Document:

ex102.htm

Exhibit 10.02

 

THIS DEBENTURE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS DEBENTURE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CLICKER INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CONVERTIBLE DEBENTURE

 

FOR VALUE RECEIVED, CLICKER, Inc., a Nevada corporation (the “Borrower”), promises to pay to Flyback, LLC (the “Holder”) or its registered assigns or successors in interest, the sum of Three Hundred Thousand Dollars ($300,000), together with any accrued and unpaid interest hereon, on March 20, 2013 (the “Maturity Date”) if not sooner paid.

 

Capitalized terms used herein without definition shall have the meanings ascribed to such terms in that certain Securities Purchase Agreement dated as of September 21, 2011, between Borrower and the Holder (as amended, modified or supplemented from time to time, the “Purchase Agreement”).

 

The following terms shall apply to this Debenture:

 

ARTICLE I

INTEREST & AMORTIZATION

 

1.1. Contract Rate.  Subject to Sections 3.10 and 5.7 hereof, interest payable on this Debenture shall accrue at a rate per annum equal to ten percent (10%).

 

1.2. Payments.  Payment of the aggregate principal amount outstanding under this Debenture (the “Principal Amount”), together with all accrued interest thereon shall be made on the Maturity Date.  Notwithstanding the foregoing, the Borrower shall have the right to pay this Debenture at any time after providing the Holder with at least five (5) days prior written notice of its intent to repay the outstanding Principal Amount of the Debenture plus any accrued but
unpaid interest.

 

ARTICLE II

CONVERSION REPAYMENT

 

2.1. Optional Conversion.  Subject to the terms of this Article II, the Holder shall have the right, but not the obligation, at any time after the Stockholder Approval until the Maturity Date, or thereafter during an Event of Default and to convert all or any portion of the outstanding Principal Amount and/or accrued interest and fees due and payable into fully paid and nonassessable shares of the Common Stock at the Conversion Price. The shares of Common Stock to be issued upon such conversion are herein referred to
as the “Conversion Shares.”  The “Conversion Price” shall mean fifty percent (50%) of the average of the closing prices of the Common Stock during the five (5) trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP or such other quotation service as mutually agreed to by the parties.  The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

 

2.2. Conversion Limitation.  Notwithstanding anything contained herein to the contrary, the Holder shall not be entitled to convert pursuant to the terms of this Debenture an amount that would be convertible into that number of Conversion Shares which would exceed the difference between the number of shares of Common Stock beneficially owned by such Holder and 4.99% of the outstanding shares of Common Stock of Borrower.  For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder.

 

 

  

1

  

 

 

2.3. Mechanics of Holder’s Conversion.  Subject to Section 2.2, this Debenture will be converted by the Holder in part from time to time after the Issue Date, by submitting to the Borrower a Notice of Conversion (by facsimile or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time).  On each Conversion Date (as hereinafter defined) and in accordance with its Notice of Conversion, the Holder shall make the appropriate reduction to the
Principal Amount, accrued interest and fees as entered in its records and shall provide written notice thereof to the Borrower on the Conversion Date.  Each date on which a Notice of Conversion is delivered or telecopied to Borrower in accordance with the provisions hereof shall be deemed a Conversion Date (the “Conversion Date”).  A form of Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit A.  Pursuant to the terms of the Notice of Conversion, Borrower will issue instructions to the transfer agent accompanied by an opinion of counsel to Borrower of the Notice of Conversion and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to the Holder by physical
delivery or crediting the account of the Holder’s designated broker with the Depository Trust Corporation (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within five (5) business days after receipt by Borrower of the Notice of Conversion (the “Delivery Date”). In the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Conversion Shares issuable upon such conversion shall be deemed to have been issued upon the date of receipt by Borrower of the Notice of Conversion. The Holder shall be treated for all purposes as the record holder of such Common Stock, unless the Holder
provides Borrower written instructions to the contrary.

 

2.4. Late Payments.  The Borrower understands that a delay in the delivery of the shares of Common Stock in the form required pursuant to this Article beyond the Delivery Date could result in economic loss to the Holder.  As compensation to the Holder for such loss, the Borrower agrees to pay late payments to the Holder for late issuance of such shares in the form required pursuant to this Article II upon conversion of the Debenture, in the amount equal to $500 per business day after the Delivery
Date.  The Borrower shall pay any payments incurred under this Section in immediately available funds upon demand.

