Exhibit 10.7
Employment Agreement
 
This EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of April 26,
2019, by and between True Drink Holdings, Inc., a Nevada corporation (the
“Company”), and Brandon Stump(“Executive”).
 
WHEREAS, the Company recognizes that the Executive has had and is expected to
continue to have a critical and essential role in guiding the Company and in
developing the Company’s business;
 
WHEREAS, the Executive is expected to make major contributions to the stability,
growth and financial strength of the Company;
 
WHEREAS, the Company has determined that appropriate arrangements should be
taken to encourage the continued attention and dedication of the Executive to
his assigned duties without distraction;
 
WHEREAS, in consideration of the Executive’s employment with the Company, the
Company desires to provide the Executive with certain compensation and benefits
as set forth in this Agreement; and
 
WHEREAS, the Executive desires to be employed by the Company on the terms
contained in this Agreement which shall supersede all previous employment
agreements regarding the Executive’s service as an officer, director and
employment by the Company.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
 
1. Position and Duties.
 
(a) The Executive shall serve as the Chief Executive Officer (“CEO”) of the
Company reporting to the Company’s Board of Directors (the “Board”). The
Executive shall primarily work out of any office he deems appropriate.
 
(b) The Company agrees to propose to the shareholders of the Company at each
appropriate meeting of such shareholders during the Term and any Renewal Term
(as such terms are defined below), the election and reelection of the Executive
as a member of the Board. In addition, in his capacity as the Company’s Chief
Executive Officer, the Executive shall either serve as a director, manager,
member and senior executive officer of each of the Company’s subsidiaries or
affiliates, or shall alone act on the Company’s behalf in the Company’s capacity
as member, manager, shareholder, partner, or otherwise as interest holder in
respect of any and all of the Company’s subsidiaries and affiliates, except that
the Executive himself may delegate such function or appoint another in his
stead.
 
(c) The Executive shall have such duties, authority and responsibilities as are
consistent with the role of CEO and as may be set forth in the Bylaws of the
Company on the date hereof. Executive shall only have duties as arise from this
Agreement and any duties or obligations to the Company under any previous
employment agreement are hereby cancelled. For purposes of the applicability of
the Company’s compensation plans to the Executive, Executive shall be considered
an “employee.” Nothing herein shall require the Executive to devote more than a
substantial amount of his business time to the performance of his duties
hereunder. Accordingly, the Executive shall be entitled to (i) serve as an
advisor or member of the board of directors of unaffiliated companies, (ii)
serve on civic, charitable, educational, religious, public interest or public
service boards, (iii) manage the Executive’s personal and family investments,
and (iv) engage in and/or have an ownership interest in other businesses. In
addition, the Executive has disclosed to the Company his involvement in entities
and investments other than the Company (collectively, the “Outside Activities”).
The Executive is permitted to continue to engage in the Outside Activities. The
Company shall also permit the Executive to engage in other business related
activities provided that the Executive agrees to disclose to the Board any
actual or potential conflict of interest arising out of any such activities.
 
 
 
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2. Term. This Agreement and Executive’s employment hereunder shall be for an
initial term of three (3) years (“Initial Term”) commencing on the date hereof
(the “Effective Date”) and ending on the third anniversary of the Effective
Date, unless terminated earlier by the Company or the Executive pursuant to
Section 4 of this Agreement (the “Term”). Thereafter, at the election of the
Executive or the Company, this Agreement may be extended for an additional one
(1) year (the “First Extension”). Thereafter, the Term shall continue for an
additional one-year periods unless, at least one hundred and eighty (180) days
before the expiration of the First Extension, the Company provides notice in
writing to the Executive that the Term shall not be further extended. Each such
extension shall be referred to as a Renewal Term. The date upon which this
Agreement would terminate if both extensions are elected shall be referred to as
the Expiration Date.
 
3. Compensation and Related Matters.
 
(a) Base Salary. The Executive’s initial annual base salary shall be $500,000.00
subject to applicable withholdings (the “Base Salary”). The Base Salary shall be
payable in accordance with the Company’s normal payroll procedures in effect
from time to time. On each calendar year the base salary will increase no less
than $25,000.00 (“minimum”). The Compensation Committee of the Board
(“Compensation Committee”) shall review the Base Salary annually and may
increase the Base Salary more than the minimum, and the term “Base Salary” shall
refer to such increased amount.
 
