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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of
report (Date of earliest event reported): April 25, 2019
Commission
File Number: 001-32420
True Drinks Holdings, Inc.
(Exact
name of registrant as specified in its charter.)
Nevada
(State
or other jurisdiction of incorporation or
organization)
|
84-1575085
(IRS
Employer Identification No.)
|
2 Park Plaza, Suite 1200, Irvine, California 92614
(Address
of principal executive offices)
949-203-3500
(Registrant's
Telephone number)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (17 CFR
230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17
CFR 240.12b-2)
Emerging
growth company [ ]
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01 Entry into a Material Definitive Agreement
See
Items 1.02, 2.01 and 5.02 below.
Item 1.02 Termination of a Material Definitive
Agreement
On
April 26, 2019, True Drinks Holdings, Inc. (the “Company”) entered into a Debt
Conversion Agreement with Red Beard Holdings, LLC
(“Red Beard”),
a significant holder of the Company’s securities, pursuant to
which Red Beard converted certain outstanding indebtedness of the
Company, in the aggregate amount of $4,227,250, into 1,070,741,474
shares of the Company’s common stock, par value $0.001 per
share (“Common
Stock”) (the “Debt Conversion”). As a result of the Debt Conversion, all
indebtedness, liabilities and other obligations of the Company held
by and owed to Red Beard were cancelled and deemed satisfied in
full. A copy of the Debt Conversion Agreement is attached to this
Current Report as Exhibit 10.1.
The issuance of the shares of Common Stock in
connection with the Debt Conversion was exempt from the
registration requirements of the Securities Act of 1933, as amended
(the “Securities
Act”), in reliance
on the exemption provided by Section 4(a)(2) and/or Section 3(a)(9)
of the Securities Act. Such shares of Common Stock have not been
registered under the Securities Act or any other applicable
securities laws, and unless so registered, may not be offered or
sold in the United States except pursuant to an exemption from the
registration requirements of the Securities
Act.
Item 2.01 Completion of Acquisition or Disposition of
Assets
On
April 26, 2019 (the “Closing
Date”), the Company entered into a Securities Exchange
Agreement, in the form attached to this Current Report as Exhibit
10.2 (the “Exchange
Agreement”), with each of the members
(“Members”) of
Charlies Chalk Dust, LLC, a Delaware limited liability company
(“CCD”), and
certain direct investors (“Direct Investors”), pursuant to
which the Company acquired all outstanding membership interests of
CCD beneficially owned by the Members in exchange for the issuance
by the Company of units (“Units”), with such Units
consisting of an aggregate of (i) 15,655,744,597 shares of Common
Stock (which includes the issuance of an aggregate of 1,396,305
shares a newly created class of Series B Convertible Preferred
Stock, par value $0.001 per share (“New Series B Preferred”),
convertible into an aggregate of 13,963,047,716 shares of Common
Stock, issued to certain individuals in lieu of Common Stock); (ii)
2,062,490 shares of a newly created class of Series A Convertible
Preferred Stock, par value $0.001 per share (“Series A Preferred”); and (iii)
warrants to purchase an aggregate of 4,033,769,340 shares of Common
Stock (the “Investor
Warrants,” and together with the Common Stock, Series
A Preferred and New Series B Preferred, the “Securities”) (the
“Exchange”). As
a result of the Exchange, CCD became a wholly owned subsidiary of
the Company.
The
Investor Warrants, a form of which is attached to this Current
Report as Exhibit 4.1, have a term of five years, and are
exercisable at a price of $0.0044313 per share, subject to certain
adjustments. The Investor Warrants may be exercised at any time at
the option of the holder;provided,
however, that the Investor Warrants shall not become
exercisable unless and until such time that the Company has amended
its Amended and Restated Articles of Incorporation, as amended
(“Charter”), to
increase the number of shares authorized for issuance thereunder by
a sufficient amount to allow for the conversion and/or exercise of
all Securities issued to the Members and Direct Investors in the
Exchange (the “Increase in
Authorized”). In addition, pursuant to the terms of
the Investor Warrants, a holder may not exercise any portion of the
Investor Warrants in the event that such exercise would result in
the holder and its affiliates beneficially owning in excess of
4.99% of the Company’s issued and outstanding Common Stock
immediately thereafter, which limit may be increased to 9.99% at
the election of the holder.
