SEC Connect





 










Exhibit
4.1



 



CERTIFICATE OF DESIGNATION,



PREFERENCES, RIGHTS AND LIMITATIONS



of



SERIES D CONVERTIBLE PREFERRED STOCK



of



TRUE DRINKS HOLDINGS, INC.


 


Pursuant
to Section 78.1955 of the Nevada Revised Statutes


True
Drinks Holdings, Inc., a Nevada corporation (the
“Company”), in
accordance with the provisions of Sections 78.195 and 78.1955 of
the Nevada Revised Statutes (“NRS”), does hereby certify that,
pursuant to the authority conferred upon the Board of Directors
(the “Board”)
of the Company by the Articles of Incorporation of the Company, as
amended, the following resolution creating a series of Series D
Convertible Preferred Stock, was duly adopted on January 24,
2017.


RESOLVED, that pursuant to the authority
granted to and vested in the Board, in accordance with the
provisions of the Articles of Incorporation of the Company, as
amended, a series of Preferred Stock of the Company be and it
hereby is created, and that the designation and amount thereof and
the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and
the qualifications, limitations, and restrictions thereof are as
follows:


1. Designation
and Amount.


The
shares of such series shall be designated as “Series D
Convertible Preferred Stock,” $0.001 par value per share (the
“Preferred
Stock”), and the number of shares constituting such
series shall be 50,000. Each share of Preferred Stock shall have a
stated value equal to $100.00 (the “Stated Value”).


2. Dividends
on Shares of Common Stock.


If the
Board declares a dividend on the outstanding shares of the
Company’s common stock, $0.001 par value per share (the
“Common Stock”)
or any other Junior Stock (as defined below) (except for a dividend
on Common Stock payable in shares of Common Stock), such dividend
will be declared and paid on each outstanding share of Preferred
Stock, prior and in preference to any dividends declared and paid
on the Common Stock or other Junior Stock, in an amount equal to
the aggregate amount of the dividend to which such share of
Preferred Stock would have been entitled had such share been
converted into shares of Common Stock (regardless whether a
sufficient number of shares of Common Stock were authorized under
the Company’s Articles of Incorporation, as amended, to
effect such conversion), pursuant to the provisions hereof as of
the record date for the determination of holders of Common Stock or
other Junior Stock entitled to receive such dividend (or if there
is no such record date, on the date of payment of such dividend).
Such dividends will be payable only when, as and if declared by the
Board and will be noncumulative.


 




 

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3. Liquidation,
Dissolution or Winding Up.


Upon
any voluntary or involuntary liquidation, dissolution or winding up
of the Company (a “Liquidation”), the holders of
record of shares of Preferred Stock (the “Holders”) then outstanding will
be entitled to be paid in cash out of the assets of the Company
available for distribution to its stockholders, after and subject
to the payment in full of all amounts required to be distributed to
the holders of any Senior Stock (as defined), but before any
payment may be made to the holders of shares of any Junior Stock
(as defined), because of their ownership thereof, an amount equal
to the Stated Value of the Preferred Stock plus any accrued but
unpaid dividends (the “Preferred Liquidation
Preference”). Notwithstanding the foregoing, upon a
Liquidation, a Holder will receive the amount, if such amount is
greater than the amount set forth in the preceding sentence, that
such Holder would have received had such Holder converted such
Holder’s shares of Preferred Stock into Common Stock
immediately before a Liquidation (regardless of whether a
sufficient number of shares of Common Stock were authorized under
the Company’s Articles of Incorporation, as amended, to
effect such conversion). If upon a Liquidation, the Company’s
remaining assets available for distribution to its stockholders are
insufficient to pay the Holders the full amount of the Preferred
Liquidation Preference, the Holders and holders of any Parity Stock
will share ratably in any distribution of the Company’s
remaining assets and funds in proportion to the respective amounts
which would otherwise be payable in respect of the shares held by
them upon such distribution if all amounts payable on or with
respect to such shares were paid in full. After the Holders have
been paid the Preferred Liquidation Preference in full in cash, any
remaining assets will be distributed pro rata among each holder of
Junior Stock in accordance with the terms thereof. Unless otherwise
determined by the holders of at least two-thirds of the then
outstanding shares of Preferred Stock, voting as a separate class,
for the purposes of this Section 3, a Liquidation shall be
deemed to include (i) the acquisition of the Company by
another entity by means of any transaction or series of related
transactions (including, without limitation, any merger, sale of
all or substantially all of the shares of then outstanding capital
stock, consolidation or other form of reorganization in which
outstanding shares of the Company are exchanged for securities or
other consideration issued, or caused to be issued, by the
acquiring entity or its subsidiary, but excluding any transaction
effected primarily for the purpose of changing the Company’s
jurisdiction of incorporation), unless the Company’s stockholders
of record as constituted immediately prior to such transaction or
series of related transactions will (by virtue of their
pre-transaction holdings in the Company and any additional
securities received by them as part of the transaction in exchange
of such pre-transaction holdings), immediately after such
transaction or series of related transactions continue to hold at
least a majority of the voting power of the surviving or acquiring
entity or (ii) a sale, lease, transfer, exclusive license or
other disposition of all or substantially all of the assets of the
Company.