 

2.5. Conversion Mechanics.

 

(a) The number of shares of Common Stock to be issued upon each conversion of this Debenture shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price.

 

(b) The Conversion Price and number and kind of shares or other securities to be issued upon conversion shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:

 

A. Reclassification, etc.  If Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes, this Debenture, as to the unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock (i) immediately prior to or (ii)
immediately after such reclassification or other change at the sole election of the Holder.

 

2.6. Authorized Shares. Subject to Stockholder Approval, the Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Debenture.  Subject to Stockholder Approval, the Borrower is required at all times to have authorized and reserved such number of shares that is actually issuable upon full
conversion of the Debenture (based on the Conversion Price in effect from time to time) (the “Reserved Amount”).  The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable.  In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Debenture shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Debenture.  The Borrower agrees that its issuance of this Debenture shall constitute full authority
to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Debenture.

 

If, at any time after Stockholder Approval, Holder submits a Notice of Conversion, and the Borrower does not have sufficient authorized but unissued shares of Common Stock available to effect such conversion in accordance with the provisions of this Article II (a “Conversion Default”), subject to Section 2.2, the Borrower shall issue to the Holder all of the shares of Common Stock which are then available to effect such conversion.  The portion of this Debenture which the Holder included in its Conversion Notice and which exceeds the amount which is then convertible into available shares of Common Stock shall, notwithstanding anything
to the contrary contained herein, not be convertible into Common Stock in accordance with the terms hereof until (and at the Holder’s option at any time after) the date additional shares of Common Stock are authorized by the Borrower to permit such conversion.  In addition, the Borrower shall pay to the Holder $1,000 per day (a “Conversion Default Payment”) to the date (the “Authorization Date”) that the Borrower authorizes a sufficient number of shares of Common Stock to effect conversion of the full outstanding Principal Amount of this Debenture.  The Borrower shall use its best efforts to authorize a sufficient number of shares of Common Stock as soon as practicable following the earlier of (i) such time that the Holder
notifies the Borrower or that the Borrower otherwise becomes aware that there are or likely will be insufficient authorized and unissued shares to allow full conversion thereof and (ii) a Conversion Default.  The Borrower shall send notice to the Holder of the authorization of additional shares of Common Stock and the Authorization Date along with the Holder’s Conversion Default Payments in immediately available funds.

 

Nothing herein shall limit the Holder’s right to pursue actual damages (to the extent in excess of the Conversion Default Payments) for the Borrower’s failure to maintain a sufficient number of authorized shares of Common Stock, and Holder shall have the right to pursue all remedies available at law or in equity (including degree of specific performance and/or injunctive relief).

 

2.7. Issuance of New Debenture.  Upon any partial conversion of this Debenture, a new Debenture containing the same date and provisions of this Debenture shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Debenture and interest which shall not have been converted or paid. Subject to the provisions of Article III, the Borrower will pay no costs, fees or any other consideration to the Holder for the production and issuance of a new Debenture.

 

ARTICLE III

EVENTS OF DEFAULT

 

The occurrence of any of the following events set forth in Sections 3.1 through 3.9, inclusive, shall be an “Event of Default”:

 

3.1. Failure to Pay Principal, Interest or Other Fees.  Borrower fails to pay principal, interest or other fees hereon and such failure shall continue for a period of five (5) days following the date upon which any such payment was due.

 

 

 

  

2

  

 

3.2. Breach of Covenant.  Borrower breaches any covenant or other term or condition of this Debenture in any material respect and such breach, if subject to cure, continues for a period of five (5) days after the occurrence thereof.

 

3.3. Breach of Representations and Warranties.  Any representation or warranty of Borrower made herein or the Purchase Agreement shall be false or misleading in any material respect.

 

3.4. Stop Trade.  An SEC stop trade order or Principal Market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of 10 consecutive days, excluding in all cases a suspension of all trading on a Principal Market, provided that Borrower shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Principal Market within 60 days of such notice.  The “Principal
Market” for the Common Stock shall include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock), or any securities exchange or other securities market on which the Common Stock is then being listed or traded.

