaaall	PA0001981669
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Just Say Snow	PA0001981664
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Listen to the Music	PA0001981653
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Nebraska Yankee in King Arthur's Court Pt 1	PA0001981658
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Nebraska Yankee in King Arthur's Court Pt 2	PA0001981662
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Nebraska Yankee in King Arthur's Court Pt 3	PA0001981663
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Paranormally We Don't Do Things Like This	PA0001981654
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Sing Between the Lines	PA0001981673
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Avast Ye Downloads!	PA0001819480

 

 

 

    	 	47	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Sweeeeet!	PA0001981660
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Fashion Bot Fiasco	PA0001981671
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	The Final Financial Frontier	PA0001981656
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	The Gift	PA0001981674
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	To Herring is Human	PA0001981665
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Be Cool to Your School	PA0001799030
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Cost of Giving	PA0001799032
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Elena's Shaqtastic Adventure	PA0001799030
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	When Pigs Fly	PA0001799035
	Secret Millionaires Club (TV)	Genius Brands International, Inc.	Xing Xing Digital	Neither a Borrower Nor a Lender Be Dude	PA0001799280
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Lemons to Lemonade	PA0001712094
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Car Wash Caper	PA0001712089
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Walking the Dog	PA0001712091
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Lawn & Order	PA0001712090
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	What's So Funny?	PA0001712093
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	House of Cards	PA0001712088
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Debt of a Salesman	PA0001712082
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	The Big Trade-Off	PA0001712076
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	The Trouble with Credit Cards	PA0001712077
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Gotta Dance!	PA0001712083
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	It Takes Two	PA0001712085
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Special Delivery	PA0001712084
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Learn, Baby, Learn	PA0001712087
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Sorry I Can't Hair You	PA0001712080
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	The High Cost of High Demand	PA0001712079
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Why Pay More?	PA0001712078
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Tough Cookies	PA0001712081
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	All Fall Up!	PA0001712086
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Are You Experienced?	PA0001716508
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Don't Just Say No	PA0001716510
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Design for Success	PA0001716511

 

 

 

    	 	48	 

     

    

 

Schedule 3(p) - Intellectual Property

 

	SERIES TITLE	CLAIMANT	ADDL CLAIMANT	Episode/Webisode Title	Reg. Number
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Too Good to be True	PA0001716513
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	The Domino Effect	PA0001716516
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Mental for Rental	PA0001717906
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	The Real Skinny	PA0001717905
	Secret Millionaires Club (web)	A Squared Entertainment LLC	Xing Xing Digital	Cancel My Reputation	PA0001717903
	Secret Millionairs Club (book)	A Squared Entertainment LLC	Xing Xing Digital	Warren Buffett's 26 Secrets to Success	TX0007780685
	SpacePOP	Genius Brands International, Inc.	Telegael Teoranta	Not Your Average Princesses	TX0008336651
	SpacePOP	Genius Brands International, Inc.	Telegael Teoranta	Princess Power	PA0002066614
	SpacePOP	Genius Brands International, Inc.	Telegael Teoranta	SpacePOP Takes Off	PA0002066616
	SpacePOP	Genius Brands International, Inc.	 	Rocking the Resistance	TX0008521101
	Stan Lee and the Mighty Seven	Stan Lee Comics LLC	NA	Movie	PAu003649043
	Stan Lee's Superhero Kindergarten	Genius Brands International, Inc.	NA	Trailer	PAu004001429

 

Trademarks

Registered and Pending

 

	United States (USPTO)	 	A SQUARED ENTERTAINMENT
	United States (USPTO)	 	A SQUARED
	United States (USPTO)	 	BABY GENIUS
	United States (USPTO)	 	BABY GENIUS
	United States (USPTO)	 	BABY GENIUS
	United States (USPTO)	 	BABY GENIUS
	United States (USPTO)	 	KAFLOOEY
	United States (USPTO)	 	KID GENIUS
	United States (USPTO)	 	KID GENIUS
	United States (USPTO)	 	RAINBOW RANGERS
	United States (USPTO)	 	RAINBOW RANGERS
	Australia (IPA)	 	RAINBOW RANGERS
	Canada (CIPO)	 	RAINBOW RANGERS
	European Union (EUIPO)	 	RAINBOW RANGERS
	United Kingdom (UKIPO)	 	RAINBOW RANGERS
	Mexico (IMPI)	 	RAINBOW RANGERS
	China (CNIPA)	 	RAINBOW RANGERS
	New Zealand (IPONZ)	 	RAINBOW RANGERS
	China (CNIPA)	 	RAINBOW RANGERS (Chinese Char)
	China (CNIPA)	 	RAINBOW RANGERS (logo)
	United States (USPTO)	 	SECRET MILLIONAIRES CLUB
	United States (USPTO)	 	SPACE POP
	United States (USPTO)	 	SPACE POP
	United States (USPTO)	 	THOMAS EDISON'S SECRET LAB
	United States (USPTO)	 	THOMAS EDISON'S SECRET LAB

 

 

 

    	 	49	 

     

    

 

Schedule 3(s)– Internal Accounting Controls

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	50	 

     

    

 

Schedule 3(s)(ii) Disclosure Controls

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	51	 

     

    

 

Schedule 3(z) – Employee Relations

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	52	 

     

    

 

Schedule 3(aa) – Transactions With Affiliates

 

On August 31, 2018,
Llama Productions LLC entered into an animation production services agreement with Mr. Heyward for services as a producer for which
he is to receive $124,000 through the course of production of the Company’s animated series Llama Llama Season 2. As
of September 30, 2019, Mr. Heyward was paid $124,000.

 

Pursuant to his employment
agreement dated November 16, 2018, Mr. Heyward is entitled to an Executive Producer fee of $12,400 per half hour episode for each
episode he provides services as an executive producer. The first identified series under this employment agreement is Rainbow
Rangers. As of September 30, 2019, twenty-six half hours had been delivered and, accordingly, Mr. Heyward is owed $322,400.

 

Pursuant to his employment
agreement dated November 16, 2018, Mr. Heyward is entitled to an Executive Producer fee of $12,400 per half hour episode for each
episode he provides services as an executive producer. The second identified series under this employment agreement is the twenty-six
half hour episodes of Rainbow Rangers: Season 2. During the six months ended December 31, 2019, 13 episodes had
been delivered and accordingly Mr. Heyward is owed $161,200.

   

On September 17, 2019,
Mr. Heyward purchased $500,000 of the Secured Convertible Notes from another holder. The Company did not receive any proceeds from
this transaction.

 

As of December 31,
2019, Andy Heyward is owed $99,208 for reimbursable expenses.

 

On
October 2, 2019, the Company and Mr. Heyward entered into a stock purchase agreement (the “Stock Purchase Agreement”)
pursuant to which Mr. Heyward agreed to purchase 1,000,000 shares of Common Stock, in a private placement for an aggregate purchase
price of $760,000, or $0.76 per share (the “Private Placement”). The Private Placement closed on October 3, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

    	 	53	 

     

    

 

Schedule 3(ee) – Brokerage Fees; Commissions

 

The Special Equities Group, LLC, a division of Bradley Woods
& Co. Ltd., are acting as the placement agent and will receive 10% of the net proceeds in cash, and warrants to purchase common
stock equaling 10% of the total warrants issued in conjunction with this offering.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	54	 

     

    

 

Schedule 3(ss) – Indebtedness and Other Contracts

 

SENIOR CONVERTIBLE
NOTES

 

We are obligated
under our Secured Convertible Notes, which collectively had an outstanding unamortized book balance of approximately $2,866,666
as of February 6, 2020. The Secured Convertible Notes accrue interest of 10% per annum. The Secured Convertible Notes, including
interest accrued thereon, are convertible at any time until a Secured Convertible Note is no longer outstanding, in whole or in
part, at the option of the holders into shares of our Common Stock at a conversion price of $1.515 per share. We are obligated
to make periodic payments on such debt obligations to each noteholder. In addition, we have granted a security interest to the
noteholders in all of our tangible and intangible personal property to secure our obligations under the Secured Convertible Notes.

 

The Secured Convertible Notes matured on
August 20, 2019. We failed to meet certain conditions under the terms of the Secured Convertible Notes and are obligated to repay
in cash the then outstanding principal amount of the Secured Convertible Notes in full by the six-month anniversary of the date
of maturity. On August 20, 2019, pursuant to the Secured Convertible Notes, the Company elected to make six equal monthly principal
payments of $750,000.

