Fourth Consent and Waiver Agreement

EX-10.2 3 ex102.htm EXHIBIT 10.2 ex102.htm
Exhibit 10.2
 
Fourth Consent and Waiver Agreement

This Fourth Consent and Waiver Agreement (“Agreement”) is made and entered into as of November 15, 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 Agreements (as defined below).

WHEREAS, the Company and Subscribers entered into Subscription Agreements dated as of November 24, 2010, April 18, 2011, 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”);

WHEREAS, under that certain Third Consent and Waiver Agreement between the Company and the parties identified on the signature pages thereto (the “Third Consent and Waiver”), entered into in connection with the Second Closing under the August Offering, the Company agreed 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.

WHEREAS, pursuant to the Third Consent and Waiver, failure to effectuate the Increase on or before December 1, 2011 is an Event of Default under the Notes;

WHEREAS, pursuant to that certain Amendment to Note and Warrant between the Company and the parties identified on the signature pages thereto, the Conversion Price of the Notes and the Purchase Price of the Warrant Shares has been reduced to $0.08  (the “Conversion and Purchase Price Reduction”);

WHEREAS, the Subscribers desire to (i) waive the requirement for the Company to effectuate the Increase, (ii) consent to the Company effecting a 10-to-1 reverse split of its common stock by April 1, 2012,  (iii) waive the last sentence of Section 3.3 of all of the Warrants issued pursuant to the Subscription Agreements entered into on November 24, 2010 and April 18, 2011 (the “November 2010 and April 2011 Subscription Agreement Warrants”), with respect to (a) the Conversion and Purchase Price Reduction, and (b) any future action taken by the Company, such that as of the date of this Agreement, the last sentence of Section 3.3 of the November 2010 and April 2011 Subscription Agreement Warrants will be deemed to have been removed, and (iv) waive the Company’s obligation to comply with Schedule 9(e) to the August Offering Subscription Agreement, such that the Company’s use of proceeds from the August Offering (including the Initial Closing and the Second Closing) will be in the Company’s sole discretion;

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.           Waiver of Increase. The Majority in Interest hereby waive the requirement that the Company effectuate the Increase.

3.           Reverse Split. The Company shall use its best efforts to effect a 10-to-1 reverse split of its common stock by April 1, 2012 (the “Reverse Split”).  The Majority in Interest hereby consent to the Reverse Split.

4.           Waiver of November 2010 and April 2011 Subscription Agreement Warrant Exploding Feature. The Majority in Interest knowingly waive the application of the last sentence of Section 3.3 of each of the November 2010 and April 2011 Subscription Agreement Warrants, with respect to (i) the Conversion and Purchase Price Reduction, and (ii) any future action taken by the Company, such that, as of the date of this Agreement, the last sentence of Section 3.3 of the November 2010 and April 2011 Subscription Agreement Warrants  will be deemed to have been removed, and there will be no further adjustment of the number of Warrant Shares that may be purchased upon full exercise of each of such November 2010 and April 2011 Subscription Agreement Warrants, as a result of (a) the Conversion and Purchase Price Reduction, or (b) any future action by the Company.
 
 
 
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5,           Waiver of Schedule 9(e) to August Offering Subscription Agreement. The Majority in Interest hereby waive the Company’s obligation to comply with Schedule 9(e) to the August Offering Subscription Agreement, such that the Company’s use of proceeds from the August Offering (including the Initial Closing and the Second Closing) will be in the Company’s sole discretion.

6.           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.

7.           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.

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

9.           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.

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

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

12.           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]
 
 
 
 
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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/ Eric Weisblum
 
Name: Konrad Ackerman
   
Name: Eric Weisblum
 
Title:  Director
   
Title:
 
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)
 
Principal Amount of Notes held: $75,000 (9/23/11)
   
Principal Amount of Notes held: $25,000 (9/23/11)
         
         
         
 
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)
     
 
Principal Amount of Notes held: $25,000 (9/23/11)
     


BRILLIANT SINO INVESTMENT LIMITED


By:  /s/ Andrew Lee
Name:  Andrew Lee
Title: Director
Principal Amount of Notes held: $300,000 (5/5/11)
Principal Amount of Notes held: $10,000 (9/23/11)
 
 
 
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BRIO CAPITAL L.P.   EDWARD KARR
         
         
         
By:  
/s/ Shaye Hirsch
  By:
/s/ Edward Karr
 
Name: Shaye Hirsch
   
Principal Amount of Notes held: $100,000 (11/24/10)
 
Title: Managing Partner
   
Principal Amount of Notes held: $10,000 (9/23/11)
 
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)
     
 
Principal Amount of Notes held: $10,000 (9/23/11)
     
         
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:
   
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)
       
Principal Amount of Notes held: $25,000 (9/23/11)
         
         
BRISTOL CAPITAL ADISORS   BRISTOL CAPITAL, LLC
PROFIT SHARING PLAN      
         
         
By:
/s/ Paul Kessler
  By:
Name:  Paul Kessler
  Name:Paul Kessler    
By:   /s/ Paul Kessler
 
Title: Authorized Signatory
   
Title:  Manager
 
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)
 
 
 
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WHALEHAVEN OPPORTUNITIES FUND L.P.   AMPERSAND MANAGEMENT AS TRUSTEE
      OF THE MUNT TRUST
         
         
         
By: 
/s/ Eric Weisblum
  By:  
/s/ Jean Paul Le Coeq/Isabelle Spaeth
 
Name: Eric Weisblum
   
Name: Jean Paul Le Coeq/Isabelle Spaeth
 
Title: Partner
   
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 Jr.
  By:  
/s/ Steven Spiegel
 
Name: James F. Heekin Jr.
   
Name: Steven Spiegel
 
Title: Its 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)
         
 
    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”
 
       
 
 
/s/ John Benfield  
   
By: John Benfield
 
       
       
 
 
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