 

3.5. Receiver or Trustee.  The Borrower or any of its Subsidiaries shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.

 

3.6. Judgments.  Any money judgment, writ or similar final process shall be entered or filed against the Borrower or any of its Subsidiaries or any of their respective property or other assets for more than $100,000 in the aggregate for Borrower, and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days.

 

3.7. Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any of its Subsidiaries.

 

3.8. Default Under Other Agreements.  The occurrence of an Event of Default under and as defined in the Purchase Agreement or any event of default (or similar term) under any other agreement evidencing indebtedness of at least $100,000.

 

3.9. Failure to Deliver Common Stock or Replacement Debenture.  Borrower’s failure to timely deliver Common Stock to the Holder pursuant to and in the form required by this Debenture and the Purchase Agreement, if such failure to timely deliver Common Stock shall not be cured within five (5) days.  If Borrower is required to issue a replacement Debenture to Holder and Borrower shall fail to deliver such replacement Debenture within seven (7) Business Days.

 

DEFAULT RELATED PROVISIONS

 

3.10. Default Interest Rate.  Following the occurrence and during the continuance of an Event of Default, interest on this Debenture shall automatically be instated at a rate of 18% per annum, effective as of the date of Issuance of this Debenture, which interest shall be payable in cash or Common Stock, at the option of the Borrower.

 

3.11. Conversion Privileges.  The conversion privileges set forth in Article II shall remain in full force and effect immediately from the date hereof and until this Debenture is paid in full.

 

3.12. Cumulative Remedies.  The remedies under this Debenture shall be cumulative.

 

ARTICLE IV

DEFAULT PAYMENTS

 

4.1. Default Payment.  If an Event of Default occurs and is continuing beyond any applicable grace period, the Holder, at its option, may elect, in addition to all rights and remedies of Holder under the Purchase Agreement and all obligations of the Borrower under the Purchase Agreement to require the Borrower to make a Default Payment (“Default Payment”).  The Default Payment shall be 105% of the outstanding principal amount of the Debenture, plus accrued but
unpaid interest, all other fees then remaining unpaid, and all other amounts payable hereunder. The Default Payment shall be applied first to any fees due and payable to Holder pursuant to the Debentures or the Ancillary Agreements, then to accrued and unpaid interest due on the Debentures and then to outstanding principal balance of the Debentures.

 

4.2. Default Payment Date.  The Default Payment shall be due and payable immediately on the date that the Holder has exercised its rights pursuant to Section 4.1 (“Default Payment Date”).

 

 

 

  

3

  

 

ARTICLE V

MISCELLANEOUS

 

5.1. Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.  All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

5.2. Notices.  Any notice herein required or permitted to be given shall be in writing and provided in accordance with the terms of the Purchase Agreement.

 

5.3. Amendment Provision.  The term “Debenture” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented, and any successor instrument as it may be amended or supplemented.

 

5.4. Assignability.  This Debenture shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns, and may not be assigned by the Holder without the prior written consent of the Borrower, which consent may not be unreasonably withheld.

 

5.5. Cost of Collection.  If default is made in the payment of this Debenture, each Borrower shall jointly and severally pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.

 

5.6. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Debenture shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to principles of conflicts of law.  HOLDER AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS DEBENTURE OR ANY TRANSACTION CONTEMPLATED HEREIN, INCLUDING CLAIMS BASED ON CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER COMMON LAW OR STATUTORY BASES. Each
party hereby submits to the exclusive jurisdiction of the state and federal courts located in the County of New York, State of New York.  If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Debenture or any of the transactions contemplated herein will be finally settled by binding arbitration in New York, New York in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules.  The arbitrator shall apply New York law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  Notwithstanding the
foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph.  The expenses of the arbitration, including the arbitrator’s fees and expert witness fees, incurred by the parties to the arbitration, may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator.  Unless and until the arbitrator decides that one party is to pay for all (or a share) of such expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

5.7. Maximum Payments.  Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law.  In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by Borrowers to the Holder and thus refunded to the Borrowers

 

5.8. Construction.  Each party acknowledges that its legal counsel participated in the preparation of this Debenture and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Debenture to favor any party against the other.