(b) Annual Bonus. During the Term, the Executive may receive an annual cash
bonus, in respect of each full or partial fiscal year of the Company occurring
during the Term a target bonus of $750,000 (the “Target Bonus”). The bonus for
the first year will be based on gross revenue of at least $35,000,000 (the “GR
Target”). If the Company’s gross revenue is less than 50% of the GR Target, then
the Executive shall not receive any Target Bonus; if the Company’s gross revenue
is above 50% of the GR Target then the Executive shall receive a percentage of
the Target Bonus equal to the percentage of the GR Target that the Company has
achieved; if the Company’s gross revenue is 105% of the GR Target, the Executive
shall receive an amount equal to 110% of the Target Bonus; and if the Company’s
Gross Revenue is 110% or more of of the GR target, then Executive shall receive
120% of the Target Bonus. The Annual Bonus shall be capped at 120% of the target
bonus.
 
(c) Milestone Bonuses. In addition to any other compensation to which the
Executive is entitled, upon the Company obtaining any of the milestones set
forth on Exhibit A hereof, Executive will be entitled to awards of common stock
calculated in accordance with Exhibit A hereof.
 
(d) Long Term Incentive Plan. The Executive shall be entitled to participate in
all bonus plans, policies, practices, policies and programs adopted by the
Company and applicable generally to senior executives and employees of the
Company. At Executive’s request, the Company shall, at the Company’s expense,
set up a retirement plan for executives and senior officers of the Company.
 
(e) Equity Incentive Plan. The Executive shall be granted the equity rights set
forth on Exhibit B. Additionally, the Executive shall be entitled to participate
in any and all plans providing for awards of equity or instruments convertible
into equity adopted by the Company and applicable generally to other senior
executives and employees of the Company. When used in this Agreement “Fair
Market Value” shall mean: (1) If the Company’s common stock (the “common stock”)
is listed on a national securities exchange or traded in the over-the-counter
market and sales prices are regularly reported for the common stock, the closing
or, if not applicable, the last price of the common stock on the composite tape
or other comparable reporting system for the last trading day prior to the
applicable date; (2) If the common stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales prices are not
regularly reported for the common stock for the trading day referred to in
clause (1), and if bid and asked prices for the Common Stock are regularly
reported, the mean between the bid and the asked price for the common stock at
the close of trading in the over-the-counter market for the trading day on which
common stock was traded on the applicable date and if such applicable date is
not a trading day, the last market trading day prior to such date; and (3) If
the common stock is neither listed on a national securities exchange nor traded
in the over-the-counter market, such value as the Compensation Committee and the
Executive, in good faith, shall determine.
 
 
 
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(f) Business Expenses. The Company shall promptly reimburse the executive for
all reasonable business-related expenses incurred in connection with the
performance of the Executive’s duties hereunder in accordance with the policies
and procedures then in effect and established by the Company for its senior
executive officers.
 
(g) Insurance. The Company shall provide the Executive with health insurance for
the Executive and his dependents. The insurance coverage provided shall be not
less than what the Executive has prior to this agreement and in any event not
less than 100% coverage at the highest available family plan available from the
company’s current benefits provider for California State Residents. At a minimum
Health will include 100% coverage of medical, dental, vision, and 100% coverage
of long-term disability for Executive’s entire Base Salary and accidental death
and/or dismemberment. Company will also provide Executive with $5,000,000.00 of
life insurance with an insurance company rated “A” or higher. Should the
Executive elect to not utilize any of the benefits described in this paragraph
or any benefits described elsewhere in this Agreement, then the Company will pay
to the Executive the equivalent value of such insurance plan or benefit.
 
(h) Other Benefits. The Executive shall be entitled to participate in all
pension, savings and retirement plans, welfare and insurance plans, practices,
policies, programs and perquisites of employment applicable generally to other
senior executives of the Company and any benefits or covered expenses included
in all previous employment agreements between the Company and the Executive.
Executive shall also receive the same compensation as other members of the
Company’s Board for his service on the Board. Should the Executive defer such
benefits for one year it shall not be deemed deferred for any other year.
 
(i) Vacation. The Executive shall be entitled to accrue up to 21 paid vacation
days in each year, which shall be accrued ratably. The Executive shall also be
entitled to all paid holidays given by the Company to its executives and
employees. Any unused vacation days shall be rolled forward to be used in future
years.
 