As a
condition to entering into the Exchange, the Company was required
to convert all of its currently issued and outstanding Series B
Convertible Preferred Stock, Series C Convertible Preferred Stock,
and Series D Convertible Preferred Stock (collectively, the
“Old
Preferred”), and existing indebtedness, into shares of
Common Stock. See Item 5.03 below. In addition, upon consummation
of the Exchange, CCD was provided with the right to appoint two
directors to the Company’s Board of Directors. See Item 5.02
below.
In connection with the Exchange, the Company also
entered into Registration Rights Agreements (the
“Registration Rights
Agreements”), a form of
which is attached to this Current Report as Exhibit 10.3, with each
of the Members and Direct Investors, pursuant to which the Company
agreed to use its best efforts to file a registration statement
with the Securities and Exchange Commission no later than 30 days
after the Closing Date in order to register, on behalf of the
Members and Direct Investors, the shares of Common Stock, shares of
Common Stock issuable upon conversion of the Series A Preferred and
New Series B Preferred, and shares of Common Stock issuable upon
exercise of the Investor Warrants. See Item 5.03
below.
Immediately prior
to, and in connection with, the Exchange, CCD consummated a private
offering of membership interests that resulted in net proceeds to
CCD of approximately $27.5 million (the “CCD Financing”). Katalyst
Securities LLC (“Katalyst”) acted as the sole
placement agent in connection with the CCD Financing pursuant to an
Engagement Letter entered into by and between Katalyst, CCD and the
Company on February 15, 2019, a copy of which is attached to this
Current Report as Exhibit 10.4, which was amended on April 16,
2019, a copy of which amendment is attached to this Current Report
as Exhibit 10.5 (“Amended
Engagement Letter”). As consideration for its services
in connection with the CCD Financing and Exchange, the Company
issued to Katalyst and its designees five-year warrants to purchase
an aggregate of 902,661,671 shares of Common Stock at a price of
$0.0044313 per share (the “Placement Agent Warrants”). The
Placement Agent Warrants have substantially the same terms as those
set forth in the Investor Warrants.
As
additional consideration for advisory services provided in
connection with the CCD Financing and Exchange, the Company issued
an aggregate of 902,661,671 shares of Common Stock (the
“Advisory
Shares”), including to Scot Cohen, a member of the
Company’s Board of Directors, pursuant to a Subscription
Agreement, a copy of which is attached to this Current Report as
Exhibit 10.6.
The
Exchange resulted in a change of control of the Company, with the
Members and Direct Investors owning approximately 85.7% of the
Company’s outstanding voting securities immediately after the
Exchange, and the Company’s current stockholders beneficially
owning approximately 14.3% of the issued and outstanding voting
securities, which includes the Advisory Shares. Together, Ryan
Stump and Brandon Stump, the founders of CCD and the
Company’s newly appointed Chief Executive Officer and Chief
Operating Officer, respectively, own in excess of 50% of the
Company’s issued and outstanding voting securities as a
result of the Exchange. Upon issuance of the Common Stock,
conversion of the Series A Preferred and New Series B Preferred,
and exercise of the Investor Warrants and Placement Agent Warrants
issued in connection with the Exchange, and assuming that the
Company’s Charter is further amended to effect the Increase
in Authorized, it is anticipated that the Company shall have an
aggregate of approximately 27.7 billion shares of Common Stock
issued and outstanding, of which approximately 24.3 billion shares
issued or issuable in connection with the Exchange are and shall be
restricted until such time as such shares are registered under the
Securities Act or an exemption therefrom is available to permit the
resale of such shares.