 

 

 

  

4

  

 

IN WITNESS WHEREOF, Borrower has caused this Convertible Debenture to be signed in its name effective as of this 21st day of September, 2011.

 

	 	
CLICKER INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ 	 
	 	 	
Name: Lloyd Lapidus

	 
	 	 	
Title:   Chief Executive Officer

	 
	 	 	 	 

 

 

  

5

  

 

 

EXHIBIT A

 

NOTICE OF CONVERSION

 

(To be executed by the Holder in order to convert all or part of the Debenture

 

into Common Stock)

 

[Name and Address of Holder]

 

 

The undersigned hereby converts $_________ of the principal due on March 20, 2013 under the Convertible Debenture issued by CLICKER Inc. (“Borrower”) dated as of September 21, 2011 by delivery of shares of Common Stock of Borrower on and subject to the conditions set forth in Article II of such Debenture.

 

	
1.

	
Date of Conversion

	
_______________________

 

	
2.

	
Shares To Be Delivered:

	
_______________________

 

______________________________

 

By:____________________________

 

Name:__________________________

 

Title:___________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

5ex101.htm

Exhibit 10.1

 

THIRD CONSENT AND WAIVER AGREEMENT

This Third Consent and Waiver Agreement (“Agreement”) is made and entered into as of September 23, 2011, by and among The Brainy Brands Company, Inc., a Delaware corporation (the “Company”), and the parties identified on the signature page hereto (“Subscribers”).  Capitalized terms used but not defined herein will have the meanings assigned to them in the Subscription Agreement (as defined below).

WHEREAS, the Company and Subscribers entered into Subscription Agreements dated as of November 24, 2010 (“November Offering”),  April 18, 2011 (“April Offering”) and August 11, 2011 (“August Offering”) (each a “Subscription Agreement”); and

WHEREAS, pursuant to the Subscription Agreements, the Company issued to the Subscribers secured convertible promissory notes (“Notes”) and Warrants (the “Warrants”); and

WHEREAS, the August Offering contemplated the sale of up to $2,400,000 of principal amount of secured promissory Notes and Warrants in three tranches, the first of which occurred August 11, 2011 (“Initial Closing of August Offering”); and

WHEREAS, in connection with the Second Closing of the August Offering, the Conversion Price of the Notes is to be reduced to $0.20 and the Purchase Price for each Warrant Share is to be $0.20; and

WHEREAS, Schedule 9(e) to the August Offering Subscription Agreement is to be amended to set forth the Use of Proceeds of the proceeds of the Second Closing of the August Offering in the form annexed hereto as Exhibit A; and

WHEREAS, Schedule 12(a) to the November Offering, April Offering and August Offering Subscription Agreement is to be modified to increase from 7,500,000 to 15,000,000, the amount of shares of Common Stock to be issuable pursuant to the Plan, and restated in the form annexed hereto as Exhibit B; and

WHEREAS, the Subscription Agreements and Transaction Documents (as defined in the Subscription Agreement for the November Offering, April Offering and August Offering) permit a Majority in Interest representing 75% of the outstanding Principal Amount of the Notes on the date the consent is obtained to consent to or waive on behalf of all holders of the Notes any provision or term of the Transaction Documents or to take any action under the Transaction Documents; and

WHEREAS, the Subscribers wish to: (i) consent to the reduction of the Conversion Price of the Notes issued and issuable in the November Offering, April Offering and August Offering to $0.20 per Conversion Share, (ii) the reduction of the Purchase Price per Warrant Share issued and issuable in the November Offering, April Offering and August Offering to $0.20, (iii) the amendment and restatement of Schedule 1, Schedule 9(e), and Schedule 12(a) to the August Offering Subscription Agreement in the forms annexed hereto as Exhibits A, B and C, (iv) consent to the addition of the additional Subscribers identified on  Exhibit A and the signature pages hereto, and (v) consent to the other terms of this Agreement.

NOW, THEREFORE, the Company and the Subscribers hereby agree as follows:

1.           Definitions.  Capitalized terms used and not otherwise defined herein that are defined in the Subscription Agreements shall have the meanings given to such terms in the Subscription Agreements.