 

On September 17, 2019, the Company’s
Chief Executive Officer, Andy Heyward, purchased $500,000 of the Secured Convertible Notes from another holder. The Company did
not receive any proceeds from this transaction.

 

On September 20, 2019, the Company and
the holders of $1,958,334 of the Secured Convertible Notes, extended the maturity date of those Secured Convertible Notes until
January 31, 2020. The Company also agreed to pay the 10% interest to the holders monthly instead of quarterly.

 

On September 20, 2019, the Company and
the holders of $687,500 of the Secured Convertible Notes, extended the maturity date of those Secured Convertible Notes until August
20, 2021. The Company also agreed to pay the 10% interest to the holders monthly instead of quarterly.

  

The remaining balance of $883,332 under
the Secured Convertible Notes not extended were partially repaid, including interest, in three monthly installments of $220,883,
with the last payment currently due.

 

Production Facility

 

On September 28, 2018, Llama Productions
LLC, a California limited liability company (“Llama”) and a wholly-owned subsidiary of the Company, entered into a
Loan and Security Agreement (the “Loan and Security Agreement”) with Bank Leumi USA (the “Lender”), pursuant
to which the Lender agreed to make a secured loan in an aggregate amount not to exceed $4,231,989 to Llama (the “Loan”).
The proceeds of the Loan will be used to pay the majority of the expenses of producing, completing and delivering two 22-minute
episodes and sixteen 11- minute episodes of the second season of the animated series Llama Llama to be initially
exhibited on Netflix.

 

To secure payment of the Loan, Llama has
granted to the Lender a continuing security interest in and against, generally, all of its tangible and intangible assets, which
includes all seasons of the Llama Llama animated series.

 

As of February 6, 2020, the Company had
gross outstanding borrowing under the facility of $3,182,985 against which financing costs of $132,569 were applied resulting in
net borrowings of $3,050,416.

 

 

 

    	 	55	 

     

    

 

Schedule 3(zz) – Ranking of Notes

 

The current Senior Convertible Note Holders have a first position
lien on all assets of the of the company and a second position lien on the assets of Llama Llama Productions until the bank is
repaid. Once the bank is repaid the lien shifts to first position.

 

City National Bank as lender under the Production Facility Loan
Agreement has a first priority lien on all of the assets of Llama Llama Productions LLC until such time the loan is repaid in full.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	56	 

     

    

 

Schedule 4(c) – Use of Proceeds

 

	 	 	 	March

                                               Closing
	 	 	 	September

                                               Closing
	 
	 	 	 	 	 	 	 	 	 
	Total Deal	 	$	11,000,000	 	 	$	–	 
	 	 	 	 	 	 	 	 	 
	Note Receivable amount from Investors	 	 	4,000,000	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Net Cash Available	 	 	7,000,000	 	 	 	4,000,000	 
	 	 	 	 	 	 	 	 	 
	SEG Fees at 10%	 	 	700,000	 	 	 	400,000	 
	 	 	 	 	 	 	 	 	 
	Legal Fees	 	 	150,000	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Senior Convertible Notes Principal	 	 	2,866,665	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Senior Convertible Notes Interest	 	 	47,124	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Outstanding Legal Fees	 	 	350,000	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Advance from Andy Heyward	 	 	350,000	 	 	 	–	 
	 	 	 	 	 	 	 	 	 
	Net Working Capital available	 	$	2,536,211	 	 	$	3,600,000	 

 

 

 

 

 

 

 

 

    	 	57	 

     

    

 

Schedule 4(q) – Principal Stockholders

 

	Name	Number of Shares Held
	 	 
	Andy Heyward	2,369,199
	 	 
	Silverado Holdings LDC	1,590,476
	 	 
	Leister Capital Limited	1,585,714
	 	 
	Hana Resources (BAHAMAS) LTD	1,585,714
	 	 
	Mike Maliani/HBA Entertainment Trade Co. Limited	

 

 

 

 

 1,414,030

	 	 
	A Squared Holdings LLC	990,728

 

 

 

 

 

 

 

 

 

 

 

 

    	 	58	 

     

    

 

Schedule 7(xv) – Parties to Lock-Up Agreements

 

Andy Heyward 2,369,199

A Squared Holdings LLC 990,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	59Exhibit 10.2

 

PLEDGE AND SECURITY AGREEMENT

 

PLEDGE AND SECURITY
AGREEMENT, dated as of March __, 2020 (this “Agreement”), made by Genius Brands International, Inc.,
a Nevada corporation (the “Company”), and each other Subsidiary of the Company hereafter becoming party hereto
(together with the Company, each a “Grantor” and, collectively, the “Grantors”), in favor
of Anson Investments Master Fund LP, in its capacity as collateral agent (in such capacity, the “Collateral Agent”)
for the Buyers (as defined below) party to the Securities Purchase Agreement, dated as of March 11, 2020 (as amended, restated
or otherwise modified from time to time, the “Securities Purchase Agreement”).

 

W I T N E S S E T H:

 

WHEREAS, the Company
and each party listed as a “Buyer” on the Schedule of Buyers (as such schedule may be amended, restated or otherwise
modified from time to time) attached thereto, each a “Buyer”, and collectively, the “Buyers”)
are parties to the Securities Purchase Agreement, pursuant to which the Company shall be required to sell, and the Buyers shall
purchase or have the right to purchase, the “Notes” (as defined in the Securities Purchase Agreement);

 

WHEREAS, it is a condition
precedent to the Buyers consummating the transactions contemplated by the Securities Purchase Agreement that the Grantors execute
and deliver to the Collateral Agent this Agreement providing for the grant to the Collateral Agent for the benefit of the Buyers
of a security interest in all personal property of the Grantors to secure all of the Company's obligations under the Securities
Purchase Agreement and the “Notes” (as defined therein) issued pursuant thereto (as such Notes may be amended, restated,
replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Notes”)
and the other Transaction Documents (as defined in the Securities Purchase Agreement);

 

WHEREAS, the Grantors
(i) are mutually dependent on each other in the conduct of their respective businesses as an integrated operation, with the credit
needed from time to time by one often being provided through financing obtained by the other Grantors and the ability to obtain
such financing being dependent on the successful operations of the Grantors and (ii) will receive a mutual benefit from the proceeds
received by the Company in respect of the issuance of the Notes; and

 

WHEREAS, each Grantor
has determined that the execution, delivery and performance of this Agreement directly benefits, and are in the best interest of
the Company and such Grantor.

 

NOW, THEREFORE, in consideration
of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement,
each Grantor agrees with the Collateral Agent, for the benefit of the Buyers, as follows:

 

Section
1.      Definitions.

Reference is hereby made to the Securities
Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Agreement and the recitals hereto
which are defined in the Securities Purchase Agreement, the Notes or in Articles 8 or 9 of the Uniform Commercial Code (the “Code”)
as in effect from time to time in the State of New York, and which are not otherwise defined herein shall have the same meanings
herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of
New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute
except as the Collateral Agent may otherwise determine.

 

 

 

    	 	1	 

     

    

 

The following terms shall have the respective
meanings provided for in the Code: “Accounts”, “Account Debtor”, “Cash Proceeds”, “Chattel
Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit
Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”,
“General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”,
“Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”,
“Promissory Notes”, “Security”, “Record”, “Security Account”, “Software”,
and “Supporting Obligations”.

 

As used in this Agreement, the following
terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural
forms of such terms:

“Collateral”
shall have the meaning set forth in Section 2 hereof.

 

“Copyright Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing
for the grant of any rights with respect to any copyright (including, without limitation, all Copyright Licenses set forth in Schedule
II hereto).

 

“Copyrights”
means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout
the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original
works of authorship fixed in any tangible medium of expression (including computer software and internet website content), and
all other general intangibles of like nature, now or hereafter owned, acquired, licensed, used or held for use by any Grantor (including,
without limitation, all copyrights described in Schedule II hereto), all applications, registrations and recordings thereof
(including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar
office or agency of the United States or any other country or any political subdivision thereof), and all renewals thereof.

 

“Event of Default”
means (i) any defined event of default under any one or more of the Transaction Documents, in each instance, after giving effect
to any notice, grace, or cure periods provided for in the applicable Transaction Document, (ii) the failure by the Company to pay
any amounts when due under the Notes or any other Transaction Document, or (iii) the breach of any representation, warranty or
covenant by any Grantor under this Agreement.