(j) Sick Days. The Executive shall be entitled to accrue up to 10 paid sick days
in each year, which shall be accrued ratably. Any unused sick days shall be
rolled forward to be used in future years.
 
(k) Withholding. All amounts payable to the Executive under this Section 3 shall
be subject to all required federal, state and local withholding, payroll and
insurance taxes and requirements.
 
(l)  Direct Payment. To the extant practical, at the request of the Executive,
all benefits granted hereunder will be paid directly by the Company to the
vendor.
 
(m) Shares in lieu. In lieu of cash for any payments due to the Executive
including all payments due upon termination of this Agreement, the Executive may
elect to receive shares of the Company’s common stock valued at the Fair Market
Value based upon the date such cash should have been paid to the Executive. The
election can be made from 30 days before and 60 days after the date such cash
should have been paid to the Executive.
 
(n) Automobile Allowance. During the Term, Executive shall receive a monthly
automobile allowance in the amount of $750.00 per month for automobile-related
expenses.
 
4. Termination. The Executive’s employment may be terminated under the following
circumstances:
 
(a) Death. The Executive’s employment hereunder shall terminate upon his death.
 
(b) Disability. The Company may terminate the Executive’s employment if the
Executive becomes subject to a Disability. For purposes of this Agreement,
“Disability” means the Executive is unable to perform the essential functions of
his position as CEO, with or without a reasonable accommodation, for a period of
120 consecutive days or 180 days during any rolling consecutive 12-month period.
Notice of termination for Disability shall not take effect unless notice of at
least 90 days is provided to the Executive. Such notice may not be given (and
the Disability not deemed to have occurred) until the Disability is first
confirmed in writing by a medical professional mutually acceptable to both the
Executive and the Compensation Committee.
 
 
 
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(c) Termination by Company for Cause. The Company may terminate the Executive’s
employment for Cause. For purposes of this Agreement, “Cause” means the
Executive’s: (i) willful misconduct or gross negligence which causes material
harm to the Company; (ii) fraud, embezzlement or willful other material
dishonesty with respect to the affairs of the Company or any of its affiliates;
(iii) conviction, plea of nolo contendere, guilty plea, or confession to either
a felony or any lesser crime relating to the affairs of the Company or any of
its affiliates or of which fraud, embezzlement, or moral turpitude is a material
element; or (iv) a willful material breach of this Agreement or a willful breach
of a fiduciary duty owed to the Company. Provided that any such Cause, except
for Cause pursuant to subsection 4(c)(iii), shall not constitute Cause unless
the Company has provided the Executive with (x) written notice of the acts or
omissions giving rise to a termination of his employment for Cause; (y) the
opportunity to correct the act or omission within 30 days after receiving the
Company’s notice (the “Cure Period”); and (z) a meaningful opportunity to be
heard before the Board with the Executive’s counsel present at least two
business days prior to the Board’s decision to provide a Termination for Cause
notice the Executive.
 
(d) Termination by the Company without Cause. The Company may not terminate the
Executive’s employment during any Term or Renewal Term without Cause.
 
(e) Termination by the Executive for Any Reason. The Executive may terminate his
employment at any time for any reason.
 
(f) Termination by the Executive for Good Reason. The Executive may terminate
his employment for Good Reason. For purposes of this Agreement, “Good Reason”
means: (i) a material reduction in the Executive’s Base Salary; (ii) a material
diminution in the Executive’s responsibilities as CEO; (iii) the assignment of
duties to the Executive materially inconsistent with his position as CEO; (iv)
the requirement that the Executive relocate his primary place of employment from
Executive’s current location (v) the Company shall have had a Change in Control
(as defined below); (vi) Executive receipt of a termination notice from the
Company seeking to terminate the Executive’s employment in violation of Section
4(d); or (vii) the Company’s material breach of this Agreement. For the purposes
of this Agreement a “Change in Control” shall mean any of the following to
occur: (1) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of Company, by contract or otherwise) in excess of 15% of the voting
securities of Company, (2) Company merges into or consolidates with any other
person, or any person merges into or consolidates with Company and, after giving
effect to such transaction, the stockholders of Company immediately prior to
such transaction own less than 50% of the aggregate voting power of Company or
the successor entity of such transaction, (3) if the Executive ceases or be a
director of the Company for any reason except a voluntary resignation by the
Executive, (4) Company sells or transfers all or substantially all of its assets
to a non-affiliated person or entity (5) During the term of this Agreement,
individuals who at the time of the signing of this Agreement, who constitute the
Board, cease for any reason to constitute a majority of the Board, (6)
replacement at one time or within a five year period of one-half or more of the
members of the Board, (7) An actual or threatened contested proxy ) including
but not limited to, the actual or threatened election contest or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board, (8) a person or group of people acting in concert to acquire,
manage, vote or otherwise exercise control over 15% or more of the outstanding
common stock of the Company, (9) the Company not nominating the Executive for
reelection as a director, or (10) the execution by Company of an agreement to
which Company is a party or by which it is bound, providing for any of the
events set forth in clauses (1) through (9) above. A Change in Control shall be
deemed to have occurred after any action taken in furtherance of such event or
if the Change in Control occurs as a result of a change in circumstances without
any specific action taken.
 
