Item 3.02 Unregistered Sales of Equity Securities
On February 18, 2014, Be Active Holdings, Inc. (the "Company") sold an
aggregate of 33,333,332 shares of common stock, par value $0.0001 per share (the
"Common Stock"), 26,666,667 shares of Series C Convertible Preferred Stock, par
value $0.0001 per share (the "Series C Preferred Stock" and, collectively with
the shares of Common Stock sold, the "Shares") and five year warrants to
purchase up to an aggregate of 59,999,999 shares of Common Stock at an exercise
price of $0.03 per share (the "Warrants") with gross proceeds to the Company of
$1,799,999.99 (the "Offering") to certain accredited investors (the "Investors")
pursuant to a subscription agreement (the "Subscription Agreement"). Each Share
was sold for a purchase price of $0.03 per Share. Investors who would, as a
result of the purchase of shares of Common Stock, hold in excess of 5% of the
Company's issued and outstanding Common Stock, were afforded the opportunity to
elect to receive shares of Series C Preferred Stock. Until the earlier of (i)
three years from the closing of the Offering or (ii) such time as no Investor
holds any Shares, Warrants, or shares of Common Stock underlying Warrants or
underlying the Series C Preferred Stock, in the event the Company issues or
sells Common Stock or Common Stock equivalents at a per share price equal to
less than $0.03 per share, as adjusted, the Company has agreed to issue
additional Shares such that the aggregate purchase price paid by such Investor
shall equal such lower price issuance, subject to certain customary exceptions.
Each share of Series C Preferred Stock is convertible, at the option of the
holder at any time, into one share of Common Stock and has a stated value of
$0.0001 per share. The conversion ratio of the Series C Preferred Stock is
subject to adjustment in the case of stock splits, stock dividends, combination
of shares and similar recapitalization transactions. The Company is prohibited
from effecting the conversion of the Series C Preferred Stock to the extent that
as a result of such conversion, the holder would beneficially own more than
9.99%, in the aggregate, of the issued and outstanding shares of Common Stock
calculated immediately after giving effect to the issuance of shares of Common
Stock upon the conversion of the Series C Preferred Stock. Holders of the Series
C Preferred Stock are entitled to vote on all matters submitted to the Company's
stockholders and are entitled to such number of votes as is equal to the number
of shares of Common Stock into which such shares of Series C Preferred Stock are
convertible, subject to the governing beneficial ownership limitations discussed
in the preceding sentence.
The Warrants are exercisable for a period of five years from the date of
issuance and have an exercise price of $0.03 per share, subject to adjustment
upon the occurrence of certain events such as lower priced issuances, stock
splits and dividends.
The Warrants contain anti-dilution protection for as long as such Warrant is
outstanding, such that (other than customary exceptions) if the Company issues
securities for consideration less than the Exercise Price, then the Exercise
Price shall be reduced to such lower price and the number of shares issuable
upon exercise of the Warrant shall be increased such that the aggregate exercise
price payable under the Warrant, after taking into account the decrease in the
exercise price, shall be equal to the exercise price prior to such adjustment.
If at any time there is no effective registration statement registering, or no
current prospectus available for, the resale of the shares of Common Stock
underlying the Warrant, then the holder of such Warrant has the right to
exercise the Warrant by means of a cashless exercise. The Company is prohibited
from effecting the exercise of the Warrants to the extent that, as a result of
such exercise, the holder beneficially owns more than 9.99%, in the aggregate,
of the issued and outstanding shares of Common Stock calculated immediately
after giving effect to the issuance of shares of Common Stock upon the exercise
of the Warrants.
In connection with the Offering, the Company granted the Investors
"piggy-back" registration rights. Additionally, Investors in the Offering are
entitled to a right of participation in future financings conducted by the
Company for a period of 24 months.
The Company paid placement agent fees of $143,999.99 in cash and issued a
warrant to purchase up to 4,799,999 shares of Common Stock to a broker-dealer in
connection with the sale of the Shares and the Warrants. The warrant issued to
the broker dealer contains substantially the same terms as the Warrants issued
to the Investors in the Offering. The Company permitted the conversion of an
aggregate of $13,500 of unpaid fees owed to a consultant into Shares and
Warrants at the per Share offering price.
Pursuant to an Investment Agreement, certain members of the Company's
management have agreed to invest an aggregate of $250,000 into the Company
within thirty (30) days of the closing of the Offering, on the same terms as the
The Shares and the Warrants were sold and issued to "accredited investors," as
such term is defined in the Securities Act of 1933, as amended (the "Securities
Act") and were offered and sold in reliance on the exemption from registration
afforded by Section 4(a)(2) and Regulation D (Rule 506) under the Securities Act
of 1933 and corresponding provisions of state securities laws.
The foregoing is not a complete summary of the terms of the Offering described
in this Item 3.02 and reference is made to the complete text of the Subscription
Agreement, the Certificate of Designations of Preferences, Rights and
Limitations of Series C Convertible Preferred Stock, the Warrant and the
Investment Agreement, attached, respectively, as Exhibits 10.1, 3.1 10.2 and
10.3, respectively, to this Current Report on Form 8-K, and hereby incorporated
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
The information set forth in Item 3.02 is incorporated by reference herein.
On February 18, 2014
, the Company filed a Certificate of Designations of
Preferences, Rights and Limitations of Series C Convertible Preferred Stock
authorizing the issuance of up to 26,666,667 shares of Series C Preferred Stock.
Item 9.01 Financial Statements and Exhibits
The exhibits listed in the following Exhibit Index are filed as part of this
Current Report on Form 8-K.
Exhibit Number Description
3.1 Certificate of Designations of Preferences, Rights and Limitations
of Series C Convertible Preferred Stock
10.1 Form of Subscription Agreement
10.2 Form of Warrant
10.3 Form of Investment Agreement