 

“Existing Issuer”
has the meaning specified therefor in the definition of the term “Pledged Shares”.

 

“Guaranty”
means the Guarantee Agreement, dated as of the date hereof, by [ ] in favor of the Buyers and the Collateral Agent.

 

“Insolvency
Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter
11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement,
or other similar relief.

 

“Intellectual
Property” means the Copyrights, Trademarks, Patents and Other Proprietary Rights.

 

“Licenses”
means the Copyright Licenses, the Trademark Licenses, the Patent Licenses and all licenses, contracts or other agreements, whether
written or oral, naming any Grantor as licensee or licensor and providing for the grant of any rights with respect to any Other
Proprietary Rights.

 

“Lien”
means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security
or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement,
any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

 

 

 

    	 	2	 

     

    

 

“Obligations”
shall have the meaning set forth in Section 3 hereof.

 

“Other Proprietary
Rights” means all inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information,
technology, know-how and formulae, and all other intellectual or proprietary rights, in any jurisdiction through the world, of
any Grantor, now or hereafter owned, acquired, licensed, used or held for use.

 

“Patent Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing
for the grant of any right to make, use, offer for sale, sell or import any invention covered by any Patent (including, without
limitation, all Patent Licenses set forth in Schedule II hereto).

 

“Patents”
means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, and other general
intangibles of like nature, of any Grantor, now or hereafter owned, acquired, licensed, used or held for use (including, without
limitation, all domestic and foreign letters patent, design patents, utility patents and industrial designs described in Schedule
II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations
and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any
other country or any political subdivision thereof), and all reissues, divisionals, continuations, continuations in part, reexaminations,
or extensions thereof.

 

“Permitted Liens”
shall have the meaning set forth in the Notes.

 

“Pledged Debt”
means the indebtedness described in Schedule VII hereto and all indebtedness from time to time owned or acquired by a Grantor,
the Promissory Notes and other Instruments evidencing any or all of such indebtedness, and all interest, cash, Instruments, Investment
Property, financial assets, securities, capital stock, other equity interests, stock options and Commodity Contracts, notes, debentures,
bonds, Promissory Notes or other evidences of indebtedness and all other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such indebtedness.

 

“Pledged Interests”
means, collectively, (a) the Pledged Debt, (b) the Pledged Shares and (c) all security entitlements in any and all of the foregoing.

 

“Pledged Issuer”
has the meaning specified therefor in the definition of the term “Pledged Shares”.

 

“Pledged Shares”
means (a) the shares of capital stock or other equity interests described in Schedule VIII hereto, whether or not evidenced or
represented by any stock certificate, certificated security or other Instrument, issued by the Persons described in such Schedule
VIII (the “Existing Issuers”), (b) the shares of capital stock or other equity interests at any time and from
time to time acquired by a Grantor of any and all Persons now or hereafter existing (such Persons, together with the Existing Issuers,
being hereinafter referred to collectively as the “Pledged Issuers” and each individually as a “Pledged
Issuer”), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument,
and (c) the certificates representing such shares of capital stock, all options and other rights, contractual or otherwise, in
respect thereof and all dividends, distributions, cash, Instruments, Investment Property, financial assets, securities, capital
stock, other equity interests, stock options and commodity contracts, notes, debentures, bonds, Promissory Notes or other evidences
of indebtedness and all other property (including, without limitation, any stock dividend and any distribution in connection with
a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such
capital stock.

 

“Trademark Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee and providing
for the grant of any right with respect to any Trademark (including, without limitation, all Trademark Licenses described in Schedule
II hereto).

 

 

 

    	 	3	 

     

    

 

“Trademarks”
means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like
nature, now or hereafter owned, adopted, acquired, licensed, used or held for use by any Grantor (including, without limitation,
all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's,
Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto),
all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings
in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or
any other country or any political subdivision thereof), and all renewals thereof, together with all goodwill of the business symbolized
by any of the foregoing and all customer lists, formulae and other Records of any Grantor relating to the distribution of products
and services in connection with which any of the foregoing are used.

 

Section
2.     Grant
of Security Interest. As collateral security for the payment, performance and observance of all of the Obligations, each Grantor
hereby pledges and assigns to the Collateral Agent (and its agents and designees) for the benefit of the Buyers, and grants to
the Collateral Agent (and its agents and designees) for the benefit of the Buyers a continuing security interest in, all personal
property of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of
every kind and description, tangible or intangible, including, without limitation, the following (all being collectively referred
to herein as the “Collateral”):

 

all Accounts;

 

all Chattel Paper (whether tangible or
electronic);

 

the Commercial Tort Claims specified on
Schedule VI hereto;

 

all Deposit Accounts (including, without
limitation, all cash, and all other property from time to time deposited therein or otherwise credited thereto and the monies and
property in the possession or under the control of the Collateral Agent or a Buyer or any affiliate, representative, agent or correspondent
of the Collateral Agent or a Buyer;

 

all Documents;

 

all Equipment;

 

all Fixtures;

 

all General Intangibles (including, without
limitation, all Payment Intangibles);

 

all Goods;

 

all Instruments (including, without limitation,
Promissory Notes and each certificated Security);

 

all Inventory;

 

all Investment Property;

 

all Intellectual Property and all Licenses;

 

all Letter-of-Credit Rights;

 

all Supporting Obligations;

 

all Pledged Interests;

 

 

 

    	 	4	 

     

    

 

all other tangible and intangible personal
property of such Grantor (whether or not subject to the Code), including, without limitation, all bank and other accounts and all
cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions
and replacements of and to any of the property of such Grantor described in the preceding clauses of this Section 2 (including,
without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by
such Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without
limitation, all tapes, disks, cards, Software, data and computer programs in the possession or under the control of such Grantor
or any other Person from time to time acting for such Grantor that at any time evidence or contain information relating to any
of the property described in the preceding clauses of this Section 2 or are otherwise necessary or helpful in the collection
or realization thereof; and

 

all Proceeds, including all Cash Proceeds
and Noncash Proceeds, and products of any and all of the foregoing Collateral;

 

in each case, howsoever such Grantor's
interest therein may arise or appear (whether by ownership, security interest, claim or otherwise). Notwithstanding anything to
the contrary herein, the security interest granted herein shall not attach to, and no security interest is granted hereunder in,
(i) any Trademark application filed on an intent to use basis until such time as an Amendment to Allege Use or Statement of Use,
as applicable, if filed and accepted by the United States Patent and Trademark Office, solely if and to the extent the grant of
a security interest in such application would result in the voiding or abandonment, or impair the validity or enforceability, of
such application or any registration that issues therefrom, or (ii) any of the foregoing where the granting of a security interest
thereon is prohibited by applicable law (so long as (x) such prohibition was not put in place with the intention of excluding such
property from Collateral, and (y) that immediately upon the ineffectiveness, lapse, termination or waiver of any such provision,
the Collateral shall include, and such Grantor shall be deemed to have granted a security interest in, all such right, title and
interest as if such provision had never been in effect).

 

Notwithstanding anything herein to the
contrary, in no event shall the Collateral include, and the Company shall be deemed not to have granted a security interest in,
any of the Company’s right, title and interest in the issued and outstanding equity interests of Llama Productions LLC.

 

Section
3.    Security
for Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for all
of the following obligations, whether now existing or hereafter incurred (collectively, the “Obligations”):

 

the prompt payment by each Grantor, as
and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time
to time owing by it in respect of the Securities Purchase Agreement, the Notes, the Guaranty and the other Transaction Documents,
including, without limitation, (A) all principal of and interest on the Notes (including, without limitation, all interest that
accrues after the commencement of any Insolvency Proceeding of any Grantor, whether or not the payment of such interest is unenforceable
or is not allowable due to the existence of such Insolvency Proceeding), (B) all amounts from time to time owing by such Grantor
under the Guaranty, and (C) all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become
due under any of the Transaction Documents; and

 

the due performance and observance by each
Grantor of all of its other obligations from time to time existing in respect of any of the Transaction Documents for so long as
the Notes are outstanding.

 

Section
4.      Representations
and Warranties. Each Grantor represents and warrants as follows:

Schedule I hereto sets forth (i)
the exact legal name of such Grantor, and (ii) the organizational identification number of such Grantor or states that no such
organizational identification number exists.