2.           (a)           Reset.  The Company and the Subscribers acknowledge and agree that as a result of the Second Closing of the August Offering, the Subscribers to the November Offering, April Offering and Initial Closing of the August Offering are entitled to and are hereby granted anti-dilution protection and a reset of the Conversion Price of their Notes and Purchase Price of their Warrants to $0.20, subject to further reduction as described in the Transaction Documents.  The Majority in Interest knowingly waive the application of the last sentence of Section 3.3 of each of the Warrants issued in connection with the November Offering and April Offering, one time only, with respect to the amount of Warrant Shares that may be purchased upon full exercise of each of such Warrants so that the amount of Warrant Shares for which the Warrants may be exercised immediately following the execution of this Agreement is the same as immediately preceding the execution of this Agreement.  The foregoing waiver applies only with respect to the reduced Warrant Purchase Price described in this Section 2(a).

 

 

 

  

1

  

 

(b)           Security.   The undersigned consent to the amendment of all Schedules and Exhibits to the Transaction Documents, including but not limited to Schedule 1 to the August Offering Subscription Agreement to reflect the amended amount of Principal Amount of Notes to be acquired by the Subscribers thereon in connection with the Second Closing to the August Offering as set forth on Exhibit A hereto, Schedule 9(e) to the August Offering Subscription Agreement to set forth the Use of Proceeds of the proceeds of the Second Closing of the August Offering in the form annexed hereto as Exhibit B, Schedule 12(a) to the November Offering, April Offering and August Offering Subscription Agreement to increase from 7,500,000 to 15,000,000, the amount of shares of Common Stock to be issuable pursuant to the Plan, in the form annexed hereto as Exhibit C, and  the Schedule to the Security Agreement to include the subscribers to the Second Closing of the August Offering as Secured Parties pari-passu with the Subscribers and authorize the Collateral Agent to make additional filings at the discretion of the Collateral Agent to memorialize the security interest to be granted to the subscribers to the Second Closing of the August Offering.

3.           Increase Authorized Shares.  The Company covenants to use its best efforts to obtain an increase in the amount of authorized Common Stock (the “Increase”) to 500,000,000 shares, not later than December 1, 2011.  Failure to effectuate the Increase on or before December 1, 2011 is an Event of Default under the Notes.

4.           Additional Subscribers.  The additional Subscribers identified on Exhibit A and the signature pages hereto (the “New Subscribers”) are hereby added as Subscribers under the August Offering Subscription Agreement. Without limiting the generality of the foregoing, the Subscribers hereby consent to the addition of the New Subscribers as parties to the August Offering Subscription Agreement  and Transaction Documents, and the New Subscribers hereby (i) enter into each of the Transaction Documents under the August 2011 Subscription Agreement to which the Subscribers are a party, and (ii) make the representation and warranties made by the Subscribers under the August Offering Subscription Agreement.

 

5.           Full Force and Effect.   Except as expressly set forth herein, this Agreement shall not be deemed to be a waiver, amendment or modification of any provisions of the Transaction Documents or of any right, power or remedy of the Subscribers, or constitute a waiver of any provision of the Transaction Documents (except to the extent herein set forth), or any other document, instrument and/or agreement executed or delivered in connection therewith and any other agreement to which the Subscribers may be parties to, in each case whether arising before or after the date hereof or as a result of performance hereunder or thereunder.  Except as set forth herein, the Subscribers reserve all rights, remedies, powers, or privileges available under the Transaction Documents and any other agreement to which the Subscribers may be parties to, at law or otherwise.  This Agreement shall not constitute a novation or satisfaction and accord of the Transaction Documents or any other document, instrument and/or agreement executed or delivered in connection therewith and any other agreement to which the Subscribers may be parties to.  This Agreement shall be included in the definition of the Transaction Documents.

6.           Holding Period.  The Company acknowledges and agrees that the holding period of the Securities issued pursuant to the Transaction Documents for purposes of Rule 144 under the Securities Act of 1933 remains unaffected by the terms and transactions described in this Agreement, and is not reset or restarted in any way as a result of the terms and transactions described in this Agreement.

7.           Agreement.  Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

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

9.           Governing Law.  This Agreement will be governed by and interpreted in the same manner as the Transaction Documents.

10.           Amendments.  This Agreement and any term hereof may be changed, waived, discharged or terminated in the same manner as the Transaction Documents.