The
Common Stock, Series A Preferred, New Series B Preferred, Investor
Warrants, Placement Agent Warrants and Advisory Shares issued in
connection with the Exchange were issued without registration
and are subject to restrictions under the Securities Act, and
the securities laws of certain states, in reliance on the private
offering exemptions contained in Section 4(a)(2) of the Securities
Act and on Regulation D promulgated thereunder, and in reliance on
similar exemptions under applicable state laws as a transaction not
involving a public offering.
The
foregoing descriptions of the Exchange Agreement, Investor
Warrants, Registration Rights Agreement, Engagement Letter, Amended
Engagement Letter and Subscription Agreement do not purport to be
complete, and are qualified in their entirety by reference to the
same, attached to this Current Report as Exhibits 10.2, 4.1,
10.3, 10.4, 10.5 and 10.6, respectively, each of which are
incorporated by reference herein.
On
April 29, 2019, the Company issued a press release announcing the
Exchange, a copy of which is attached to this Current Report as
Exhibit 99.1, and is incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities
See
Item 2.01 above.
Item 3.03 Material Modification to Rights of Security
Holders
See
Item 2.01 above and Item 5.03 below.
Item 5.01 Changes in Control of Registrant
See
Item 2.01 above and Item 5.02 below.
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
Resignation of Officers and Directors
On
April 26, 2019, effective upon consummation of the Exchange, Ramona
Capello, Jim Greco and Neil LeVecke each resigned from his or her
position as a member of the Company’s Board of Directors. In
addition, effective upon consummation of the Exchange, Robert Van
Boerum resigned from his position as the Company’s Principal
Executive Officer and Principal Financial Officer. Messrs. Greco,
LeVecke and Van Boerum, as well as Ms. Capello, each separately
indicated that his or her resignation was not due to any dispute or
disagreements with the Company on any matter related to the
Company’s operations, policies or practices.
Appointment of New Officers and Directors
On
April 26, 2019, effective upon consummation of, and in connection
with, the Exchange and immediately after the resignation of the
foregoing directors and officers, Brandon Stump and Ryan Stump were
each appointed as directors on the Company’s Board of
Directors, and Brandon Stump, Ryan Stump and David Allen were
appointed as the Company’s Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer, respectively.
Brandon Stump and Ryan Stump are brothers.
Brandon
Stump, age 33, is a co-founder of CCD, and has served as
CCD’s Chief Executive Officer since its inception in 2014.
Prior to co-founding CCD, Mr. Stump
co-founded his first business, the Ohio House in 2011, with his
brother Ryan Stump. Since then, he has gone on to co-found both The
Chadwick House and Buckeye Recovery Network, both established in
2017, as well as The Mend California, established in 2018. These
programs provide a continuum of care and services to men and women
from the country promoting emotional, physical and spiritual
development.
As a
co-founder of CCD, the Board of Directors believes that Mr.
Stump’s substantial entrepreneurial, marketing, sales and
industry experience provide the Board with valuable expertise that
will assist the Company in continuing to grow its revenue and to
enter into new markets for its products.
Ryan
Stump, age 30, has served as CCD’s Chief Operating Officer
since 2014, during which time he has been responsible for all
global operations of CCD. Prior to joining CCD, Mr. Stump worked as
an Associate Territory Manager and then a Territory Manager for
ConMed, a medical sales device company, from 2010 to 2013. Mr.
Stump also co-founded and continues to be engaged with multiple
companies, including The Ohio House since 2011, the Buckeye
Recovery Network since 2017, and The Mend California since 2018.
Mr. Stump earned a B.S. and B.A. in Sports Marketing and Marketing
from Duquesne University.
The
Board of Directors believes that Mr. Stump’s experience
operating high growth companies, as well as entrepreneurial
experience, will be valuable to the Board as it manages the
Company’s anticipated continued growth.