“Senior Stock” means,
collectively, any class or series of stock of the Company ranking
on Liquidation and with respect to the payment of dividends prior
and in preference to the Preferred Stock.


“Junior Stock” means,
collectively, Common Stock or any other shares of capital stock of
the Company ranking on Liquidation and with respect to the payment
of dividends junior and subordinate to the Preferred Stock, Senior
Stock and Parity Stock. Any other class or series of preferred
stock of the Company authorized, designated or issued after this
date, except as expressly set forth and provided in the resolution
or resolutions of the Board providing for authorization,
designation or issuance of shares of any such other class or series
of preferred stock of the Company (subject to Section 9), shall be
“Junior
Stock.”


“Parity Stock” means,
collectively, the Series B Convertible Preferred Stock of the
Company, par value $0.001 per share (the “Series B Preferred Stock”),
Series C Convertible Preferred Stock, par value $0.001 per share
(the “Series C Preferred
Stock”) or any other class or series of stock ranking
on Liquidation and with respect to payment of dividends on a parity
with the Preferred Stock.


 




 

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4. Dividends
and Distributions.


The
Preferred Stock shall rank (i) prior to the Junior Stock, (ii) on
parity with the Parity Stock, and (iii) junior to the Senior Stock,
with respect to dividends. The Holders shall be entitled to receive
such dividends and other distributions (payable in cash, property
or capital stock of the Company) when, as and if declared thereon
by the Board from time to time out of any assets or funds of the
Company legally available therefor and shall share equally on a per
share basis in such dividends and distributions.

5. Voting.

   
        Except to the extent
specifically provided herein or required by applicable law, the
Holders and the holders of Common Stock will vote together on all
matters as to which the approval of the stockholders may be
required. The Holders will vote on an as-converted basis, and with
respect to such vote, will have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock.
Fractional votes will not, however, be permitted and any fractional
voting rights available on an as-converted basis (after aggregating
all shares into which shares of Preferred Stock held by each Holder
could be converted) will be rounded to the nearest whole number
(with one-half being rounded upward).

6. Conversion.


   
        The Preferred Stock shall be
convertible into Common Stock in accordance with the
following:

(a) Optional
Conversion by the Holder. The
Preferred Stock shall be convertible at the option of the Holder at
any time following the earlier of (i) the expiration of the twenty
(20) calendar day period set forth in Rule 14c-2(b) under the
Securities Exchange Act of 1934, as amended
(“Exchange
Act”), such period
commencing on the distribution to the Company’s stockholders
in accordance with Regulation 14C promulgated under the Exchange
Act of an Information Statement on Schedule 14C by the Company with
the Securities and Exchange Commission relating to the issuance of
Common Stock in connection with the conversion of the Preferred
Stock, and (ii) such time as there are sufficient authorized but
unissued shares (which have not otherwise been reserved or
committed for issuance) to permit the conversion of all the shares
of Preferred Stock into shares of Common Stock.

