Kartoon Studios, Inc. has implemented a preferred stock rights agreement, effective July 1, 2026. This agreement establishes a dividend distribution of one preferred share purchase right for each outstanding common share. The rights will be distributed to stockholders of record as of July 13, 2026. The rights are designed to protect stockholders by imposing significant dilution on any person or group that acquires 10% or more of the company's common stock without prior board approval. The rights will initially be attached to common stock and will trade with it until a 'Distribution Time' is triggered. The 'Distribution Time' is defined as the earlier of a specific period after a 10% ownership threshold is crossed or after a tender/exchange offer commences. Upon the 'Distribution Time', separate rights certificates will be issued, and the rights will become exercisable. The rights will expire on June 29, 2027, unless redeemed or exchanged earlier. The Series D Participating Preferred Stock, which can be purchased upon exercise of the rights, has specific dividend, liquidation, and voting rights, designed to approximate the value of one common share. The company retains the option to redeem the rights for $0.001 per right at any time before the 'Distribution Time' or the 'Final Expiration Time'.