David
Allen brings over 22 years of
experience as the Chief Financial Officer of public companies. In
addition to his service as the Company’s Chief Financial
Officer, Mr. Allen currently serves as Chief Financial Officer of
Iconic Brands, Inc. (OTCQB: ICNB), a position that he has held
since September 2018. From December 2014 to January 2018, Mr. Allen
served as the Chief Financial Officer of WPCS International, Inc.,
a design-build engineering firm focused on the deployment of
wireless networks and related services. WPCS International was
listed on Nasdaq, and Mr. Allen oversaw its financial reporting
obligations and Securities and Exchange Commission
(“SEC”) compliance. From June 2006 to June 2013,
Mr. Allen served as the Chief Financial Officer and Executive Vice
President of Administration at Converted Organics, Inc., a company
organized to convert food waste into organic fertilizer. At
Converted Organics, he was responsible for SEC reporting, audit,
insurance and taxes. Mr. Allen is currently an Assistant Professor
of Accounting at Southern Connecticut State University, a position
he has held since 2017, and for the 12 years prior to that he was
an Adjunct Professor of Accounting at SCSU and Western Connecticut
State University. Mr. Allen is a licensed CPA and holds a
Bachelor’s Degree in Accounting and a Master’s Degree
in Taxation from Bentley College.
Employment Agreements
On
April 26, 2019, in connection with the Exchange and his appointment
as Chief Executive Officer, the Company and Brandon Stump entered
into an employment agreement (the “B. Stump Employment Agreement”),
a copy of which is attached to this Current Report as Exhibit 10.7,
pursuant to which Brandon Stump shall (i) serve as the
Company’s Chief Executive Officer for a term of three years,
renewable for one-year periods thereafter, during which time he
shall report to the Company’s Board of Directors; (ii) be
subject to a non-competition requirement for three years after his
termination; (iii) be subject to a non-solicitation requirement for
one year after his termination, and be entitled to receive the
following compensation for his services as Chief Executive Officer:
(a) an annual base salary of $500,000, which shall increase on an
annual basis by an amount not less than $25,000 per year, as
determined by the Compensation Committee of the Company’s
Board of Directors, (b) an annual cash bonus of up to $750,000 per
year, which cash bonus will be determined based on the
Company’s achievement of audited gross revenue targets of
$35.0 million per year, as more particularly set forth in the B.
Stump Employment Agreement, (c) certain milestone based bonuses,
(d) an annual award of shares of Common Stock having an aggregate
value equal to one-half of Brandon Stump’s annual base salary
in effect for such year, which shares shall vest quarterly in equal
amounts over a three year period commencing on the issuance date,
(e) participation in the Company’s retirement plan, if any,
(f) reimbursement of all reasonable business-related expenses
incurred by Brandon Stump, (e) full health insurance coverage for
he and his dependents, and at least $5.0 million of life insurance,
(g) 21 paid vacation days per year, and (h) a monthly automobile
allowance of $750 per month.
The
Company may terminate the B. Stump Employment Agreement in the
event of Brandon Stump’s death or disability, or for Cause,
as defined in the B. Stump Employment Agreement;provided, however, that at no time may
the Company terminate him without Cause. Brandon Stump may
terminate the B. Stump Employment Agreement at any time for any
reason. In the event that his employment is terminated by him
without Good Reason, as defined in the B. Stump Employment
Agreement, or by the Company for Good Cause as a result of a Change
in Control, he shall be entitled to the following compensation: (i)
any earned but unpaid salary through the termination date, (ii)
unpaid and unreimbursed expenses, (iii) earned but unpaid bonuses,
and (iv) any accrued vacation days;provided, however, that in the event
that the B. Stump Employment Agreement is terminated by Brandon
Stump for any reason, he shall also be entitled to one year’s
severance, consisting of one year’s base salary, milestone
bonuses and certain other benefits. In the event his employment is
terminated by the Company without Cause or Brandon Stump terminates
it for Good Reason, as defined in the B. Stump Employment
Agreement, then he shall be entitled to the following compensation:
(i) all amounts due to him through the termination date, (ii) full
vesting of any and all previously granted equity-based incentive
awards, and (iii) health insurance coverage for a period of 18
months after the termination date. In addition, effective upon a
Change in Control, regardless of whether the B. Stump Employment
Agreement is terminated, his base salary for the year in which the
Change in Control occurred and any years thereafter shall
automatically increase by 20% and the milestone bonuses shall
automatically decrease by 30%.