11.           Severability.   The invalidity or unenforceability of any provision hereof will in no way affect the validity or enforceability of any other provision.

[Signature page to follow]

  

2

  

 

 

IN WITNESS WHEREOF, the Company and the undersigned have caused this Agreement to be executed as of the date first written above.

 

	 	
THE BRAINY BRANDS COMPANY INC.

	 
	 	 the “Company”	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ John Benfield	 
	 	 	 	 

 

“NEW SUBSCRIBERS”

 

	 FLM HOLDINGS LLC  	 	 	EDWARD KARR	 
	 	 	 	 	 
	 	 	 	 	 
	
By: /s/ Samuel DelPresto

	 	 	
/s/ Edward Karr

	 
	
Name: Samuel DelPresto

	 	 	
 

	 
	
Title: Managing Member

	 	 	
 

	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
BRILLIANT SINO INVESTMENT LIMITED

	 	 	 	 
	 	 	 	 	 
	
By:  /s/ Andrew Lee

	 	 	 	 
	Name: Andrew Lee	 	 	 	 
	Title: Director	 	 	 	 

                                                                       

  

3

  

                                                                          

IN WITNESS WHEREOF, the Company and the undersigned have caused this Agreement to be executed as of the date first written above.

 

 

	 	
THE BRAINY BRANDS COMPANY INC.

	 
	 	the “Company”	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ John Benfield	 
	 	 	 	 

 

“SUBSCRIBERS”

 

 

	ALPHA CAPITAL ANSTALT   	 	WHALEHAVEN CAPITAL FUND LIMITED
	 	 	 
	
By: /s/ Konrad Ackerman

	 	
By: /s/ Vadim Mats

	
Name: Konrad Ackerman

	 	
Name: Vadim Mats

	
Title: Director

	 	
Title: CFO

	
Principal Amount of Notes held: $500,000 (11/24/10)

	 	
Principal Amount of Notes held: $500,000 (11/24/10)

	
Principal Amount of Notes held: $137,500 (4/18/11)

	 	
Principal Amount of Notes held: $125,000 (4/18/11)

	
Principal Amount of Notes held: $137,500 (5/20/11)

	 	
Principal Amount of Notes held: $125,000 (5/20/11)

	
Principal Amount of Notes held: $72,800 (8/11/11)

	 	
Principal Amount of Notes held: $65,000 (8/11/11)

	  	 	  
	  	 	  
	
FLM HOLDINGS LLC

	 	
FJD HOLDINGS LLC

	  	 	  
	  	 	  
	  	 	  
	
By: /s/ Samuel DelPresto

	 	
By:  /s/ Frank D’Agostino Jr.

	
Name: Samuel DelPresto

	 	
Name: Frank D’Agostino Jr.

	Title: Managing Member	 	
Title: Managing Member

	
Principal Amount of Notes held: $206,488.89 (11/24/10)

	 	
Principal Amount of Notes held: $250,000 (11/24/10)

	
Principal Amount of Notes held: $150,000 (4/18/11)

	 	  
	
Principal Amount of Notes held: $150,000 (5/20/11)

	 	  
	 	 	 
	 	 	 
	 	 	 
	
BRILLIANT SINO INVESTMENT LIMITED

	 	 
	 	 	 
	 	 	 
	
By: /s/ Andrew Lee

	 	 
	
Name: Andrew Lee

	 	 
	
Title: Director

	 	 
	
Principal Amount of Notes held: $300,000 (5/5/11)

	 	 
	 	 	 

                                                                        

  

4

  

	
BRIO CAPITAL L.P.