(b) Optional
Conversion by the Company. The
Preferred Stock shall be convertible at the option of the Company
if, at any time, (i) the Common Stock is registered pursuant to
Section 12(b) or (g) under the Exchange Act; (ii) there are
sufficient authorized but unissued shares (which have not otherwise
been reserved or committed for issuance) to permit the issuance of
Common Stock upon the conversion of the Preferred Stock (the
“Conversion
Shares”); (iii) the
Conversion Shares are either (A) covered by an effective
registration statement under the Securities Act of 1933, as amended
(“Securities
Act”), which is then
available for the immediate resale of the Conversion Shares being
issued by the recipients thereof, and the Board of Directors
believes that such effectiveness will continue uninterrupted for
the foreseeable future, or (B) freely tradable without restriction
under Rule 144 of the Securities Act without volume or
manner-of-sale restrictions or current public information
requirements, as determined by the counsel to the Company as set
forth in a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders; and (iv)
the arithmetic average of the closing sale price of the Common
Stock is at least $0.62 for ten (10) consecutive trading
days.




 

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(c) Fractional
Shares. No fractional shares of
Common Stock will be issued upon conversion of the shares of
Preferred Stock. In lieu of fractional shares, the Company will pay
to the Holder an amount in cash equal to such fraction multiplied
by the fair market value (as determined pursuant to Section
6(g)(iv) below) of a share of Common Stock at the time of such
conversion.

(d) Mechanics
of Conversion.

(i) Upon
the conversion of the Preferred Stock pursuant to this
Section 6, each share of Preferred Stock shall be converted
into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Stated Value by the
Conversion Price (as defined) in effect at the time of conversion.
The conversion price (as adjusted pursuant hereto, the
“Conversion
Price”) will initially be
$0.15. Upon such conversion, the Holder shall promptly, after
notice of such conversion has been provided to such Holder or
public disclosure thereof has been made pursuant to a Current
Report on Form 8-K or press release, if such shares are held in
certificated form, surrender the certificate or certificates for
such shares of Preferred Stock at the office of the transfer agent
(or at the principal office of the Company if the Company serves as
its own transfer agent). Such surrender may be made by registered
mail with return receipt requested, properly insured, by hand or
overnight courier. If required by the Company, certificates
surrendered for conversion, if applicable, will be endorsed or
accompanied by a written instrument or instruments of transfer, in
form reasonably satisfactory to the Company, duly executed by the
Holder or his or its attorney duly authorized in writing. The date
on which the conditions to conversion set forth in Section 6(a) or,
if later and to the extent applicable, of receipt of such
certificates by the transfer agent or the Company, as the case may
be, will be the conversion date (“Conversion
Date”). The Company will,
as soon as practicable after the Conversion Date, subject to the
book-entry provisions set forth below, issue and deliver to such
Holder, or to such Holder’s nominees, a certificate or
certificates for the number of shares of Common Stock to which such
Holder is entitled, together with cash in lieu of any fraction of a
share. In lieu of delivering physical certificates representing the
shares of Common Stock issuable upon conversion of the shares of
Preferred Stock, provided the transfer agent for the Common Stock
is participating in The Depository Trust Company’s (including
its successors and assigns, the “Depository”) Fast Automated Securities Transfer
program, upon request of the Holder, the Company shall, if in
compliance with applicable securities laws and in accordance with
the Company’s policies and procedures with respect to
“restricted securities” as defined in Rule 144(a)(3)
under the Securities Act of 1933, as amended, use its commercially
reasonable efforts to cause the transfer agent to electronically
transmit the shares of Common Stock issuable upon conversion by
crediting the account of the Holder’s prime broker with the
Depository through its Deposit Withdrawal Agent Commission system.
The Company agrees to coordinate with the Depository to accomplish
this objective. Such conversion of the Preferred Stock will be
deemed to have been made immediately before the close of business
on the Conversion Date, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion
will be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date.

(ii) All
shares of Preferred Stock which have been surrendered for
conversion as herein provided will no longer be deemed to be
outstanding and all rights with respect to such shares will
immediately cease and terminate on the Conversion Date, except only
the right of the Holders thereof to receive shares of Common Stock,
cash in lieu of fractional shares in exchange therefor and accrued,
but unpaid dividends. Any shares of Preferred Stock so converted
will be deemed canceled and will not thereafter be issuable by the
Company as shares of Preferred Stock, but will return to the status
of authorized, but unissued shares of Preferred Stock of no
designated series.