On
April 26, 2019, in connection with the Exchange and his appointment
as Chief Operating Officer, the Company and Ryan Stump entered into
an employment agreement (the “R. Stump Employment Agreement”),
a copy of which is attached to this Current Report as Exhibit 10.8,
pursuant to which Ryan Stump shall (i) serve as the Company’s
Chief Operating Officer for a term of three years, renewable for
one-year periods thereafter, during which time he shall report to
the Company’s Chief Executive Officer; (ii) be subject to a
non-competition requirement for three years after his termination;
(iii) be subject to a non-solicitation requirement for one year
after his termination, and be entitled to receive the following
compensation for his services as Chief Operating Officer: (a) an
annual base salary of $500,000, which shall increase on an annual
basis by amount that is not less than $25,000 per year, as
determined by the Compensation Committee of the Company’s
Board of Directors, (b) an annual cash bonus of up to $750,000 per
year, which cash bonus will be determined based on the
Company’s achievement of a gross revenue target of $35.0
million per year, as more particularly set forth in the R. Stump
Employment Agreement, (c) certain milestone based bonuses, (d) an
annual award of shares of Common Stock having an aggregate value
equal to one-half of Ryan’s annual base salary in effect for
such year, which shares shall vest quarterly in equal amounts over
a three year period commencing on the issuance date, (e)
participation in the Company’s retirement plan, if any, (f)
reimbursement of all reasonable business-related expenses incurred
by Ryan Stump, (e) full health insurance coverage for he and his
dependents, and at least $5.0 million of life insurance, (g) 21
paid vacation days per year, and (h) a monthly automobile allowance
of $750 per month.
The
Company may terminate the R. Stump Employment Agreement in the
event of Ryan Stump’s death or disability, or for Cause, as
defined in the R. Stump Employment Agreement;provided, however, that at no time may
the Company terminate him without Cause. Ryan Stump may terminate
the R. Stump Employment Agreement at any time for any reason. In
the event that his employment is terminated by him without Good
Reason, as defined in the R. Stump Employment Agreement, or by the
Company for Good Cause as a result of a Change in Control, he shall
be entitled to the following compensation: (i) any earned but
unpaid salary through the termination date, (ii) unpaid and
unreimbursed expenses, (iii) earned but unpaid bonuses, and (iv)
any accrued vacation days;provided, however, that in the event
that the R. Stump Employment Agreement is terminated by Ryan Stump
for any reason, he shall also be entitled to one year’s
severance, consisting of one year’s base salary, milestone
bonuses and certain other benefits. In the event that his
employment is terminated by the Company without Cause or he
terminates it for Good Reason, as defined in the R. Stump
Employment Agreement, then Ryan Stump shall be entitled to the
following compensation: (i) all amounts due to him through the
termination date, (ii) full vesting of any and all previously
granted equity-based incentive awards, and (iii) health insurance
coverage for a period of 18 months after the termination date. In
addition, effective upon a Change in Control, regardless of whether
the R. Stump Employment Agreement is terminated, his base salary
for the year in which the Change in Control occurred and any years
thereafter shall automatically increase by 20% and the milestone
bonuses shall automatically decrease by 30%.
Except as disclosed in this Current Report on Form 8-K, Messrs.
Brian Stump, Ryan Stump and David Allen have no direct or indirect
material interest in any transaction required to be disclosed
pursuant to Item 404(a) of Regulation S-K, have no
arrangement or understanding between them and any other person
required to be disclosed pursuant to Item 401(b) of
Regulation S-K, and have no family relationships required
to be disclosed pursuant to Item 401(d) of
Regulation S-K.
