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SECURITIES & EXCHANGE COMMISSION EDGAR FILINGCord Blood America, Inc.Form: 8-KDate Filed: 2014-12-23Corporate Issuer CIK:Symbol:SIC Code:Fiscal Year End:1289496CBAI807112/31 Copyright 2014, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to theterms of use.
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 8-KCURRENT REPORTPursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Date of Report (Date of earliest event reported): December 17, 2014CORD BLOOD AMERICA, INC.(Exact name of registrant as specified in its charter)Florida(State or Other Jurisdictionof Incorporation)000-50746(CommissionFile Number)90-0613888(I.R.S. EmployerIdentification No.)1857 Helm Drive, Las Vegas, NV 89119(Address of Principal Executive Office) (Zip Code)(702) 914-7250(Registrant’s telephone number, including area code)Copies to:Joseph R. Vicente1857 Helm Drive, Las Vegas, NV 89119Phone: (702) 914-7250Fax: (702) 914-7251Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant underany 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))
ITEM 1.01 Entry Into a Material Definitive Agreement.In a transaction that closed on December 17, 2014 and in settlement of the previously disclosed litigation matter between Cord BloodAmerica, Inc., a Florida corporation (the "Company"), on the one hand, and St. George Investments LLC, an Illinois limited liabilitycompany (“St. George”) and Tonaquint, Inc., a Utah corporation (“Tonaquint”), on the other, Case Number 2:13-CV-00806-PMW filedin the United States District Court for the District of Utah, Center Division, the Company, St. George and Tonaquint entered into aSettlement and Exchange Agreement (the "Settlement Agreement"). Pursuant to the Settlement Agreement, the Secured ConvertiblePromissory Note and the Warrant to Purchase Shares of Common Stock issued by the Company to St. George on or around March10, 2011, as well as the Note and Warrant Purchase Agreement pursuant to which the St. George Note and St. George Warrant wereissued, and all other documents that made up the March 2011 transaction between the Company and St. George, all of which havebeen set forth in detail in prior filings by the Company, were terminated, cancelled or otherwise extinguished. Further pursuant to theSettlement Agreement, the Secured Convertible Promissory Note issued by the Company to Tonaquint on or around June 27, 2012was exchanged for a Secured Convertible Promissory Note of the Company in the principal amount of 2,500,000.00 (the "CompanyNote"), and certain of the other documents that were part of the June 27, 2012 transaction between the Company and Tonaquint (the“June 2012 Tonaquint Transaction”) were terminated, cancelled or otherwise extinguished, and certain of them were amended, as setforth below. The June 2012 Tonaquint Transaction is described in prior filings by the Company.Under the Company Note, the Company shall make monthly payments to Tonaquint, with the first payment due on or before April 17,2015, and with payments continuing thereafter until the Company's Note is paid in full, with a maturity date that is 33 calendar monthsafter April 17, 2015. The amount of the monthly payments is 100,000.00 (the “Installment Amount”); provided, however, that if theremaining amount owing under the Company Note as of the applicable Installment Date (defined in the Company Note) is less than 100,000.00, then the Installment Amount for such Installment Date shall be equal to the outstanding amount. The Company mayprepay any or all of the outstanding amount of the Company Note at any time, without penalty. In the event the Company prepays anamount that is less than the outstanding amount, then the prepayment amount shall be applied to the next Installment Amount(s) dueunder the Company Note.For each monthly payment, the Company may elect to designate all or any portion of the Installment Amount then due as aconversion eligible amount (hereafter “Conversion Eligible Amount”); provided that the total outstanding Conversion Eligible Amountthat has not been converted by Tonaquint, as set forth below, at any given time may not exceed one hundred thousand dollars( 100,000) without Tonaquint’s prior written consent and subject to additional restrictions set forth in the Company Note. In the eventthe Company designates any portion of any monthly payment amount as a Conversion Eligible Amount, the applicable monthlypayment shall be reduced by an amount equal to the portion thereof designated as a Conversion Eligible Amount. The ConversionEligible Amount shall continue to be included in and be deemed to be a part of the Outstanding Balance (defined in the CompanyNote) of the Company Note unless and until such amount is either paid in cash by the Company or converted into Common Stock byTonaquint. The Company may pay the Conversion Eligible Amount in cash, provided that no prepayments of cash shall reduce theConversion Eligible Amount until the Outstanding Balance is equal to or less than the Conversion Eligible Amount.Once the Company has designated amounts as Conversion Eligible Amount, Tonaquint may convert all or any portion of that amountinto shares of the Company's Common Stock. In the event of a conversion by Tonaquint of a Conversion Eligible Amount, the numberof Common Stock shares delivered to Tonaquint upon conversion will be calculated by dividing the amount of the Company Note thatis being converted by 70% of the average of the three (3) lowest Closing Bid Prices of the Common Stock (as defined in theCompany Note) in the twenty (20) Trading Days immediately preceding the applicable Conversion.The Company Note has an interest rate of 7.5%, which would increase to a rate of 15.0% on the happening of certain Events ofDefault (defined in the Company Note) that are not considered a Payment Default (defined in the Company Note), provided that theCompany may cure the default in accordance with and subject to the terms set forth in the Company Note. Where a Payment Defaultoccurs, including where (i) Borrower shall fail to pay any principal, interest, fees, charges, or any other amount when due and payableunder that Company Note; or (ii) Borrower shall fail to deliver any Conversion Shares in accordance with the terms of the CompanyNote, late fees shall accrue as set forth in the Company Note, and in addition, the Company shall have ninety (90) days from deliveryof notice of default from Tonaquint to cure the default, as set forth in more detail in the Company Note. If the Company fails to curethe Payment Default, Tonaquint may accelerate the Company Note by written notice to the Company, with the Outstanding Balancebecoming immediately due and payable in cash at the Mandatory Default Amount (defined in the Company Note) equal to (i) theOutstanding Balance as of the date of acceleration (which Outstanding Balance, for the avoidance of doubt, will include all Late Feesthat accrue until any applicable Payment Default is cured) multiplied by (ii) two hundred fifty percent (250%), along with otherremedies, as set forth in the Company Note.
The Company Note, as well as a First Amendment to Security Agreement, which amended the Security Agreement entered as part ofthe June 2012 Tonaquint Transaction and Consent to Entry of Judgment by Confession, along with a First Amendment to Guarantyexecuted by all wholly owned subsidiaries of the Company, which amended the Amendment to Guaranty that was entered as part ofJune 2012 Tonaquint Transaction were each delivered along with the Settlement Agreement (collectively the "TransactionDocuments"). The Transaction Documents contain representations and warranties of the Company and Tonaquint that are customaryfor transactions of this kind.The foregoing is only a summary of the terms of the transaction between the Company and St. George and Tonaquint. You are urgedto read each of the Transaction Documents, which are attached as Exhibits to this Current Report and incorporated by referenceherein.ITEM 5.02Compensatory Arrangements of Certain Officers.On December 18, 2014, the Company entered into an Executive Employment Agreement with Joseph R. Vicente, the Company’sPresident and Chairman of the Board, which is effective as of January 1, 2015 and shall terminate as of December 31, 2017, unlessearlier terminated by the Company or Mr. Vicente in accordance with the Employment Agreement.Mr. Vicente’s Executive Employment Agreement provides for a base salary equal to 135,000, as well as an annual bonus, payable atthe discretion of the Board of Directors, equal to 30% of Mr. Vicente’s base salary for that calendar year, provided that Mr. Vicentehas the option to receive any portion of his salary and bonus in stock of the Company, in lieu of cash, at a value determined by theBoard of Directors in their reasonable discretion and otherwise in accordance with the Employment Agreement.The Employment Agreement provides for change of control termination payments, whereby if Mr. Vicente is terminated, hiscompensation reduced, or the employer terminates his employment within one year after a change in control, then Mr. Vicente isentitled to a termination benefit in an amount no less than the total of the highest annual salary and bonus amount set forth in theEmployment Agreement multiplied by two (2). The Employment