Attached files
| file | filename |
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| EX-10 - Charlie's Holdings, Inc. | ex10-04112018_010452.htm |
| EX-10 - Charlie's Holdings, Inc. | ex10-04112018_010451.htm |
| EX-10 - Charlie's Holdings, Inc. | ex10-04112018_010450.htm |
| EX-10 - Charlie's Holdings, Inc. | ex10-04112018_010446.htm |
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 5, 2018
TRUE DRINKS HOLDINGS, INC.
(Exact name of Registrant as specified in its Charter)
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Nevada
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001-32420
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84-1575085
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(State or other
jurisdiction
of
incorporation)
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(Commission File
No.)
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(IRS
Employer
Identification
No.)
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4 Executive
Circle, Suite 280, Irvine, California 92614
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(Address of
principal executive offices)
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(949)
203-3500
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(Registrant’s
Telephone Number)
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Not
Applicable
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(Former name or
address, if changed since last report)
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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 (see General Instruction A.2.
below):
☐
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
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
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
Item 8.01.
Item 1.02 Termination of a Material
Definitive Agreement.
See Item 8.01.
Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant
In connection with the
Settlement described under Item 8.01 of this Current Report on Form
8-K, and in order to make the Cash Payment described below, True
Drinks Holdings, Inc. (the “Company”)
issued to Red Beard Holdings, LLC (“Red
Beard”) a senior
secured convertible promissory note (the “Red
Beard Note”) in the
principal amount of $2.25 million, which Red Beard Note accrues
interest at a rate of 5% per annum. Pursuant to the terms of the
Red Beard Note, Red Beard shall have the right, at its sole option,
to convert the outstanding balance due into that number of fully
paid and non-assessable shares of the Company’s common stock,
par value $0.001 per share (“Common
Stock”), equal to the
outstanding balance divided by 0.005 (the
“Conversion
Option”); provided,
however, that the Company
shall have the right, at its sole option, to pay all or a portion
of the accrued and unpaid interest due and payable to Red Beard
upon its exercise of the Conversion Option in cash. Such Conversion
Option shall not be exercisable unless and until such time as the
Company has amended its Certificate of Incorporation to increase
the number of authorized shares of Common Stock from 300.0 million
to at least 2.0 billion (the “Amendment”).
All outstanding
principal and interest due under the terms of the Red Beard
Note shall be due and
payable to Red Beard (“Red Beard
Affiliate”) in full on or
before December 31, 2019 (the “Due Date”). All amounts due under the Red Beard Note
shall be secured by a continuing
security interest in substantially all of the Company’s
assets, as set forth in the Security Agreement entered into by and
between the Company and Red Beard.
Item 3.02 Unregistered Sales of Equity
Securities.
See Item 8.01.
Item 8.01 Other Events
On October 9, 2015, True Drinks, Inc.
(“True Drinks”), a wholly owned subsidiary of the
Company, entered into a bottling agreement (the
“Bottling
Agreement”) with its
contract bottling manufacturer (“Bottler”). Concurrently, an affiliate of Red
Beard executed a personal
guaranty of True Drinks’ obligations under the Bottling
Agreement in an amount not to exceed $10.0 million (the
“Affiliate
Guaranty”).
On
October 19, 2017, True Drinks received a notice of breach under the
Bottling Agreement for, among other things, failure to pay certain
amounts due thereunder, which failure resulted in an event of
default.
On April 5, 2018 (the “Effective
Date”), True Drinks
agreed to terminate the Bottling Agreement and the Affiliate
Guarantee (together, the “2015
Agreements”) (the
“Settlement”). As of the Effective
Date, the damage amount claimed by Bottler
under the Bottling Agreement was $18,480,619.50, which amount
consisted of amounts due to the Bottler for product as
well as amounts due for True Drink’s failure to meet certain
minimum requirements under the Bottling Agreement (the
“Outstanding
Amount”). Under the terms
of the Settlement, in exchange for the termination of the 2015
Agreements, the Bottler agreed to accept, among other things: (i) a
promissory note in the principal amount of $4,644,906.00 (the
“Principal
Amount”), with
a 5% per annum interest rate, to be compounded,
annually (“Note One”), (ii) a promissory note with a principal
amount equal to the Outstanding Amount (“Note Two”), and (iii) a cash payment of
$2,185,157.80 (the “Cash
Payment”).
The Principal Amount and all interest payments due
under Note One shall be due and payable to the Bottler in full on
or before the Due Date (the “Note
Payment”). True Drinks,
the Company and the Red Beard Affiliate are all jointly and
severally responsible for all amounts due under Note
One; provided,
however, that in the event of a
Change in Control Transaction, as defined in Note One, the Red
Beard Affiliate will be the sole obligor for any amounts due under
Note One.
Note
Two shall have no force or effect except under certain
conditions and shall be reduced by any payments made to the
Bottler under the terms of the Settlement. True Drinks and the
Company shall be jointly and severally responsible for all amounts
due, if any, under Note Two, which shall automatically
expire and terminate on the Due Date.
In consideration for
the guarantee of the Company’s obligations in connection with
the Settlement, including as a joint and several obligor under the
terms of Note One, the Company is obligated to issue Red Beard
348,367,950 shares of Company Common Stock (the
“Shares”),
which Shares shall be issued at such time as the Amendment is filed
with the Nevada Secretary of State, but in no event later than
September 30, 2018. As a condition to the Company’s
obligation to issue the Shares, Red Beard shall, and shall cause
its affiliates to, execute a written consent of shareholders to
approve the Amendment, and to take such other action as reasonably
requested by the Company to effect the
Amendment.
Note One, Note Two, and the Red Beard Note were offered and sold in
transactions exempt from registration under the Securities Act of
1933, as amended, in reliance on Section 4(2) thereof and Rule 506
of Regulation D thereunder.
Item 9.01 Financial Statements and
Exhibits.
See Exhibit Index.
Disclaimer.
The
foregoing descriptions of Note One, Note Two, Red Beard Note and
Security Agreement do not purport to be complete, and are qualified
in their entirety by reference to the full text of each agreement,
attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4,
respectively, each of which are incorporated by reference
herein.
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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.
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TRUE DRINKS HOLDINGS, INC.
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Date:
April 11, 2018
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By:
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/s/
James J. Greco
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James
J. Greco
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Chief
Executive Officer
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Exhibit Index
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Exhibit No.
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Description
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10.1
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Secured Promissory
Note, in the principal amount of $4,644,906.00, dated April 5,
2018.
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10.2
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Secured Promissory
Note, in the principal amount of $18,480,619.50, dated April 5,
2018.
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10.3
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Senior Secured
Promissory Note, in the principal amount of $2,250,00, dated April
5, 2018.
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10.4
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Security
Agreement
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