The
foregoing descriptions of the B. Stump Employment Agreement and R.
Stump Employment Agreement do not purport to be complete, and are
qualified in their entirety by reference to the same, attached to
this Current Report as Exhibits 10.7 and 10.8, respectively,
each of which are incorporated by reference herein.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change
in Fiscal Year
Restructuring of the Old Series B Preferred, Old Series C Preferred
and Old Series D Preferred
On
April 26, 2019, in connection with the Exchange, the Company filed
Amendments to the Certificate of Designation After Issuance of
Class or Series with the Secretary of State of the State of Nevada
to amend the Certificates of Designation, Preferences, Rights and
Limitations, as amended (each, a “COD”), of the Company’s Old
Preferred, consisting of Series B Convertible Preferred Stock
(“Old Series B
Preferred”), Series C Convertible Preferred Stock
(“Old Series C
Preferred”) and Series D Convertible Preferred Stock
(“Old Series D
Preferred”) (the “Amendments”). Each of the CODs
were amended to provide the Company with the right, at its
election, to convert all of the issued and outstanding shares of
Old Preferred into Common Stock, at a price of $0.25 per share in
the case of the Old Series B Preferred, and $0.025 per share in the
case of the Old Series C Preferred and Old Series D Preferred. In
addition, the Series B Preferred COD was amended to remove Section
8 in its entirety, which required the Company to redeem all
outstanding shares of Old Series B Preferred under certain
circumstances. Copies of the Second Amended and Restated COD of the
Old Series B Preferred, Fourth Amended and Restated COD of the Old
Series C COD, and First Amended and Restated COD of the Series D
COD are attached to this Current Report as Exhibits 3.1, 3.2 and
3.3, respectively.
Prior
to effecting each of the Amendments, the Company obtained written
consent from the holders of the requisite number of outstanding
shares of Old Series B Preferred, Old Series C Preferred and Old
Series D Preferred, as set forth in their respective CODs, to
effect such Amendments.
Immediately after
effecting the Amendments, the Company provided each holder of the
Old Series B Preferred, Old Series C Preferred and Old Series D
Preferred with a Mandatory Conversion Notice, pursuant to which the
Company converted all outstanding shares of the Old Preferred into
an aggregate of 580,385,360 shares of Common Stock.
Promptly after
distributing the Mandatory Conversion Notices to all holders of the
Old Preferred, the Company filed Certificates of Withdrawal for
each of the Old Series B Preferred, Old Series C Preferred and Old
Series D Preferred, copies of which are attached to this Current
Report as Exhibits 3.4, 3.5 and 3.6, respectively, with the
Secretary of State of the State of Nevada, thereby eliminating the
Old Series B Preferred, Old Series C Preferred and Old Series D
Preferred and returning them to authorized but unissued shares of
the Company’s preferred stock.
The
issuance of the shares of Common Stock in connection with the
conversion of the Old Preferred was exempt from the registration
requirements of the Securities Act, in reliance on the
exemption provided by Section 4(a)(2) and/or Section 3(a)(9) of the
Securities Act. Such shares of Common Stock have not been
registered under the Securities Act or any other applicable
securities laws, and unless so registered, may not be offered or
sold in the United States except pursuant to an exemption from the
registration requirements of the Securities Act.
Creation of Series A Preferred
On
April 25, 2019, in connection with the Exchange, the Company filed
the Certificate of Designation, Preferences and Rights of the
Series A Convertible Preferred Stock (the “Series A COD”), a copy of which
is attached to this Current Report as Exhibit 3.7, with the
Secretary of State of the State of Nevada, designating 300,000
shares of its preferred stock as Series A Convertible Preferred
Stock. Each share of Series A Preferred has a stated value of $100
per share (the “Series A
Stated Value”). The
Series A Preferred rank senior to all of the Company’s
outstanding securities, including the Company’s Series B
Convertible Preferred Stock.