 

There is no pending or written notice threatening
any action, suit, proceeding or claim affecting such Grantor before any governmental authority or any arbitrator, or any order,
judgment or award by any governmental authority or arbitrator, that may adversely affect the grant by such Grantor, or the perfection,
of the security interest purported to be created hereby in the Collateral, or the exercise by the Collateral Agent of any of its
rights or remedies hereunder.

 

 

 

    	 	5	 

     

    

 

All Federal, state and local tax returns
and other reports required by applicable law to be filed by such Grantor have been filed, or extensions have been obtained, and
all taxes, assessments and other governmental charges imposed upon such Grantor or any property of such Grantor (including, without
limitation, all federal income and social security taxes on employees' wages) and which have become due and payable on or prior
to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition
of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside
for the payment thereof in accordance with United States generally accepted accounting principles consistently applied (“GAAP”).

 

All Equipment, Fixtures, Goods and Inventory
of such Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of such Grantor hereafter existing will be,
located and/or based at the addresses specified therefor in Schedule III hereto, except that such Grantor will give the
Collateral Agent not less than 30 days' prior written notice of any change of the location of any such Collateral, other than to
locations set forth on Schedule III and with respect to which the Collateral Agent has filed financing statements and otherwise
fully perfected its Liens thereon. Such Grantor's chief place of business and chief executive office, the place where such Grantor
keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in
Schedule III hereto. None of the Accounts is evidenced by Promissory Notes or other Instruments. Set forth in Schedule
IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory Note, Security and other
Instrument owned by each Grantor and (ii) each Deposit Account, Securities Account and Commodities Account of each Grantor, together
with the name and address of each institution at which each such Account is maintained, the account number for each such Account
and a description of the purpose of each such Account. Set forth in Schedule II hereto is a complete and correct list of
each trade name used by each Grantor and the name of, and each trade name used by, each person from which such Grantor has acquired
any substantial part of the Collateral.

 

Such Grantor has delivered or made available
to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including all schedules
and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement. Each such License sets forth
the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements,
arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of such Grantor or any of
its affiliates in respect thereof. Each material License now existing is, and any material License entered into in the future will
be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
other similar laws and equitable principles (regardless of whether enforcement is sought in equity or in law). No default under
any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in
favor of any such party.

 

Such Grantor owns and controls, or possesses
a valid and enforceable right to use, all Intellectual Property, and such Intellectual Property constitutes all trademarks, patents,
copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity, and other
intellectual property or proprietary rights necessary to conduct its business in substantially the same manner as conducted as
of the date hereof. Schedule II hereto sets forth a true and complete list of all (i) registered Copyrights, issued Patents,
Trademarks (including, without limitation, any Internet domain names and the registrar and expiry date of each such Internet domain
name), and all applications for any of the foregoing, owned, used or held for use by such Grantor as of the date hereof and (ii)
Licenses. To the knowledge of each Grantor, all such Intellectual Property of such Grantor is subsisting and in full force and
effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part.
Except as set forth in Schedule II, no such Intellectual Property is the subject of any licensing or franchising agreement.
To the knowledge of such Grantor, such Grantor is not now infringing, misappropriating or otherwise in conflict with any trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity,
or other intellectual property or proprietary rights of others in any material respect, and to the knowledge of such Grantor, no
other Person is now infringing, misappropriating or otherwise in conflict with, in any material respect, any Intellectual Property.
Such Grantor has not received any notice that it is infringing, misappropriating or otherwise conflicting with the trademarks,
patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity
or other intellectual property or proprietary rights of any other Person.

 

 

 

    	 	6	 

     

    

 

Such Grantor is and will be at all times
the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral free and clear of any Liens,
except for Permitted Liens. No effective financing statement or other instrument similar in effect covering all or any part of
the Collateral is on file in any recording or filing office except (A) such as may have been filed in favor of the Collateral Agent
relating to this Agreement, and (B) such as may have been filed to perfect any Permitted Liens.

 

The exercise by the Collateral Agent of
any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting
such Grantor or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of
its properties.

 

No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or other regulatory body, or any other Person, is required for
(i) the grant by such Grantor, or the perfection, of the security interest purported to be created hereby in the Collateral, or
(ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except (A) for the filing under the Uniform
Commercial Code as in effect in the applicable jurisdiction of the financing statements, all of which financing statements, have
been duly filed and are in full force and effect, (B) with respect to the perfection of the security interest created hereby in
the Intellectual Property, for the recording of the appropriate Intellectual Property Security Agreement, substantially in the
form of Exhibit A hereto, as applicable, in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, and (C) with respect to the perfection of the security interest created hereby in foreign Intellectual Property,
for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating
to the Intellectual Property and Licenses.

 

This Agreement creates in favor of the
Collateral Agent a legal, valid and enforceable security interest in the Collateral, as security for the Obligations. The Collateral
Agent's having possession of all Instruments and cash constituting Collateral from time to time, the recording of the appropriate
Intellectual Property Security Agreement executed pursuant hereto in the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, and the filing of the financing statements and the other filings and recordings, as applicable,
described in Schedule V hereto and, with respect to the Intellectual Property hereafter existing or acquired, and not covered
by an appropriate Intellectual Property Security Agreement, the recording in the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, of appropriate security agreements, result in the perfection of such security interests.
Such security interests are, or in the case of Collateral in which such Grantor obtains rights after the date hereof, will be,
perfected, first priority security interests, subject only to Permitted Liens and the recording of such instruments of assignment.
Such recordings and filings and all other action necessary or desirable to perfect and protect such security interest have been
duly taken, except for the Collateral Agent's having possession of Instruments and cash constituting Collateral after the date
hereof and the other filings and recordations described in Section 4(l) hereof.

 

As of the date hereof, such Grantor does
not hold any Commercial Tort Claims nor is such Grantor aware of any such pending claims, except for such claims described in Schedule
VI.

 

Each of the Grantors (other than the Company)
is a wholly-owned Subsidiary of the Company and are the only Subsidiaries of the Company, as of the date hereof.

 

 

 

    	 	7	 

     

    

 

Section
5.     Covenants
as to the Collateral. So long as any of the Obligations shall remain outstanding, unless the Collateral Agent shall otherwise
consent in writing:

 

Further Assurances. Each Grantor
will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and
take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect the security interest
purported to be created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder in respect
of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously
all Chattel Paper and each License and, at the request of the Collateral Agent, each of its Records pertaining to the Collateral
with a legend, in form and substance satisfactory to the Collateral Agent, indicating that such Chattel Paper, License or Collateral
is subject to the security interest created hereby, (B) delivering and pledging to the Collateral Agent hereunder each Promissory
Note, Security, Chattel Paper or other Instrument, now or hereafter owned by such Grantor, duly endorsed and accompanied by executed
instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing
(to the extent, if any, that such Grantor's signature is required thereon) or authenticating the filing of, such financing or continuation
statements, or amendments thereto, as may be necessary or desirable or that the Collateral Agent may request in order to perfect
and preserve the security interest purported to be created hereby, (D) furnishing to the Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each
case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall be in the possession
of a third party, notifying such Person of the Collateral Agent's security interest created hereby and obtaining a written acknowledgment
from such Person that such Person holds possession of the Collateral for the benefit of the Collateral Agent, which such written
acknowledgement shall be in form and substance satisfactory to the Collateral Agent, (F) if at any time after the date hereof,
such Grantor acquires or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor
setting forth a brief description of such Commercial Tort Claim and granting to the Collateral Agent a security interest therein
and in the proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory
to the Collateral Agent, (G) upon the acquisition after the date hereof by such Grantor of any motor vehicle or other Equipment
subject to a certificate of title or ownership (other than a Motor Vehicle or Equipment that is subject to a purchase money security
interest), causing the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering
evidence of the same to the Collateral Agent in accordance with the Securities Purchase Agreement; and (H) taking all actions required
by any earlier versions of the Uniform Commercial Code or by other law, as applicable, in any relevant Uniform Commercial Code
jurisdiction, or by other law as applicable in any foreign jurisdiction.

 

Location of Equipment and Inventory.
Each Grantor will keep the Equipment and Inventory at the locations specified therefor in Section 4(d) hereof or, upon not
less than thirty (30) days' prior written notice to the Collateral Agent accompanied by a new Schedule III hereto indicating
each new location of the Equipment and Inventory, at such other locations in the United States.