 




 

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(e) Adjustment for Stock
Splits, Dividends, Distributions and
Combinations. If, after the
date on which the first share of Preferred Stock is issued (the
“Original Issue
Date”), the Company fixes
a record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders
of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other
securities or rights without payment of any consideration by such
holder for the additional shares of Common Stock or rights
(including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or
the date of such dividend, distribution, split or subdivision if no
record date is fixed), the Conversion Price of the shares of
Preferred Stock will be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of
such series will be increased in proportion to such increase of the
aggregate number of shares of Common Stock outstanding and those
issuable with respect to such rights, with the number of shares
issuable with respect to the rights determined from time to time as
such number may be adjusted. If, after the Original Issue Date, the
Company combines the outstanding shares of Common Stock into a
smaller number of shares, the Conversion Price in effect
immediately before the combination will be proportionately
increased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred Stock will be decreased in
proportion to such decrease in outstanding shares. Any adjustments
under this paragraph will become effective at the close of business
on the date the subdivision or combination becomes
effective.

(f) Adjustment
for Reorganization, Reclassification or Exchange. If the Common Stock issuable upon the conversion
of the shares of Preferred Stock is changed into or exchanged for
the same or a different number of shares of any class or classes of
stock of the Company or another entity, whether by capital
reorganization, merger, consolidation, reclassification, or
otherwise (other than a subdivision or combination of shares or
stock dividend provided for in Section 6(e), or
resulting in a Mandatory Redemption under Section
7)
then and in each such event the Holders will have the right
thereafter to convert such shares into the kind and amount of
shares of stock and other securities and property receivable upon
such capital reorganization, merger, consolidation,
reclassification, or other change that holders of the number of
shares of Common Stock into which such shares of Preferred Stock
would have been converted immediately before such capital
reorganization, merger, consolidation, reclassification, or change
would have received, all subject to further adjustment as provided
herein.

(g) Adjustment Upon
Issuance of Shares of Common Stock. If the Company issues or sells, or in accordance
with this Section 6 is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities (as defined in the Securities
Purchase Agreement, dated on or about January __, 2017, by and
between the Company and the Purchasers party thereto (the
“Purchase
Agreement”)) issued or
sold or deemed to have been issued or sold) without consideration
or for a consideration per share (the “New Issuance
Price”) less than a price
equal to the Conversion Price in effect immediately prior to such
issue or sale or deemed issuance or sale (such Conversion Price
then in effect is referred to as the “Applicable
Price”) (the foregoing a
“Dilutive
Issuance”), then
immediately after such Dilutive Issuance, the Conversion Price then
in effect shall be reduced to an amount equal to the New Issuance
Price; provided
that if such Dilutive Issuance was
without consideration, then the Company shall be deemed to have
received an aggregate of $0.001 of consideration for all such
additional shares of Common Stock issued or deemed to be issued. No
adjustment pursuant to this Section 6(g) shall be made if such
adjustment would result in an increase of the Conversion Price then
in effect. For all purposes of the foregoing (including, without
limitation, determining the adjusted Conversion Price and
consideration per share under this Section 6(g)), the following
shall be applicable:


 




 

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(i) Issuance of
Options. If the Company in any
manner grants or sells any Options (as defined below) and the
lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion,
exercise or exchange of any Convertible Securities (as defined
below) issuable upon exercise of any such Option is less than the
Applicable Price, but excluding any Excluded Securities, then such
share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or
sale of such Option for such price per share. For purposes of this
Section 6(g)(i), the
“lowest price per share for which one share of Common Stock
is issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option” shall be equal to
the lower of (x) the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one
share of Common Stock upon the granting or sale of such Option,
upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such
Option and (y) the lowest exercise price set forth in such Option
for which one share of Common Stock is issuable upon the exercise
of any such Options or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option.
Except as contemplated below, no further adjustment of the
Conversion Price shall be made upon the actual issuance of such
shares of Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such shares
of Common Stock upon conversion, exercise or exchange of such
Convertible Securities.

(A) “Options”
means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible
Securities.

(B) “Convertible
Securities” means any
capital stock, convertible debenture or other security of the
Company or any of its subsidiaries (other than Options) that is, or
may become, at any time and under any circumstances directly or
indirectly convertible into, exercisable or exchangeable for, or
which otherwise entitles the holder thereof to acquire shares of
Common Stock.