	 	
EDWARD KARR

	  	 	  
	  	 	  
	  	 	  
	
By: /s/ Shaye Hirsch

	 	
/s/ Edward Karr

	
Name: Shaye Hirsch

	 	
Principal Amount of Notes held: $100,000 (11/24/10)

	
Title: Managing Partner

	 	 
	
Principal Amount of Notes held: $150,000 (11/24/10)

	 	  
	
Principal Amount of Notes held: $37,500 (4/18/11)

	 	  
	
Principal Amount of Notes held: $37,500 (5/20/11)

	 	  
	
Principal Amount of Notes held: $20,800 (8/11/11)

	 	  
	  	 	  
	 	 	 
	
ADVENTURE VENTURES LLC

	 	
OSHER CAPITAL PARTNERS LLC

	  	 	  
	  	 	  
	  	 	  
	
By: /s/ Ari Kluger

	 	
By:  /s/ Ari Kluger

	
Name:

	 	
Name:

	
Title:

	 	
Title:

	
Principal Amount of Notes held: $125,000 (11/24/10)

	 	
Principal Amount of Notes held: $125,000 (11/24/10)

	
Principal Amount of Notes held: $36,400 (8/11/11)

	 	
Principal Amount of Notes held: $62,500 (4/18/11)

	  	 	
Principal Amount of Notes held: $62,500 (5/20/11)

	  	 	  
	  	 	  
	
MAIELLA INVESTMENT HOLDINGS LLC

	 	
BRISTOL INVESTMENT FUND, LTD.

	  	 	  
	  	 	  
	  	 	  
	
By: /s/ Gerard Adams

	 	
By:  /s/Paul Kessler

	
Name: Gerard Adams

	 	
Name: Paul Kessler

	
Title: Principal

	 	
Title: Director

	
Principal Amount of Notes held: $150,000 (11/24/10)

	 	
Principal Amount of Notes held: $280,000 (11/24/10)

	 	 	
Principal Amount of Notes held: $50,000 (4/18/11)

	  	 	
Principal Amount of Notes held: $50,000 (5/20/11)

	  	 	
Principal Amount of Notes held: $25,000 (8/11/11)

	  	 	  
	  	 	  
	
BRISTOL CAPITAL ADISORS

	 	
BRISTOL CAPITAL, LLC

	
PROFIT SHARING PLAN

	 	  
	  	 	  
	  	 	  
	
By: /s/ Paul Kessler

	 	
By:  /s/ Paul Kessler

	
Name: Paul Kessler

	 	
Name: Paul Kessler

	
Title: Director

	 	
Title: Director

	
Principal Amount of Notes held: $40,000 (11/24/10)

	 	
Principal Amount of Notes held: $80,000 (11/24/10)

	 	 	
Principal Amount of Notes held: $50,000 (4/18/11)

	  	 	
Principal Amount of Notes held: $50,000 (5/20/11)

	  	 	  
	  	 	  

  

5

  

 

 

	
WHALEHAVEN OPPORTUNITIES FUND L.P.

	 	
AMPERSAND MANAGEMENT AS TRUSTEE

	  	 	
OF THE MUNT TRUST

	  	 	  
	  	 	  
	  	 	  
	
By: /s/ Vadim Mats

	 	
By: /s/ Jean Paul Le Coeq/[illegible]

	
Name:Vadim Mats

	 	
Name: Jean Paul Le Coeq/[illegible]

	
Title: CFO

	 	
Title: Authorized Signatories

	
Principal Amount of Notes held: $25,000 (4/18/11)

	 	
Principal Amount of Notes held: $25,000 (4/18/11)

	
Principal Amount of Notes held: $25,000 (5/20/11)

	 	
principal Amount of Notes held: $25,000 (5/20/11)

	  	 	  
	  	 	  
	 	 	 
	
CANYONS TRUST

	 	
PARK INVESTMENT HOLDINGS, LLC

	  	 	  
	 	 	 
	  	 	  
	
By: /s/ James F. Heekin

	 	
By: /s/ Steven Spiegel

	
Name: James F. Heekin

	 	
Name: Steven Spiegel

	
Title: Trustee

	 	
Title:

	
Principal Amount of Notes held: $50,000 (4/18/11)

	 	
Principal Amount of Notes held: $37,500 (4/18/11)

	
Principal Amount of Notes held: $50,000 (5/20/11)

	 	
principal Amount of Notes held: $37,500 (5/20/11)

	  	 	  
	  	 	  
	  	 	  
	
“Escrow Agent”

	 	  
	  	 	  
	
GRUSHKO & MITTMAN, P.C.

	 	  
	  	 	  
	  	 	  
	
By: /s/ Grushko & Mittman, P.C.

	 	  
	
Name:

	 	 
	
Title:

	 	 

 

The Company represents and acknowledges that the Subscribers whose signatures are appended to this Agreement constitute a Majority in Interest.