The Series A Preferred provides the holders with
the right to receive a one-time dividend payment equal to 8% of the
Series A Stated Value (the “Series A
Dividend”), which Series
A Dividend shall be paid by the Company on the earlier to occur of
(i) when declared at the election of the Company, (ii) one year
from the date of issuance, or (iii) when a holder elects to convert
its shares of Series A Preferred into Common
Stock.
Each share of Series A Preferred is convertible,
at the option of the holder, into that number of shares of Common
Stock equal to the Series A Stated Value plus all accrued but
unpaid dividends, divided by $0.044313, which conversion rate is
subject to adjustment in accordance with the terms of the Series A
COD; provided,
however, that holders of the
Series A Preferred may not convert any shares of Series A Preferred
into Common Stock unless and until the Company has effected the
Increase in Authorized. In addition, holders of Series A Preferred
are prohibited from converting Series A Preferred into Common Stock
if, as a result of such conversion, the holder, together with its
affiliates, would own more than 4.99% (or 9.99% upon the election
of the holder prior to the issuance ofthe Series A Preferred) of
the total number of shares of Common Stock then issued and
outstanding. Each share of Series A Preferred is convertible at the
option of the Company, at the same conversion rate set forth above,
at such time, if ever, that the Company’s Common Stock is
listed on the Nasdaq Stock Market and the Company has paid the
Series A Dividend. In addition, upon the occurrence of a Bankruptcy
Event (as defined in the Series A COD), the Company shall be
required to redeem, in cash, all outstanding shares of Series A
Preferred at a price equal to the conversion
amount; provided,
however, that holders of the
Series A Preferred shall have the right to waive, in whole or in
part, such right to receive payment upon the occurrence of a
Bankruptcy Event.
Holders of the Series A Preferred shall vote on an
as-converted basis along with holders of the Company’s Common
Stock on all matters presented to the Company’s
stockholders; provided,
however, that the number of
votes that any holder, together with its affiliates, may exercise
in connection with all of the Company securities held by such
holder shall not exceed 9.99% of the voting power of the Company.
In addition, pursuant to the Series A COD, the Company shall not
take the following actions without obtaining the prior consent of
at least a majority of the holders of the outstanding Series A
Preferred, voting separately as a single class: (i) amend
the Company’s Charter or bylaws, or file a certificate of
designation or certificate of amendment to any series of preferred
stock if such action would adversely affect the holders of the
Series A Preferred, (ii) increase or decrease the authorized number
of shares of Series A Preferred, (iii) create or authorize any
series of stock that ranks senior to, or on parity with, the Series
A Preferred, (iv) purchase, repurchase or redeem any shares of
junior stock, or (v) pay dividends on any junior or parity
stock. Furthermore, so long as at
least 25% of the Series A Preferred remain outstanding, holders of
the Series A Preferred (other than the Direct Investors) shall have
a right to appoint two members to the Company’s Board of
Directors, and the Board shall not consist of more than five
members, unless the holders of a majority of the outstanding Series
A Preferred have consented to an increase in such
number.
Creation of New Series B Preferred
On
April 26, 2019, in connection with the Exchange and subsequent to
filing a Certificate of Withdrawal for the Old Series B Preferred,
the Company filed the Certificate of Designation, Preferences and
Rights of the Series B Convertible Preferred Stock (the
“New Series B
COD”), a copy of which is attached to this Current
Report as Exhibit 3.8, with the Secretary of State of the State of
Nevada, designating 1.5 million shares of its preferred stock as
Series B Convertible Preferred Stock. The New Series B Preferred ranks junior to the
Series A Preferred and senior to all of the Company’s other
outstanding securities.
The
New Series B Preferred is structured to act as a Common Stock
equivalent. Upon the Company amending its Charter to effect the
Increase in Authorized, each share of New Series B Preferred shall
be converted into 10,000 shares of Common Stock, subject to certain
adjustments. Shares of New Series B Preferred may not be converted
into Common Stock until the Increase in Authorized is effective.