(ii) Issuance
of Convertible Securities. If
the Company in any manner issues or sells any Convertible
Securities and the lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, but excluding any
Excluded Securities, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this
Section 6(g)(ii), the “lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or
exchange thereof” shall be equal to the lower of (x) the sum
of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock
upon the issuance or sale of the Convertible Security and upon
conversion, exercise or exchange of such Convertible Security and
(y) the lowest conversion price set forth in such Convertible
Security for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof. Except as contemplated
below, no further adjustment of the Conversion Price shall be made
upon the actual issuance of such shares of Common Stock upon
conversion, exercise or exchange of such Convertible Securities,
and if any such issue or sale of such Convertible Securities is
made upon exercise of any Options for which adjustment of the
Conversion Price has been or is to be made pursuant to other
provisions of this Section 6(g)(ii), except as contemplated below,
no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.




 

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(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for
in any Options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time, the Conversion
Price in effect at the time of such increase or decrease shall be
adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for
such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 6(g)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the Original Issue
Date are increased or decreased in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such increase or
decrease.

(iv) Calculation
of Consideration Received. If
(i) any Option or Convertible Security is issued in connection with
the issuance or sale or deemed issuance or sale of any other
securities of the Company, together comprising one integrated
transaction, and (ii) all such Options or Convertible Securities
(as applicable) so issued or sold are, or may become, exercisable
and/or convertible for an aggregate number of shares of Common
Stock that exceeds (as applicable) either (1) if Common Stock was
the primary security issued or sold in such transaction, the
aggregate number of shares of Common Stock so issued or sold in
such transaction or (2) if an Option or Convertible Security was
the primary security issued or sold in such transaction, the
aggregate number of shares of Common Stock so deemed issued or sold
in such transaction that underlie all Options or Convertible
Securities that constituted the primary securities in such
transaction, then (x) such Option or Convertible Security (as
applicable) will be deemed to have been issued for consideration
equal to the fair market value thereof and (y) the other securities
issued or sold or deemed to have been issued or sold in such
integrated transaction shall be deemed to have been issued for
consideration equal to the difference of (I) the aggregate
consideration received by the Company minus (II) the fair market
value of each such Option or Convertible Security (as applicable).
If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefor will be deemed to be the net
amount of consideration received by the Company therefor. If any
shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair market
value of such consideration, except where such consideration
consists of publicly traded securities, in which case the amount of
consideration received by the Company for such securities will be
the arithmetic average of the volume-weighted average price of such
security for each of the five (5) trading days immediately
preceding the date of receipt. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair market value of such portion
of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair market value of any
consideration other than cash or publicly traded securities will be
determined jointly by the Company and the Holder. If such parties
are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the
“Valuation
Event”), the fair value
of such consideration will be determined within five (5) trading
days after the tenth (10th) day following such Valuation Event by
an independent, reputable appraiser jointly selected by the Company
and the Holder. The determination of such appraiser shall be final
and binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the
Company.




 

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(v) Record
Date. If the Company takes a
record of the holders of shares of Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution
payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common
Stock, Options or Convertible Securities, then such record date
will be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase (as the case may be).









(h)           Certain
Adjustments. The applicable Conversion Price will not be
reduced if the amount of such reduction would be an amount less
than $0.001, but any such amount will be carried forward and
reduction with respect thereto made at the time of and together
with any subsequent reduction which, together with such amount and
any other amount or amounts so carried forward, will aggregate
$0.001 or more.




 


(i)     No
Impairment. The Company will
not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in the carrying out of
all the provisions of this Section 6 and in the
taking of all such action as may be necessary or appropriate to
protect the conversion rights of the Holders against
impairment.

(j) Certificate
as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion
Price pursuant to this Section 6, the Company
at its expense will promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to
each Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based and will file a copy of such
certificate with its corporate records. The Company will, upon the
written request at any time of any Holder, furnish or cause to be
furnished to such holder a similar certificate setting forth (1)
such adjustments and readjustments, (2) the Conversion Price then
in effect, and (3) the number of shares of Common Stock and the
amount, if any, of other property which then would be received upon
the conversion of Preferred Stock. Despite such adjustment or
readjustment, the form of each or all Preferred Stock certificates,
if the same will reflect the initial or any subsequent Conversion
Price, need not be changed for the adjustments or readjustments to
be valued under the provisions of this Certificate of Designation,
which will control.