(g) Expiration. Executive’s employment shall terminate on the final day of the
Term if there is no election to renew the Term or renew the Renewal Term.
 
 
 
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(h) Termination Date. The “Termination Date” means: (i) if the Executive’s
employment is terminated by his death under Section 4(a), the date of his death;
(ii) if the Executive’s employment is terminated on account of his Disability
under Section 4(b), the date on which the Company provides the Executive a
written termination notice; (iii) if the Company terminates the Executive’s
employment for Cause under Section 4(c), 10 business days after which the
Company provides the Executive a written termination following the end of any
Cure Period; (iv) if, despite the restriction against doing so under Section
4(d), the Company terminates the Executive’s employment without Cause, 30 days
after the date on which the Company provides the Executive a written termination
notice; (v) if the Executive terminates or resigns his employment without Good
Reason under Section 4(e), immediately upon notice to the Company from the
Executive, or such later date as set forth in the notice, regardless of any
termination notice given at any time by the Company to the Executive; (vi) if
the Executive terminates or resigns his employment with Good Reason under
Section 4(f), the date on which the Executive provides the Company a written
termination notice regardless of any termination notice given at any time by the
Company to the Executive, except the Termination Date shall be the last day of
any relevant Cure Period, if applicable. Provided further, the Executive must
terminate within one (1) year of the event, act, or omission giving rise to such
termination with each such event, act, or omission having its own one-year time
period; and (vii) the Expiration Date if the Executive’s employment terminates
under Section 4(g). If an occurrence of any event or any change in circumstances
described in Section 4(f) occurs at any time prior to the Termination Date, the
Executive may exercise his rights under Section 4(f) regardless of any exercise
by the Company of its rights under this Agreement or any other agreement,
whether any such exercise by the Company of any of its rights occurs before or
after Executive's exercise of his rights under Section 4(f). If more than one
Termination Date is applicable hereunder, Executive shall select the Termination
Date.
 
5. Compensation upon a Good Reason, Change in Control or Termination.
 
(a) Termination by the Company for Cause; by the Executive without Good Reason;
or upon the Expiration Date. If the Executive’s employment with the Company is
terminated pursuant to Sections 4(c), 4(e), or 4(g) following the Executive’s
election not to renew the Term or Renewal Term, the Company shall pay or provide
to the Executive the following amounts through the Termination Date: any earned
but unpaid Base Salary, unpaid expense and benefits reimbursements, any earned
but unpaid Annual Bonus, any accrued and unused vacation days (the “Accrued
Obligations”) on or before the time required by law but in no event more than 30
days after the Executive’s Termination Date. Provided however, in the event of a
termination under Section 4(e) above, the Executive shall continue to receive,
as if this Agreement had not been terminated the compensation set forth in
Sections 3(a) and 3(h) and 3(c) for one year post termination, provided however
the compensation amount set forth in Section 3(a) shall be paid as if such year
was the final year of this Agreement prior to the Expiration Date.
 
