|
|
Item 1.01
|
Entry into a Material Definitive Agreement.
|
Share Purchase Agreement
On December 1, 2021, Genius
Brands International, Inc., a Nevada corporation (“Genius” or the “Company”) and F&M Film-und Medien Beteiligungs
GmbH, a limited liability company organized under the laws of Austria (“F&M”), entered into a Share Purchase Agreement
(the “Purchase Agreement”) pursuant to which Genius acquired 3,000,000 shares (the “Purchased Shares”) of Your
Family Entertainment Aktiengesellschraft (“YFE”), a corporation under the laws of Germany and whose shares are publically
traded on the Frankfurt Stock Exchange. Capitalized terms used herein but not otherwise defined have the meaning set forth in the Purchase
Agreement.
The total consideration paid
by the Company in the transaction at closing consisted of EUR 3,000,000 in cash and 2,281,269 shares (the “Closing Shares”)
of the Company’s common stock, $0.001 par value per share (the “Common Stock”) with a value of approximately EUR
3,000,000. The Purchased Shares constitute approximately 28.6% of the issued and outstanding capital stock of YFE (the “Shares”)
and approximately 42.9 % of the Shares held by F&M. Genius is obligated under the Purchase Agreement to use reasonable commercial
efforts to provide registration rights for the Closing Shares pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), or in the alternative to provide such efforts to assist in securing the availability of an exemption from such registration,
subject to the requirements of Rule 144 promulgated by the Securities Exchange Commission under the Securities Act. The parties to the
Purchase Agreement made certain representations, warranties and covenants as set forth in the Purchase Agreement.
Prior to the closing of the
Purchase Agreement, neither the Company nor any of its affiliates, or any director or officer of the Company or any of its affiliates,
or any associate of any such director or officer, had any material relationship with F&M. The terms of the Purchase Agreement, including
the purchase price, were determined by arm’s length negotiations between the Company and F&M.
Shareholders Agreement
In connection with the closing
of the Purchase Agreement, Genius and F&M also entered into a Shareholder Agreement (the “Shareholder Agreement”) providing
for certain rights, powers and privileges with respect to the Shares held by Genius and F&M, respectively.
The Shareholder Agreement obligates
F&M to, among other things, exercise its voting rights in the next shareholders meeting of YFE to elect a Genius nominee to YFE’s
supervisory board. The Shareholder Agreement also grants, subject to certain exceptions noted therein, Genius 51% of the voting power
with respect to the Shares held by and between Genius and F&M, and obligates Genius and F&M to vote their respective Shares in
accordance with the vote of the majority of the voting power as and between them. F&M retains the ability to vote its shares outside
of the requirements of the Shareholder Agreement in the event of a vote that under German Law requires a designated super-majority.
The Shareholder Agreement obligates
Genius to, among other things, make a mandatory tender offer to the shareholders of YFE at a price of EUR 2.00 per Share (the “MTO”).
The Shareholder Agreement also obligates Genius to make a future investment in YFE of between EUR 4,000,000 and EUR 7,000,000, via a combination
of the purchase of convertible bonds of YFE or such other investment terms to be negotiated between Genius and YFE. Further, under the
Shareholder Agreement, Genius is obligated to (i) use best commercial efforts to release F&M from its guarantee of certain YFE indebtedness
with the Bank of Austria AG (the “Bank of Austria”), including providing alternative security to the Bank of Austria, if so
requested; (ii) use commercially reasonable efforts to procure financing for YFE’s production of at least two animated series in
each of the two years following the completion of the MTO; and (iii) use commercially reasonable efforts to procure a substantial acquisition
by YFE within the same two-year period.
The preceding summary does not
purport to be complete and is qualified in its entirety by reference to the Purchase Agreement and Shareholder Agreement that are filed
as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.