7. Conversion
Restriction.


Notwithstanding anything to the contrary set forth
in Section 6 of this Certificate of Designation, at no time may any
Holder convert shares of Preferred Stock into Conversion Shares if
the number of Conversion Shares to be issued would, when aggregated
with all other shares of Common Stock owned by such Holder at such
time, result in such Holder beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act) more than 4.99%
of all of the Common Stock outstanding at such time;
provided,
however,
that a Holder may waive this restriction by providing the Company
with sixty-one (61) days written notice (pursuant to Section 14
hereof) of such Holder’s intent to waive Section 7 of this
Certificate of Designation with regard to any or all Conversion
Shares issuable upon conversion of their shares of Preferred Stock
(a “Waiver
Notice”). In the event
the Company receives a Waiver Notice from a Holder, this Section 7
shall be of no force or effect with regard to those shares of
Preferred Stock referenced in the Waiver
Notice.


 




 

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8. Sinking
Fund.


There
will be no sinking fund for the payment of any dividends or
liquidation preferences on the shares of Preferred Stock or the
redemption of any shares thereof.

9. Protective
Provisions.


The
Company will not, either directly or indirectly by amendment,
merger, consolidation or otherwise, without obtaining the approval
(by vote or written consent) of the Holders of at least two-thirds
of the shares of Preferred Stock then issued and
outstanding:

(a) permit
the amendment, modification or repeal of the Company’s
Articles of Incorporation or Bylaws, except for those amendments or
modifications required to comply with, or otherwise contemplated
by, the Purchase Agreement, or necessary to adopt an exclusive
forum bylaw provision;

(b) permit
the amendment, modification, or repeal of this Certificate of
Designation;

(c) increase
or decrease the authorized number of shares of Common Stock or
Preferred Stock, except for those increases of authorized number of
shares of Common Stock required to comply with, or otherwise
contemplated by, the Purchase Agreement;

(d) issue,
sell, or deliver (whether through the issuance or granting of
rights or otherwise), or authorize the issuance, sale or delivery
of, (i) any shares of Senior Stock or Parity Stock or reclassify or
modify any Junior Stock or Parity Stock so as to become Senior
Stock or Parity Stock; or (ii) any additional shares of Common
Stock or Convertible Securities; provided,
however, nothing contained in
this Section 9(d) shall prevent the Company from, and the Company
shall be entitled to, issue Common Stock or Convertible Securities
in connection with currently outstanding grants and issuances, and
issuances to employees, officers, directors, or other eligible
recipients under the Company’s existing equity or other
incentive plans, and pursuant to equity or other incentive plans
that may be adopted by the Company’s Board of Directors after
the date hereof;

(e) amend
or modify the terms of any outstanding security or debt instrument
of the Company outstanding as of the Original Issue
Date;

(f) declare
or pay any dividend (other than dividends payable solely in Common
Stock) or distribution on, or make any payment on account of, or
set apart assets for a sinking or analogous fund to, or, purchase,
redeem, defease, retire or otherwise acquire, any shares of any
class of capital stock of the Company or any warrants or options to
purchase any such capital stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in
obligations of the Company or any subsidiary of the Company (such
declarations, payments, setting apart, purchases, redemptions,
defeasances, retirements, acquisitions and distributions being
referred to herein as “Restricted
Payments”);
provided,
however, that the Company or
any subsidiary of the Company may make Restricted Payments with
respect to any shares of Senior Stock or Parity Stock the issuance
of which has been approved in accordance herewith, including with
respect to any shares of Series B Preferred Stock and/or Series C
Preferred;

(g) adopt
or effect any modification to any employee stock option plan, stock
bonus plan, stock purchase plan or other management equity plan
without the prior approval of the Board of Directors;




 

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(h) permit
the amendment or modification of the Certificate of Designation for
any other series of preferred stock of the Company;
provided,
however, the Company may file a
certificate of elimination or otherwise terminate any other series
of preferred stock of the Company;

(i) increase
or decrease the authorized number of directors constituting the
Board of Directors; or

(j) liquidate,
dissolve or wind-up the business and affairs of the Company,
subject the Company to any transaction, or series of related
transactions following the Original Issuance Date, that constitutes
a Change of Control, or consent to any of the
foregoing.