 

Condition of Equipment. Each Grantor
will maintain or cause the Equipment (necessary or useful to its business) to be maintained and preserved in good condition, repair
and working order, ordinary wear and tear excepted, and will forthwith, or in the case of any loss or damage to any material Equipment
of such Grantor within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral
Agent may reasonably request to such end. Such Grantor will promptly furnish to the Collateral Agent a statement describing in
reasonable detail any such loss or damage to any such Equipment.

 

Taxes, Etc. Each Grantor agrees
to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the
non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.

 

 

 

    	 	8	 

     

    

 

Insurance.

 

(i)      
Each Grantor will, at its own expense, maintain insurance (including, without limitation, commercial general liability and
property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible
and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect
thereto or as is carried by such Grantor as of the date hereof and in any event, in amount, adequacy and scope reasonably satisfactory
to the Collateral Agent. Unless otherwise agreed to by the Collateral Agent, each such policy for liability insurance shall provide
for all losses to be paid on behalf of the Collateral Agent and such Grantor as their respective interests may appear, and each
policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent.
Unless otherwise agreed to by the Collateral Agent, each such policy shall in addition (A) name the Collateral Agent as an additional
insured party thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as their interests
may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own
account notwithstanding any action, inaction or breach of representation or warranty by such Grantor, (C) provide that there shall
be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that
at least 30 days' prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral
Agent by the insurer. Such Grantor will, if so requested by the Collateral Agent, deliver to the Collateral Agent original or duplicate
policies of such insurance and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker
with respect to such insurance. Such Grantor will also, at the request of the Collateral Agent, execute and deliver instruments
of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

 

(ii)     
Reimbursement under any liability insurance maintained by a Grantor pursuant to this Section 5(e) may be paid directly
to the Person who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment
or Inventory, any proceeds of insurance maintained by a Grantor pursuant to this Section 5(e) shall be paid to the Collateral
Agent (except as to which paragraph (iii) of this Section 5(e) is not applicable), such Grantor will make or cause to be
made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by such
Grantor pursuant to this Section 5(e) shall be paid by the Collateral Agent to such Grantor as reimbursement for the costs
of such repairs or replacements.

 

(iii)     
All insurance payments in respect of such Equipment or Inventory shall be paid to the Collateral Agent and applied as specified
in Section 7(b) hereof.

Provisions Concerning the Accounts and
the Licenses.

 

(iv)    
Each Grantor will (A) give the Collateral Agent at least 30 days' prior written notice of any change in such Grantor's name,
identity or organizational structure, (B) maintain its jurisdiction of incorporation as set forth in Section 4(a) hereto,
(C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the date hereof such
Grantor did not have such identification number, and (D) keep adequate records concerning the Accounts and Chattel Paper and permit
representatives of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect and make
abstracts from such Records and Chattel Paper.

 

(v)     
Each Grantor will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts
due or to become due under the Accounts. In connection with such collections, such Grantor may (and, at the Collateral Agent's
direction, will) take such action as such Grantor or the Collateral Agent may deem necessary or advisable to enforce collection
or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time, upon
the occurrence and during the continuance of an Event of Default, to notify the Account Debtors or obligors under any Accounts
of the assignment of such Accounts to the Collateral Agent and to direct such Account Debtors or obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the Collateral Agent or its designated agent and, upon such
notification and at the expense of such Grantor and to the extent permitted by law, to enforce collection of any such Accounts
and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might
have done. After receipt by a Grantor of a notice from the Collateral Agent that the Collateral Agent has notified, intends to
notify, or has enforced or intends to enforce a Grantor's rights against the Account Debtors or obligors under any Accounts as
referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received
by such Grantor in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder, shall
be segregated from other funds of such Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash collateral and applied as specified in Section 7(b) hereof,
and (B) such Grantor will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any
Account Debtors or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance
of an Event of Default, the Collateral Agent may (in its sole and absolute discretion) direct any or all of the banks and financial
institutions with which such Grantor either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts to
send immediately to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other
manner as the Collateral Agent shall direct) all or a portion of such securities, cash, investments and other items held by such
institution. Any such securities, cash, investments and other items so received by the Collateral Agent shall (in the sole and
absolute discretion of the Collateral Agent) be held as additional Collateral for the Obligations or distributed in accordance
with Section 7 hereof.

 

 

 

    	 	9	 

     

    

 

(vi)    
Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule
II hereto by any party thereto other than a Grantor, the Grantor party thereto will, promptly after obtaining knowledge thereof,
give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes
to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect
of such breach or default, or will obtain or acquire an appropriate substitute License.

 

(vii)   
Each Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication
received by it by which any other party to any material License referred to in Schedule II hereto purports to exercise
any of its rights or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.

 

(viii) 
Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other
than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License
and will take all action reasonably necessary to maintain such Licenses in full force and effect. No Grantor will, without the
prior written consent of the Collateral Agent, cancel, terminate, amend or otherwise modify in any respect, or waive any provision
of, any material License referred to in Schedule II hereto.

Transfers and Other Liens.

 

(ix)     
No Grantor will sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose
of any of the Collateral, except (A) Inventory in the ordinary course of business and (B) worn-out or obsolete assets not necessary
to the business.

 

(x)      
No Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted
Lien.

Intellectual Property.

 

(xi)    
If applicable, each Grantor shall, upon the Collateral Agent's written request, duly execute and deliver the applicable
Intellectual Property Security Agreement in the form attached hereto as Exhibit A. Each Grantor (either itself or through
licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual Property
in full force and effect, including, without limitation, using the proper statutory notices and markings and using the Trademarks
on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment
for non-use, and such Grantor will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby
any Intellectual Property may become invalidated. Each Grantor will (A) cause to be taken all necessary steps in any proceeding
before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in
any other country or political subdivision thereof to maintain each registration of the Intellectual Property, including, without
limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation
proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees in the ordinary course of business and
(B) take commercially reasonable steps to protect, maintain and enforce all other Intellectual Property. If any Intellectual Property
is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, such Grantor shall (x) upon
learning of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent and (y) to the
extent such Grantor shall deem appropriate under the circumstances, in the exercise of its reasonable judgment, promptly sue for
infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages
for such infringement, misappropriation, dilution or other violation, or take such other actions as such Grantor shall deem appropriate
under the circumstances, in the exercise of its reasonable judgment, to maintain, enforce and protect such Intellectual Property.
Each Grantor shall furnish to the Collateral Agent from time to time upon its request statements and schedules further identifying
and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses
as the Collateral Agent may reasonably request, all in reasonable detail and promptly upon request of the Collateral Agent, following
receipt by the Collateral Agent of any such statements, schedules or reports, such Grantor shall modify this Agreement by amending
Schedule II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which becomes
part of the Collateral under this Agreement and shall execute and authenticate such documents, including, without limitation, the
applicable Intellectual Property Security Agreements, and do such acts as shall be necessary or, in the judgment of the Collateral
Agent, desirable to subject such Intellectual Property and Licenses to the Lien and security interest created by this Agreement.
Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, such Grantor
may not abandon or otherwise permit any Intellectual Property to become invalid without the prior written consent of the Collateral
Agent, and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated by a third party, such Grantor
will take such action as the Collateral Agent shall deem appropriate under the circumstances to maintain, enforce and protect such
Intellectual Property.

 

 

 

    	 	10	 

     

    

 

(xii)    
In no event shall a Grantor, either itself or through any agent, employee, licensee or designee, file an application for
the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office
or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or
any political subdivision thereof unless it gives the Collateral Agent prior written notice thereof. In the event that, after the
date hereof, a Grantor acquires any registration, or application for the registration, of any Trademark or Copyright, or any issued
Patent, or application for any Patent, such Grantor shall provide the Collateral Agent written notice thereof with thirty (30)
days of acquiring such Trademark, Copyright or Patent, as applicable. Upon request of the Collateral Agent, each Grantor shall
execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers, including, without limitation,
the applicable Intellectual Property Security Agreements, as the Collateral Agent may reasonably request to evidence the Collateral
Agent's security interest hereunder in the foregoing Intellectual Property and the General Intangibles of such Grantor relating
thereto or represented thereby, and such Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate
and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such
power (being coupled with an interest) shall be irrevocable until the complete conversion of all of the Company's obligations under
the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations under the Notes (together
with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured
contingent indemnification obligations).