 

	 	
THE BRAINY BRANDS COMPANY INC.

the “Company”

	 
	 	 	 	 
	
 

	
By: 

	/s/ John Benfield	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

  

6

  

 

 

Exhibit A

SCHEDULE 1

	
SUBSCRIBER AND ADDRESS

	 	
INITIAL CLOSING PRINCIPAL 

AMOUNT AND 

PURCHASE PRICE

	 	 	
SECOND CLOSING PRINCIPAL 

AMOUNT AND 

PURCHASE PRICE

	 
	
ALPHA CAPITAL ANSTALT

Pradafant 7

9490 Furstentums

Vaduz, Lichtenstein

Fax: 011-42-32323196

	 	$	72,800.00	 	 	$	75,000.00	 
	
WHALEHAVEN CAPITAL FUND LIMITED

560 Sylvan Avenue

Englewood Cliffs, N.J. 07632

Fax: (201) 586-0258

	 	$	65,000.00	 	 	$	25,000.00	 
	
BRISTOL INVESTMENT FUND, LTD.

c/o Bristol Capital Advisors, LLC

6353 W. Sunset Blvd., Suite 4006

Hollywood, CA 90028

Attn: Amy Wang, Esq.

Fax: (323) 960-3805

	 	$	25,000.00	 	 	$	25,000.00	 
	
ADVENTURE VENTURES LLC

150 Central Park South, 2nd Floor

New York, NY 10019

Fax: (212) 586-8244

	 	$	36,400.00	 	 	 	-0-	 
	
BRIO CAPITAL L.P.

401 E. 34th Street – Suite South 33C

New York, NY 10016

Attn: Shaye Hirsch

Fax: (646) 390-2158

	 	$	20,800.00	 	 	$	10,000.00	 
	
TOTALS

	 	$	220,000.00	 	 	$	135,000.00	 

New Subscribers:

Exhibit B

	
NEW SUBSCRIBER AND ADDRESS

	 	
SECOND CLOSING PRINCIPAL 

AMOUNT AND 

PURCHASE PRICE

	 
	
FLM HOLDINGS LLC

8 Hop Brook Lane

Holmdel, New Jersey 07733

	 	$	25,000.00	 
	
EDWARD KARR

Rampartners SA

19 Blvd., Georges-Favon

Geneva, Switzerland 1204

Fax: +41-22-310-8605

	 	$	10,000.00	 
	
BRILLIAN SINO INVESTMENT LIMITED

P.O. Box 957

Offshore Incorporations Centre

Road Town, Tortola, British Virgin Islands

	 	$	10,000.00	 
	
TOTAL

	 	$	45,000.00	 

Schedule 9(e)

Use of Proceeds for Second Closing

Based on $250,000 in net proceeds:

$125,000 for infomercial development

$125,000 for operations

Based on $205,000 in net proceeds:

$100,000 for infomercial development

$105,000 for operations

  

7

  

Exhibit C

Schedule 12(a)

Excepted Issuances

Schedule 12(a) - Excepted Issuances

 

The Company expects to adopt a Incentive Stock Plan (the “Plan”) pursuant to which it will be able to issue a total of 15,000,000 (post forward split) options and/or shares of common stock to its officers, directors, and consultants.   The Plan will allow the Company to issue qualified and non-qualified stock options and as well as common stock.   No option will be exercisable for more then ten years from when it is issued. The Plan shall terminate on the sooner of when the options or shares available for issuance have been issued or ten years from when it was adopted by the Company’s Board.   The exercise price for options issued pursuant to the Plan shall be the Fair Market Value of the Company’s common stock on the date of the grant, but not less than the closing price of the Common Stock as reported for the Principal Market for the date of the grant, subject to any applicable rules and regulations.

Securities to be issued in connection with the acquisition of Giddy Gander, LLC.

Stock grants to Dennis Fedoruk of an aggregate of 5,600,000 shares of common stock in accordance with the employment agreement between Mr. Fedoruk and the Company, which agreement was filed as an exhibit to the Current Report on Form 8-K which was filed by the Company with the Securities and Exchange Commission on November 24, 2010.

 

 

 

 

 

 

8

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