Agreement also provides for termination payments in the absence ofa change of control in the event the Company terminates Mr. Vicente without cause, which said payments shall be in an amountequal to all compensation paid by the Company to Mr. Vicente for the 24 months preceding the termination, including salary, bonus,equity, stock options and other compensation, to be paid in equal, monthly installments over the 24-month period followingtermination. (see the Executive Employment Agreement attached as an Exhibit hereto for more information).Item 8.01Other Events.On December 22, 2014, the Company, Tonaquint and St. George filed a Stipulated Motion to Dismiss with Prejudice the lawsuitbetween and among those same parties in the United States District Court for the District of Utah, Central Division, case number2:13-cv-00806-PMW (the “Action”), and on that same day, the Court entered an Order of Dismissal, dismissing the Action in itsentirety. The Action which is also referenced herein above has been described in detail in previous filings by the Company.Item 9.01Financial Statements and Exhibits.(d) ExhibitsThe following Exhibits are furnished herewith:Exhibit No. Description10.110.210.310.410.510.6Settlement and Exchange AgreementSecured Convertible Promissory NoteFirst Amendment to Security AgreementFirst Amendment to GuarantyConsent to Entry of Judgment by ConfessionExecutive Employment Agreement with Joseph R. Vicente
SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned hereunto duly authorized.CORD BLOOD AMERICA, INC.(Registrant)Date: December 23, 2014By: /s/ Joseph R. VicenteChairman and President
Exhibit 10.1SETTLEMENT AND EXCHANGE AGREEMENTThis Settlement and Exchange Agreement (this “Agreement”), dated December 17, 2014 (the “Effective Date”), is enteredinto by and among St. George Investments LLC, a Utah limited liability company (formerly known as St George Investments LLC, anIllinois limited liability company) (“SGI”), Tonaquint, Inc., a Utah corporation (“Tonaquint”), and Cord Blood America, Inc., a Floridacorporation (“Cord Blood”). Each of SGI and Tonaquint are sometimes individually referred to hereinafter as an Investor“Party,” andcollectively as the “Investor Parties.”A. SGI and Cord Blood previously entered into that certain Note and Warrant Purchase Agreement dated March 10, 2011(the “SGI Purchase Agreement”), whereby Cord Blood issued to SGI a Secured Convertible Promissory Note dated March 10, 2011in the original principal amount of 1,105,500.00 (the “SGI Note”) and a Warrant to Purchase Shares of Common Stock dated March10, 2011 (the “Warrant”).B. Subsequent to entering into the SGI Purchase Agreement, Tonaquint, an affiliate of SGI, and Cord Blood entered into thatcertain Securities Purchase Agreement dated June 27, 2012 (the “Tonaquint Purchase Agreement”), whereby Cord Blood issued aSecured Convertible Promissory Note dated June 27, 2012 in the original principal amount of 1,252,000.00 to Tonaquint (the“Tonaquint Note”).C. Cord Blood’s obligations under the Tonaquint Purchase Agreement and Tonaquint Note were secured by way of thatcertain Security Agreement dated June 27, 2012 (the “Tonaquint Security Agreement”) executed by Cord Blood; CorCell Companies,Inc., a Nevada corporation (“CCCI”); CorCell, Ltd., a Nevada corporation (“CCL”); Cord Partners, Inc., a Florida corporation (“CPI”);CBA Professional Services, Inc., d/b/a/ BodyCells, Inc., a Florida corporation (“CBAPSI”), which has been dissolved; CBA Properties,Inc., a Florida corporation (“CBAPI”); and Career Channel Inc., a Florida corporation (“Channel”), in favor of Tonaquint. (Collectively,Cord Blood, CCCI, CCL, CPI, CBAPI, and Channel are referred to herein as the “Debtors”).D. Cord Blood’s obligations under the Tonaquint Purchase Agreement and Tonaquint Note were further guaranteed by all ofthe Debtors other than Cord Blood pursuant to a certain Guaranty dated June 27, 2012 executed by all of the Debtors except CordBlood for the benefit of Tonaquint (the “Tonaquint Guaranty”).E. Cord Blood made payments under the SGI Note, but none under the Tonaquint Note, because it understood from theparties’ discussions that Cord Blood was not obligated to make payments under the Tonaquint Note until the SGI Note was paid off.F. Tonaquint issued a default notice to Cord Blood dated August 23, 2013 for several alleged defaults (including nonpayment)under the Tonaquint Note.G. In response, on or about August 30, 2013, Cord Blood filed a lawsuit against the Investor Parties in the United StatesDistrict Court, District of Utah, Central Division, as Case No. 2:13-cv-00806 (the “Lawsuit”), alleging fraud and other claims.