 

(xiii)   
Upon the Collateral Agent's request, each Grantor shall cause each domain registrar where any of such Grantor's Internet
domain names are registered, whether as of the date of this Agreement or at any time hereafter, to execute and deliver to the
Collateral Agent a domain name control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly
executed by such Grantor and such domain registrar, or enter into other arrangements in form and substance satisfactory to the
Collateral Agent, pursuant to which such domain registrar shall irrevocably agree, inter alia, that it will comply at any
time with the instructions originated by the Collateral Agent to such domain registrar directing substitution of the Collateral
Agent or its designee as the registered owner of such Internet domain names, without further consent of such Grantor, which instructions
the Collateral Agent will not give to such domain registrar in the absence of a continuing Event of Default.

 

Deposit, Commodities and Securities
Accounts. Upon the Collateral Agent's request and unless otherwise agreed by Agent, each Grantor shall cause each bank and
other financial institution with an account referred to in Schedule IV hereto to execute and deliver to the Collateral Agent
a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly executed by such Grantor and such
bank or financial institution, or enter into other arrangements in form and substance satisfactory to the Collateral Agent, pursuant
to which such institution shall irrevocably agree, inter alia, that (i) it will comply at any time with the instructions
originated by the Collateral Agent to such bank or financial institution directing the disposition of cash, Commodity Contracts,
securities, Investment Property and other items from time to time credited to such account, without further consent of such Grantor,
which instructions the Collateral Agent will not give to such bank or other financial institution in the absence of a continuing
Event of Default, (ii) all cash, Commodity Contracts, securities, Investment Property and other items of such Grantor deposited
with such institution shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, (iii)
any right of set off, banker's Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the
Collateral Agent, and (iv) upon receipt of written notice from the Collateral Agent during the continuance of an Event of Default,
such bank or financial institution shall immediately send to the Collateral Agent by wire transfer (to such account as the Collateral
Agent shall specify, or in such other manner as the Collateral Agent shall direct) all such cash, the value of any Commodity Contracts,
securities, Investment Property and other items held by it. Without the prior written consent of the Collateral Agent, such Grantor
shall not make or maintain any Deposit Account, Commodity Account or Securities Account except for the accounts set forth in Schedule
IV hereto. The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Collateral Agent is
the depositary and (ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of a Grantor's salaried employees.

 

Motor Vehicles.

 

(xiv)   
Each Grantor shall deliver to the Collateral Agent originals of the certificates of title or ownership for all motor vehicles
owned by it with the Collateral Agent listed as lienholder, for the benefit of the Buyers.

 

 

 

    	 	11	 

     

    

 

(xv)   
Each Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon
the termination of this Agreement, for the purpose of (A) executing on behalf of such Grantor title or ownership applications for
filing with appropriate state agencies to enable motor vehicles now owned or hereafter acquired by such Grantor to be retitled
and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing
such other documents and instruments on behalf of, and taking such other action in the name of, such Grantor as the Collateral
Agent may deem necessary or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating
in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights and remedies of the Collateral
Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable until the complete conversion
of all of the Company's obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured indemnification obligations as of the date of such conversion
and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations).

 

(xvi)  
Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements
for each motor vehicle covered thereby.

 

(xvii) 
So long as no Event of Default shall have occurred and be continuing, upon the request of such Grantor, the Collateral Agent
shall execute and deliver to such Grantor such instruments as such Grantor shall reasonably request to remove the notation of the
Collateral Agent as lienholder on any certificate of title for any motor vehicle; provided, however, that any such
instruments shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from such
Grantor stating that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto passing to the casualty
insurance company therefor in settlement of the claim for such loss) and the amount that such Grantor will receive as sale proceeds
or insurance proceeds. Any proceeds of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon
receipt, to be applied to the Obligations then outstanding.

 

Control. Each Grantor hereby agrees
to take any or all action that may be necessary or desirable or that the Collateral Agent may request in order for the Collateral
Agent to obtain control in accordance with Sections 9-105 – 9-107 of the Code with respect to the following Collateral: (i)
Electronic Chattel Paper, (ii) Investment Property, (iii) Pledged Interests and (iv) Letter-of-Credit Rights.

 

Inspection and Reporting. Each Grantor
shall permit the Collateral Agent, or any agent or representatives thereof or such professionals or other Persons as the Collateral
Agent may designate, not more than once a year in the absence of an Event of Default, (i) to examine and make copies of and abstracts
from such Grantor's records and books of account, (ii) to visit and inspect its properties, (iii) to verify materials, leases,
Instruments, Accounts, Inventory and other assets of such Grantor from time to time, (iii) to conduct audits, physical counts,
appraisals and/or valuations, examinations at the locations of such Grantor. Each Grantor shall also permit the Collateral Agent,
or any agent or representatives thereof or such professionals or other Persons as the Collateral Agent may designate to discuss
such Grantor's affairs, finances and accounts with any of its officers subject to the execution by the Collateral Agent or its
designee(s) of a mutually agreeable confidentiality agreement.

 

Future Subsidiaries. If any Grantor
shall hereafter create or acquire any Subsidiary, simultaneously with the creation of acquisition of such Subsidiary, such Grantor
shall cause such Subsidiary to become a party to this Agreement as an additional “Grantor” hereunder and to become
a party to the Guaranty as an additional “Guarantor” thereunder, and to duly execute and/or deliver such opinions of
counsel and other documents, in form and substance acceptable to the Collateral Agent, as the Collateral Agent shall reasonably
request with respect thereto.

 

 

 

    	 	12	 

     

    

 

Section
6.      Additional
Provisions Concerning the Collateral.

 

Each Grantor hereby (i) authorizes the
Collateral Agent to file one or more Uniform Commercial Code financing or continuation statements, and amendments thereto, relating
to the Collateral (including, without limitation, financing statements describing the Collateral as “all assets” or
“all personal property” or words of similar effect) and (ii) ratifies such authorization to the extent that the Collateral
Agent has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof. A photocopy or
other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law.

 

Each Grantor hereby irrevocably appoints
the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and in the name
of such Grantor or otherwise, from time to time in the Collateral Agent's discretion, so long as an Event of Default shall have
occurred and is continuing, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement (subject to the rights of such Grantor under Section 5 hereof), including,
without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 5(e)
hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments, documents
and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights
of the Collateral Agent and the Buyers with respect to any Collateral, and (v) to execute assignments, licenses and other documents
to enforce the rights of the Collateral Agent and the Buyers with respect to any Collateral. This power is coupled with an interest
and is irrevocable until the complete conversion of all of the Company's obligations under the Notes to equity securities of the
Company and/or indefeasible payment in full in cash of all obligations under the Notes (together with any matured indemnification
obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured contingent indemnification
obligations).

 

For the purpose of enabling the Collateral
Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be lawfully entitled to exercise such
rights and remedies upon and during an Event of Default, and for no other purpose, each Grantor hereby grants to the Collateral
Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation
to such Grantor) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor,
wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may
be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding anything contained
herein to the contrary, but subject to the provisions of the Securities Purchase Agreement that limit the right of such Grantor
to dispose of its property and Section 5(h) hereof, so long as no Event of Default shall have occurred and be continuing,
such Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect
to the Intellectual Property in the ordinary course of its business. In furtherance of the foregoing, unless an Event of Default
shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of a Grantor, execute and
deliver any instruments, certificates or other documents, in the form so requested, which such Grantor shall have certified are
appropriate (in such Grantor's judgment) to allow it to take any action permitted above (including relinquishment of the license
provided pursuant to this clause (c) as to any Intellectual Property). Further, upon the complete conversion of all of the Company's
obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding
any inchoate or unmatured contingent indemnification obligations), the Collateral Agent (subject to Section 10(f) hereof)
shall release and reassign to such Grantor all of the Collateral Agent's right, title and interest in and to the Intellectual Property,
all without recourse, representation or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral Agent
shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by such Grantor in accordance
with the second sentence of this clause (c). Each Grantor hereby releases the Collateral Agent from any claims, causes of action
and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under
the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent's gross negligence
or willful misconduct, as determined by a final determination of a court of competent jurisdiction.