Holders of the New Series B Preferred are not entitled to
dividends, unless the Company’s Board of Directors elects to
issue a dividend to holders of Common Stock.
Holders of the New Series A Preferred shall vote
on an as-converted basis along with holders of the Company’s
Common Stock on all matters presented to the Company’s
stockholders. In addition, pursuant to the New Series B COD, the
Company shall not take the following actions without obtaining the
prior consent of at least 50% of the holders of the outstanding New
Series B Preferred, voting separately as a single class: (i)
amend the provisions of the New Series B COD so as to adversely
affect holders of the New Series B Preferred, (ii) increase the
authorized number of shares of New Series B Preferred, or (iii)
effect any distribution with respect to junior stock, unless the
Company also provides such distribution to holders of the New
Series B Preferred.
The foregoing descriptions of the Amendments,
Certificates of Withdrawal, Series A Preferred and New Series B
Preferred are qualified, in their entirety, by the full text of the
(i) Second Amended and Restated COD of the Old Series B
Preferred, Fourth Amended and Restated COD of the Old Series C COD,
and First Amended and Restated COD of the Series D COD are attached
to this Current Report as Exhibits 3.1, 3.2 and 3.3 respectively,
(ii) Certificates of Withdrawal
for each of the Old Series B Preferred, Old Series C Preferred and
Old Series D Preferred, copies of which are attached to this
Current Report as Exhibits 3.4, 3.5 and 3.6, respectively, and
(iii) the Series A COD and New Series B COD, copies of which are
attached to this Current Report as Exhibits 3.7 and 3.8
respectively, each of which is
incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits
The financial statements required by Item 9.01(a) of Form 8-K will
be filed no later than 71 calendar days after the date that this
Current Report on Form 8-K is required to be filed.
See Exhibit Index.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date:
April 30, 2019
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True Drinks Holdings, Inc.
By:
/s/ Brandon
Stump
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Name: Brandon Stump
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Title: Chief Executive Officer
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EXHIBIT INDEX
Exhibit No.
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Description
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Second Amended and Restated Certificate of Designation,
Preferences, Rights and Limitations of the Series B Convertible
Preferred stock, dated April 26, 2019.
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Fourth Amended and Restated Certificate of Designation,
Preferences, Rights and Limitations of the Series C Convertible
Preferred stock, dated April 26, 2019.
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First Amended and Restated Certificate of Designation, Preferences,
Rights and Limitations of the Series D Convertible Preferred stock,
dated April 26, 2019.
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Certificate of Withdrawal of the Series B Convertible Preferred
Stock, dated April 26, 2019.
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Certificate of Withdrawal of the Series C Convertible Preferred
Stock, dated April 26, 2019.
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Certificate of Withdrawal of the Series D Convertible Preferred
Stock, dated April 26, 2019.
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Certificate of Designations, Preferences and Rights of the Series A
Convertible Preferred Stock, dated April 25, 2019.
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Certificate of Designations, Preferences and Rights of the Series B
Convertible Preferred Stock, dated April 26, 2019.
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Form of Investor Warrant, dated April 26, 2019
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Debt Conversion Agreement by and between True Drinks Holdings, Inc.
and Red Beard, LLC, dated April 26, 2019.
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Form of Exchange Agreement, dated April 26, 2019
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Form of Registration Rights Agreement, dated April 26,
2019
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Engagement Letter by and between True Drinks Holdings, Inc.,
Charlie’s Chalk Dust LLC and Katalyst Securities LLC, dated
February 15, 2019.
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Amendment to Engagement Letter, dated April 16, 2019.
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Subscription Agreement, dated April 26, 2019.
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Employment Agreement by and between True Drinks Holdings, Inc. and
Brandon Stump, dated April 26, 2019.
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Employment Agreement by and between True Drinks Holdings, Inc. and
Ryan Stump, dated April 26, 2019.
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Press Release, dated April 29, 2019.
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