For
purposes of this Section 9, “Change of Control” means the
occurrence of any of the following events occurring after the
Original Issue Date: (i) any “person” or
“group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the “beneficial
owner” (as defined in Rule l3d-3 under the Exchange Act),
directly or indirectly, of more than 50% of the total voting power
of the outstanding capital stock of the Company having the right to
vote ordinarily on the election of directors (“Voting Stock”); (ii) the Company
is merged with or into or consolidated with another person or
entity and, immediately after giving effect to the merger or
consolidation, (a) less than 50% of the total voting power of the
outstanding Voting Stock of the surviving or resulting person or
entity is then “beneficially owned” (within the meaning
of Rule 13d-3 under the Exchange Act) in the aggregate by the
stockholders of the Company immediately before such merger or
consolidation or (b) any “person” or
“group” (as defined in Section 13(d)(3) or 14(d)(2) of
the Exchange Act), has become the direct or indirect
“beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the total voting power of the
Voting Stock of the surviving or resulting person or entity; or
(iii) the Company, either individually or in conjunction with one
or more of its subsidiaries, sells, assigns, conveys, transfers,
leases, or otherwise disposes of, or one or more of its
subsidiaries sells, assigns, conveys, transfers, leases or
otherwise disposes of, all or substantially all of the assets of
the Company and its subsidiaries, taken as a whole (either in one
transaction or a series of related transactions), including capital
stock of the Company’s subsidiaries, to any person or entity
(other than the Company or a wholly owned subsidiary).


With
respect to actions by the Holders upon those matters on which the
Holders may vote as a separate class, such actions may be taken
without a stockholders meeting by the written consent of Holders
who would be entitled to vote at a meeting having voting power to
cast not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which
all the shares of Preferred Stock is entitled to vote were present
and voted. In addition, the Holders may call a special meeting of
the Company’s stockholders upon the occurrence of the events
described above by providing notice of the exercise of such right
to the Company and the Company will take all steps necessary to
hold such meeting as soon as practicable after the receipt of such
notice.

10. Preemptive
Rights.


Other
than as specifically set forth in the Purchase Agreement, Holders
shall not be entitled to any preemptive, subscription or similar
rights in respect to any securities of the Company under this
Certificate of Designation.


 




 

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11. The
Company’s Dealings with Holders of the Preferred
Stock.


No
payments shall be made to Holders, nor shall redemptions of shares
of Preferred Stock be made, unless the right to receive such
payments or participate in such redemptions are made available to
all Holders on a pro rata basis based on the number of shares of
Preferred Stock such holder holds.

12. Record
Holders.


The
Company may deem and treat the record holder of any shares of the
Preferred Stock as the true and lawful owner thereof for all
purposes, and the Company shall not be affected by any notice to
the contrary.

13. Headings
and Subdivisions.


The
headings of the various subdivisions hereof are for convenience of
reference only and will not affect the interpretation of any of the
provisions hereof.

14. Notices.


Any
notice required by the provisions hereof to be given to the Holders
shall be deemed given if deposited in the United States Mail, first
class postage prepaid, and addressed to each Holder at his or its
address appearing on the Company’s books. Any notice required
by the provisions hereof to be given to the Company shall be deemed
given if deposited in the United States mail, first class postage
prepaid, and addressed to the Company at 18662 MacArthur Blvd.,
Ste. 110, Irvine, CA 92612, or such other address as the Company
shall provide in writing to the Holders.

15. Severability
of Provisions.


The
rights, preferences and limitations of the shares of Preferred
Stock set forth herein will be deemed severable and the invalidity
or unenforceability of any provision will not affect the validity
or enforceability of the other provisions hereof; provided that if any provision of this
statement of resolution, as applied to any Holder or the Company or
to any circumstance, is adjudged by a governmental body or
arbitrator not to be enforceable in accordance with its terms, the
governmental body or arbitrator making such determination may
modify (and shall modify) the provision in a manner consistent with
its objectives such that it is enforceable, and/or to delete
specific words or phrases, and in its reduced form, such provision
will then be enforceable and will be enforced.




 

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IN
WITNESS WHEREOF, True Drinks Holdings, Inc. has caused this
Certificate of Designation to be signed by the undersigned this
24th day of January, 2017.


 


	

 

	


TRUE
DRINKS HOLDINGS, INC.



	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
/s/ Kevin Sherman

	

 


	

 

	

Name: 


	



Kevin
Sherman

	

 


	

 

	

Title: 

	



Chief
Executive Officer



	

 









 

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