H. Cord Blood also filed for a temporary restraining order and preliminary injunction in connection with the Lawsuit, butvoluntarily withdrew the same after Tonaquint voluntarily halted efforts to sell assets it claimed were pledged under the TonaquintSecurity Agreement.I. The Investor Parties answered Cord Blood’s Complaint filed in the Lawsuit and asserted various counterclaims againstCord Blood.J. The Investor Parties believe and have asserted that the combined outstanding balances of the SGI Note and the TonaquintNote as of the date hereof are in excess of 11,500,000.00. Nevertheless, the Investor Parties have agreed to settle the Lawsuit onthe terms and conditions set forth herein (including Tonaquint’s receipt of the Exchange Note (as defined below) having an initialoutstanding balance that is significantly less than 11,500,000.00) in order to resolve the Lawsuit and avoid additional protractedlitigation.K. Cord Blood disputed the Investor Parties’ claims, including the amount of damages claimed by the Investor Parties, andasserted affirmative claims for relief.L. After months of litigation, the parties now desire to settle the Lawsuit and all claims between them on the terms andconditions set forth herein.NOW, THEREFORE, in consideration of the promises set forth in this Agreement and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:1. Incorporation of Recitals. The foregoing recitals are contractual in nature and are incorporated herein as part of thisAgreement.2. Exchange of the Tonaquint Note. Simultaneously with the execution of this Agreement, the parties hereto agree that, inexchange for the Tonaquint Note, Cord Blood shall issue to Tonaquint a Secured Convertible Promissory Note of even date herewithin the original principal amount of 2,500,000.00 in the form attached hereto as Exhibit A (the “Exchange Note”). The partiesacknowledge and agree that this exchange is intended to comport with the requirements of Section 3(a)(9) of the Securities Act of1933, as amended (the “Securities Act”). The parties further acknowledge that for purposes of Rule 144 of the Securities Act, it istheir intent that the holding period of the Exchange Note issued hereunder (including the corresponding Conversion Shares (asdefined in the Exchange Note)) will include the holding period of the Tonaquint Note from June 27, 2012. In furtherance thereof, theparties represent and warrant to Tonaquint that they have no knowledge of any fact or circumstance that would prevent the holdingperiod of the Exchange Note (including the corresponding Conversion Shares) from including the holding period of the TonaquintNote from June 27, 2012. As set forth in more detail in Section 9.1, the parties agree to take any reasonable actions and execute anyreasonable documents and agreements as the other party may reasonably request from time to time in support of such position. Theparties agree not to take a position contrary to this Section 2. Cord Blood agrees to issue the Exchange Note (and any ConversionShares) without restriction and not containing any restrictive legend without the need for any action by Tonaquint, provided that theapplicable holding period has been met. In furtherance thereof, counsel to Tonaquint shall provide an opinion that: (a) the ConversionShares issuable to Tonaquint upon conversion of the Exchange Note may be resold pursuant to Rule 144 without volume or mannerof-sale restrictions or current public information requirements; and (b) the transactions contemplated hereby and all other documentsassociated with this transaction comport with the requirements of Section 3(a)(9) of the Securities Act. The Exchange Note is beingissued in substitution of and exchange for, and not in satisfaction of, the Tonaquint Note, and no other cash or property has beengiven for the Exchange Note except for the surrender of the Tonaquint Note to Cord Blood for cancellation. The Exchange Note shallnot constitute a novation or satisfaction and accord of the Tonaquint Note.2
3. Amendment to Security Agreement. Simultaneously with the execution of this Agreement, the parties hereto agree thatCord Blood, all other Debtors, and Tonaquint shall execute and deliver to each other that certain First Amendment to SecurityAgreement in the form attached hereto as Exhibit B (the “Amendment to Security Agreement”), which shall amend the TonaquintSecurity Agreement as set forth therein. Consistent with the Amendment to Security Agreement, all parties hereto acknowledge andagree that it is their intent that the Tonaquint Security Agreement has been effective since June 27, 2012 and secures all obligationsarising under the Exchange Note issued hereunder. The parties hereto further acknowledge and agree that it is their intent that thesecurity interest created by the Tonaquint Security Agreement remains an unbroken and continuous security interest and lien positionsince the original date the Tonaquint Security Agreement was entered into. The parties represent and warrant that they are not awareof any facts or circumstances in contravention of the parties’ intent expressed in the foregoing sentence and further agree not to takeany position to the contrary of that intent.4. Representations and War
company (“St. George”) and Tonaquint, Inc., a Utah corporation (“Tonaquint”), on the other, Case Number 2:13-CV-00806-PMW filed in the United States District Court for the District of Utah, Center Division, the Company, St. George and Tonaquint entered into a Settle