 

 

 

    	 	13	 

     

    

 

If a Grantor fails to perform any agreement
contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement or obligation, in the name of
such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred in connection therewith shall be payable
by such Grantor pursuant to Section 8 hereof and shall be secured by the Collateral.

 

The powers conferred on the Collateral
Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.

 

Anything herein to the contrary notwithstanding
(i) each Grantor shall remain liable under the Licenses and otherwise with respect to any of the Collateral to the extent set forth
therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise
by the Collateral Agent of any of its rights hereunder shall not release such Grantor from any of its obligations under the Licenses
or otherwise in respect of the Collateral, and (iii) the Collateral Agent shall not have any obligation or liability by reason
of this Agreement under the Licenses or with respect to any of the other Collateral, nor shall the Collateral Agent be obligated
to perform any of the obligations or duties of such Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

 

Section
7.      Remedies
Upon Event of Default. If any Event of Default shall have occurred and be continuing:

 

The Collateral Agent may exercise in respect
of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights
and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also
may (i) take absolute control of the Collateral, including, without limitation, transfer into the Collateral Agent's name or into
the name of its nominee or nominees (to the extent the Collateral Agent has not theretofore done so) and thereafter receive, for
the benefit of the Collateral Agent, all payments made thereon, give all consents, waivers and ratifications in respect thereof
and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of its respective
Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place or places to be designated
by the Collateral Agent that is reasonably convenient to both parties, and the Collateral Agent may enter into and occupy any premises
owned or leased by such Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order
to effectuate the Collateral Agent's rights and remedies hereunder or under law, without obligation to such Grantor in respect
of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral
for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms
as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof
upon such terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale
or any other disposition of its respective Collateral shall be required by law, at least ten (10) days' notice to such Grantor
of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral
is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale or other disposition
of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the Buyers arising
by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that
such Grantor may have to require that all or any part of such Collateral be marshalled upon any sale (public or private) thereof.
Each Grantor hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without
warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like,
and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any
such sale of Collateral. In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent, such Grantor
shall cease any use of the Intellectual Property or any Trademark similar to any Trademark contained in the Collateral for any
purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time, upon 10 days' prior notice to
such Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual
Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall
in its sole discretion determine to the extent consistent with any restrictions or conditions imposed upon such Grantor with respect
to such Intellectual Property by license or other contractual arrangement; and (2) the Collateral Agent may, at any time, pursuant
to the authority granted in Section 6 hereof (such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual
Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.

 

 

 

    	 	14	 

     

    

 

Any cash held by the Collateral Agent as
Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale of or collection from, or other realization
upon, all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral
for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent pursuant to Section
8 hereof) in whole or in part by the Collateral Agent against, all or any part of the Obligations in such order as the Collateral
Agent shall elect, consistent with the provisions of the Securities Purchase Agreement. Any surplus of such cash or Cash Proceeds
held by the Collateral Agent and remaining after the complete conversion of all of the Company's obligations under the Notes to
equity securities of the Company and/or indefeasible payment in full in cash of all obligations under the Notes (together with
any matured indemnification obligations as of the date of such conversion and/or payment, but excluding any inchoate or unmatured
contingent indemnification obligations) shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a
court of competent jurisdiction shall direct.

 

In the event that the proceeds of any such
sale, collection or realization are insufficient to pay all amounts to which the Collateral Agent and the Buyers are legally entitled,
each Grantor shall be liable for the deficiency, together with interest thereon at the highest rate specified in any of the applicable
Transaction Documents for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together
with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the
Collateral Agent to collect such deficiency.

 

Each Grantor hereby acknowledges that if
the Collateral Agent complies with any applicable state, provincial, or federal law requirements in connection with a disposition
of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of
the Collateral.

 

The Collateral Agent shall not be required
to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or
other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the Collateral Agent's rights hereunder and in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent
that each Grantor lawfully may, such Grantor hereby agrees that it will not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the enforcement of the Collateral Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, such Grantor hereby irrevocably waives
the benefits of all such laws.

 

Section
8.      Indemnity
and Expenses.

 

Each Grantor agrees, jointly and severally,
to defend, protect, indemnify and hold the Collateral Agent and each of the Buyers, jointly and severally, harmless from and against
any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation,
reasonable legal fees, costs, expenses, and disbursements of such Person's counsel) to the extent that they arise out of or otherwise
result from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting solely and directly from such Person's gross negligence or willful misconduct, as determined by a final judgment of a
court of competent jurisdiction.

 

Each Grantor agrees, jointly and severally,
to, upon demand, pay to the Collateral Agent the amount of any and all costs and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any
collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i)
the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination
of this Agreement subject to and to the extent under Section 4(f) of the Securities Purchase Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement
of any of the rights of the Collateral Agent hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions
hereof.

 

 

 

    	 	15	 

     

    

 

Section
9.      Notices,
Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail,
postage prepaid and return receipt requested), telecopied or delivered, if to a Grantor at its address specified below and if to
the Collateral Agent to it, at its address specified below; or as to any such Person, at such other address as shall be designated
by such Person in a written notice to such other Person complying as to delivery with the terms of this Section 9. All such
notices and other communications shall be effective (a) if sent by certified mail, return receipt requested, when received or five
days after deposited in the mails, whichever occurs first, (b) if telecopied or sent by electronic mail, when transmitted (during
normal business hours), or (c) if delivered, upon delivery.

 

Section
10.    Miscellaneous.

 

No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent, and no waiver of any provision
of this Agreement, and no consent to any departure by a Grantor therefrom, shall be effective unless it is in writing and signed
by the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

No failure on the part of the Collateral
Agent to exercise, and no delay in exercising, any right hereunder or under any of the other Transaction Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof
or the exercise of any other right. The rights and remedies of the Collateral Agent or any Buyer provided herein and in the other
Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The
rights of the Collateral Agent or any Buyer under any of the other Transaction Documents against any party thereto are not conditional
or contingent on any attempt by such Person to exercise any of its rights under any of the other Transaction Documents against
such party or against any other Person, including but not limited to, any Grantor.

 

To the extent permitted by applicable law,
each Grantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations
and this Agreement and any requirement that the Collateral Agent exhaust any right or take any action against any other Person
or any Collateral. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 10(c) is knowingly made in contemplation of such benefits.
The Grantors hereby waive any right to revoke this Agreement, and acknowledge that this Agreement is continuing in nature and applies
to all Obligations, whether existing now or in the future.

 

No Grantor may exercise any rights that
it may now or hereafter acquire against any other Grantor that arise from the existence, payment, performance or enforcement of
any Grantor's obligations under this Agreement, including, without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of the Collateral Agent against any Grantor
or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from any Grantor, directly or indirectly, in cash or other property or by set-off
or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until the complete conversion
of all of the Company's obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in
cash of all obligations under the Notes (together with any matured indemnification obligations as of the date of such conversion
and/or payment, but excluding any inchoate or unmatured contingent indemnification obligations). If any amount shall be paid to
a Grantor in violation of the immediately preceding sentence at any time prior to the complete conversion of all of the Company's
obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding
any inchoate or unmatured contingent indemnification obligations), such amount shall be held in trust for the benefit of the Collateral
Agent and shall forthwith be paid to the Collateral Agent to be credited and applied to the Obligations and all other amounts payable
under the Transaction Documents, whether matured or unmatured, in accordance with the terms of the Transaction Documents, or to
be held as Collateral for any Obligations or other amounts payable under the Transaction Documents thereafter arising.

 

Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of
such provision in any other jurisdiction.

 

 

 

    	 	16	 

     

    

 

This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and effect until the complete conversion of all of the Company's
obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all obligations
under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment, but excluding
any inchoate or unmatured contingent indemnification obligations), and (ii) be binding on each Grantor and all other Persons who
become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights
and remedies of the Collateral Agent and the Buyers hereunder, to the benefit of the Collateral Agent and the Buyers and their
respective permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding
sentence, without notice to any Grantor, the Collateral Agent and the Buyers may assign or otherwise transfer their rights and
obligations under this Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted to the Collateral Agent and the Buyers herein or otherwise. Upon
any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Buyer shall mean the assignee
of the Collateral Agent or such Buyer. None of the rights or obligations of any Grantor hereunder may be assigned or otherwise
transferred without the prior written consent of the Collateral Agent, and any such assignment or transfer without the consent
of the Collateral Agent shall be null and void.