(b) Death; Disability. If the Executive’s employment terminates because of his
death as provided in Section 4(a) or because of a Disability as provided in
Section 4(b), then the Executive (or his authorized representative or estate)
shall be entitled to the following:
 
(i) the Accrued Obligations earned through the applicable Termination Date
(payable on or before the time required by law but in no event more than 30 days
after the applicable Termination Date);
 
(ii) a pro-rata portion of the Executive’s Annual Bonus, if any, for the fiscal
year in which the Executive’s termination occurs (determined by multiplying the
amount of such bonus which would be due for the full fiscal year by a fraction,
the numerator of which is the number of days during the fiscal year of
termination that the Executive is employed by the Company and the denominator of
which is 365) payable at the same time bonuses for such year are paid to other
senior executives of the Company;
 
(iii) vest the Executive on the applicable Termination Date for any and all
previously granted outstanding equity-incentive awards subject to time-based
vesting criteria as if the Executive continued to provide services to the
Company for 12 months following the applicable Termination Date;
 
 
 
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(iv) subject to the Executive’s or, in the event of his death, his eligible
dependents’ timely election of continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company
shall reimburse the Executive or his eligible dependents the monthly premium
payable to continue his and his eligible dependents’ participation in the
Company’s group health plan (to the extent permitted under applicable law and
the terms of such plan) which covers the Executive (and the Executive’s eligible
dependents) for a period of eighteen (18) months, provided that the Executive is
eligible and remains eligible for COBRA coverage; and provided, further, that in
the event that the Executive obtains other employment that offers group health
benefits, such continuation of coverage by the Company shall immediately cease.
If the reimbursement of any COBRA premiums would violate the nondiscrimination
rules or cause the reimbursement of claims to be taxable under the Patient
Protection and Affordable Care Act of 2010, together with the Health Care and
Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h)
of the Internal Revenue Code (the “Code”), the Company paid premiums shall be
treated as taxable payments and be subject to imputed income tax treatment to
the extent necessary to eliminate any discriminatory treatment or taxation under
the Act or Section 105(h) of the Code; and
 
(v) in the case of a termination due to Disability, in addition to the
aforementioned awards, continuation of the Base Salary in effect on the
Termination Date until the earlier of (A) the 12-month anniversary of the
Termination Date, and (B) the date Executive is eligible to commence receiving
payments under the Company’s long-term disability policy. If the net
compensation from the Base Salary is greater than the net compensation from the
long-term disability policy, the Company, through the 12-month anniversary of
the Termination Date will compensate the Executive’s estate the difference in
net compensation.
 
(c) Termination by the Company without Cause, by the Executive with Good Reason.
If the Executive’s employment is terminated by the Company without Cause despite
the restriction against doing so under Section 4(d), or the Executive terminates
his employment for Good Reason as provided in Section 4(f), then the Executive
shall be entitled to the following:
 
(i) The Accrued Obligations and all Base Salary (at the increased rate set forth
in Section 4(d)), Stock Compensation, bonuses, payments, compensation, benefits,
bonuses, milestone payments and any other payment, including but not limited to
everything payable under Section 3 of this Agreement earnable through the
Expiration Date (“Future Obligations”), payable on or before the time required
by law but in no event more than 30 days after the applicable Termination.
 
(ii) Full vesting of the Executive of any and all previously granted outstanding
equity-based incentive awards subject to time-based vesting criteria and any
equity grants that would have accrued through the Expiration Date as set forth
on Exhibit B or in any other agreement. All such grants, entitlements and
rights, including any Compensation Shares and shares pursuant to Section 3(n)
above, shall be valued at the lower of the Fair Market Value on (A) the date of
this Agreement; (B) the Termination Date; or (C) the date of the Change of
Control event.
 
(iii) Unless specified elsewhere in this Agreement for the benefit of the
Executive, all rights, benefits, incentives and milestones bonuses or any other
Company obligations, including but not limited to any items in Exhibit A or
Exhibit B, shall be paid in accordance with the terms of this Agreement as if it
was not terminated.
 
 
 
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(iv) Subject to the Executive’s timely election of continuation coverage under
COBRA, the Company shall reimburse the Executive the monthly premium payable to
continue his and his eligible dependents’ participation in the Company’s group
health plan (to the extent permitted under applicable law and the terms of such
plan) which covers the Executive (and the Executive’s eligible dependents) for a
period of 18 months, provided that the Executive is eligible and remains
eligible for COBRA coverage; and provided, further, that in the event that the
Executive obtains other employment that offers group health benefits, such
continuation of coverage by the Company shall immediately cease. If the
reimbursement of any COBRA premiums would violate the nondiscrimination rules or
cause the reimbursement of claims to be taxable under the Act or Section 105(h)
of the Code, the Company paid premiums shall be treated as taxable payments and
be subject to imputed income tax treatment to the extent necessary to eliminate
any discriminatory treatment or taxation under the Act or Section 105(h) of the
Code.
 