 

Upon the complete conversion of all of
the Company's obligations under the Notes to equity securities of the Company and/or indefeasible payment in full in cash of all
obligations under the Notes (together with any matured indemnification obligations as of the date of such conversion and/or payment,
but excluding any inchoate or unmatured contingent indemnification obligations), (i) this Agreement and the security interests
created hereby shall terminate and all rights to the Collateral shall revert to the respective Grantor that granted such security
interests hereunder, and (ii) the Collateral Agent will, upon such Grantor's request and at such Grantor's expense, (A) return
to such Grantor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof,
and (B) execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination,
all without any representation, warranty or recourse whatsoever.

 

THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT
TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.

 

ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF
NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

 

EACH GRANTOR AND (BY ITS ACCEPTANCE OF
THE BENEFITS OF THIS AGREEMENT) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

 

Nothing contained herein shall affect the
right of the Collateral Agent to serve process in any other manner permitted by law or commence legal proceedings or otherwise
proceed against any Grantor or any property of such Grantor in any other jurisdiction.

 

Each Grantor irrevocably and unconditionally
waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Section any special,
exemplary, punitive or consequential damages.

 

Section headings herein are included for
convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but
all of which taken together constitute one in the same Agreement.

 

[REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK]

 

 

 

 

    	 	17	 

     

    

 

IN WITNESS WHEREOF, each
Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above
written.

 

 

	 	GENIUS BRANDS INTERNATIONAL, INC., a Nevada corporation
	 	 
	 	 
	 	By:
	 	Name:
	 	

Title:
	 	 
	 	Address for Notices:
	 	 
	 	 
	 	 
	 	Email: bdenton@gnusbrands.com
	 	Facsimile: (310) 273-4202
	 	 
	 	 
	 	A SQUARED ENTERTAINMENT LLC, a Delaware limited liability company
	 	 
	 	 
	 	By:
	 	Name:
	 	Title:
	 	 
	 	 
	 	RAINBOW RANGERS PRODUCTIONS LLC, a California limited liability company
	 	 
	 	 
	 	By:
	 	Name:
	 	Title:
	 	 
	 	 
	ACCEPTED BY:	 
	 	 
	 	 
	By:	 
	Name:	 
	Title:	 
	Address:	 

 

 

 

 

    	 	18	 

     

    

 

SCHEDULE I

LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTION OF ORGANIZATION

 

	
        

        Legal Name
	
        

        State of Organization
	
        

        Type of Organization
	Organizational Identification Number
	 	 	
         

        
	
         

         

         

	 	 	
         

        
	
         

         

         

	 	 	
         

         
	
         

         

         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	I-1	 

     

    

 

SCHEDULE II

 

 

 

INTELLECTUAL PROPERTY AND LICENSES; TRADE
NAMES

 

		A.	COPYRIGHTS

 

 

		B.	PATENTS

 

 

		C.	TRADEMARKS

 

 

		D.	OTHER PROPRIETARY RIGHTS

 

 

		E.	TRADE NAMES

 

 

		F.	NAME OF, AND EACH TRADE NAME USED BY, EACH PERSON FROM WHICH A GRANTOR HAS ACQUIRED ANY SUBSTANTIAL PART OF THE COLLATERAL
WITHIN THE PRECEDING FIVE YEARS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	II-1	 

     

    

 

SCHEDULE III

 

 

LOCATIONS

 

	 

                                                                                                                 Grantor

                                                                                 
	 

                                                                                                                                                                                    Location

                                                                                 
	 

                                                                                                                                                                                    Description

                                                                                 

	
        

         

         
	 	
         

	
         

         
	 	
         

	
         

         
	 	
         

 

 

 

 

 

 

 

 

    	 	III-1	 

     

    

 

SCHEDULE IV

PROMISSORY NOTES, SECURITIES, DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS

 

 

 

A. Promissory Notes:

 

 

B. Securities and
Other Instruments:

 

 

C. Deposit Accounts, Securities Accounts
and Commodities Accounts:

 

	
        

         

        Grantor

         
	Name and Address of Institution Maintaining Account	
        

        Account Number
	
        

        Type of Account

	 	
         
	
         

         

        
	 
	 	
         
	
         

         
	 
	 	
         

         
	 

                                                                                 
	 
	 	
         

         
	 

                                                                                 
	 

 

 

 

 

 

 

 

 

 

 

    	 	IV-1	 

     

    

 

SCHEDULE V

 

 

UCC-1 FINANCING STATEMENTS

 

	 

                                                                        Name of Grantor

                                                                         
	

                                                                         

                                                                        Secretary of State

                                                                         

	 

                                                                                 
	 
	 

                                                                                 
	 
	 

                                                                                 
	 

 

 

 

 

 

 

 

    	 	V-1	 

     

    

 

SCHEDULE VI

 

COMMERCIAL TORT CLAIMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	VI-1	 

     

    

 

SCHEDULE VII

PLEDGED DEBT

 

	 

                                                                        Grantor

                                                                         
	Name of Maker	Description	Original Principal Amount
	 

                                                                                

                                                                                 
	 	 	 
	 

                                                                                 
	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	VII-1	 

     

    

 

SCHEDULE VIII

PLEDGED SHARES

 

	
        

        Grantor
	
        

        Name of Pledged Issuer
	Percentage of

                                                                                Outstanding

                                                                                Shares/Units
	
        

        

        Class
	
        

        Certificate Number

	
        

         

        

         
	 	 	 	 
	 

                                                                                                                                                                         

                                                                                 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	VIII-1	 

     

    

 

EXHIBIT A

 

 

[TRADEMARK] [PATENT] [COPYRIGHT] SECURITY AGREEMENT

 

WHEREAS, ______________________________
(the “Assignor”) [has adopted, used and is using, and holds all right, title and interest in and to, the trademarks
and service marks listed on the annexed Schedule 1A, which trademarks and service marks are registered or applied for in
the United States Patent and Trademark Office (the “Trademarks”)] [holds all right, title and interest in the
letter patents, design patents and utility patents, and all applications therefor, listed on the annexed Schedule 1A, which
patents are issued or applied for in the United States Patent and Trademark Office (the “Patents”)] [holds all
right, title and interest in the copyrights listed on the annexed Schedule 1A, which copyrights are registered or applied
for in the United States Copyright Office (the “Copyrights”)];

 

WHEREAS, the Assignor
has entered into a Pledge and Security Agreement, dated as of [__], 2020 (as amended, restated or otherwise modified from time
to time the “Security Agreement”), in favor of ___________________, as collateral agent for certain buyers (the
“Assignee”);

 

WHEREAS, pursuant to
the Security Agreement, the Assignor has assigned and granted to the Assignee for the benefit of the Buyers (as defined in the
Security Agreement) a continuing security interest in all right, title and interest of the Assignor in, to and under the [Trademarks,
together with, among other things, the good-will of the business symbolized by the Trademarks] [Patents] [Copyrights], including,
without limitation, all applications, registrations and recordings thereof, as applicable, and all proceeds thereof, including,
without limitation, any and all causes of action which may exist by reason of infringement, misappropriation or other violation
thereof and any and all damages arising from past, present and future infringements, misappropriations or other violations thereof
(the “Collateral”), to secure the payment, performance and observance of the “Obligations” (as defined
in the Security Agreement);

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor does hereby pledge, convey,
sell, assign, transfer and set over unto the Assignee and grants to the Assignee for the benefit of the Buyers a continuing security
interest in the Collateral.

 

The Assignor does hereby
further acknowledge and affirm that the rights and remedies of the Assignee with respect to the Collateral are more fully set forth
in the Security Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth
herein. In the event of a conflict between any provision of this [Trademark][Patent][Copyright] Security and the Security Agreement,
the terms of the Security Agreement shall govern.

 

IN WITNESS WHEREOF, the
Assignor has caused this [Trademark][Patent][Copyright] Security Agreement to be duly executed by its officer thereunto duly authorized
as of _____________, 2020

 

		[GRANTOR]
	 	 
	 	 
		By:____________________________	
		Name:

                                                         
	
		Title:

 

 

    	 	A-1	 

     

    

 

SCHEDULE 1A TO [TRADEMARK][PATENT][COPYRIGHT] SECURITY AGREEMENT

 

 

[Trademarks and Trademark Applications]

[Patent and Patent Applications]

[Copyright and Copyright Applications]

Owned by ______________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	A-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00306-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00306-of-00352.parquet"}]]