(v) Executive shall retain the proxy to vote any shares of common stock for
which the Company has been granted a long-term proxy to vote such shares through
the Expiration Date, unless the Executive is earlier terminated for Cause.
Provided however if the Executive contests the termination for Cause, Executive
shall retain such right until a final non-appealable court or arbitration
decision that there was Cause.
 
(d) Change in Control or Good Reason. In addition to the Executive’s other
rights described herein, upon a Change in Control or Good Reason, even if this
Agreement is not terminated, the Base Salary for the calendar year in which
Change in Control or Good Reason occurs and all subsequent increases through the
Expiration Date shall automatically and immediately increase, until the
Expiration Date by twenty percent (20%) from the Base Salary amounts otherwise
set forth herein. All payments made to the Executive upon a Termination shall be
calculated at the increased Base Salary calculated by this Section. In addition,
the Fair Market Value milestones and the Total Market Value milestones in
Exhibit A shall automatically decrease by 30% until the Expiration Date. Any
Compensation Shares issued upon a Change in Control or Good Reason shall be
valued at the lower of the Fair Market Value on (A) the date of this Agreement;
or (B) the date of the Change of Control or Good Reason event.
 
(e) No Mitigation or Offset. In the event of any termination of Executive’s
employment hereunder, Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Company under this
Agreement, and there shall be no offset against any amounts due under this
Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain.
 
(f) Effect of Termination as Officer on Board Position. Any termination of the
Executive with respect to the Executive’s standing as an executive officer must
expressly designate which such role is subject to termination. The termination
of the Executive as an Officer will not thereby terminate the Executive’s Board
status.
 
(g) Default. In the event the Company fails to make any payment or issue any
stock owed pursuant to this Section 5, even if such failure was because of a
good faith belief that such amount were not due or payable, then commencing on
the fifth (5th) day after such payment or stock issuance was due (the “Default
Date”) interest shall accrue in cash at the rate of 24% per annum on such
payment or the Full Market Value of such stock from the Default Date until such
payment is made or stock is issued.
 
6. Section 409A Compliance.
 
(a) All in-kind benefits provided and expenses eligible for reimbursement under
this Agreement shall be provided by the Company or incurred by the Executive
during the time periods set forth in this Agreement. All reimbursements shall be
paid as soon as administratively practicable, but in no event shall any
reimbursement be paid after the last day of the taxable year following the
taxable year in which the expense was incurred. The amount of in-kind benefits
provided or reimbursable expenses incurred in one taxable year shall not affect
the in-kind benefits to be provided or the expenses eligible for reimbursement
in any other taxable year. Such right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.
 
 
 
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(b) To the extent that any of the payments or benefits provided for in Section
5(b), (c) or (d) are deemed to constitute non-qualified deferred compensation
benefits subject to Section 409A of the United States Internal Revenue Code (the
“Code”), the following interpretations apply to Section 5:
 
(i) Any termination of the Executive’s employment triggering payment of benefits
under Section 5(b), (c) or (d) must constitute a “separation from service” under
Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before
distribution of such benefits can commence. To the extent that the termination
of the Executive’s employment does not constitute a separation of service under
Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result
of further services that are reasonably anticipated to be provided by the
Executive to the Company or any of its parents, subsidiaries or affiliates at
the time the Executive’s employment terminates), any benefits payable under
Section 5(b), (c) or (d) that constitute deferred compensation under Section
409A of the Code shall be delayed until after the date of a subsequent event
constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code
and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section
6(b)(i) shall not cause any forfeiture of benefits on the Executive’s part, but
shall only act as a delay until such time as a “separation from service” occurs.
 
(ii) If the Executive is a “specified employee” (as that term is used in Section
409A of the Code and regulations and other guidance issued thereunder) on the
date his separation from service becomes effective, any benefits payable under
Section 5(b), (c) or (d) that constitute non-qualified deferred compensation
under Section 409A of the Code shall be delayed until the earlier of (A) the
business day following the six-month anniversary of the date his separation from
service becomes effective, and (B) the date of the Executive’s death, but only
to the extent necessary to avoid such penalties under Section 409A of the Code.
On the earlier of (A) the business day following the six-month anniversary of
the date his separation from service becomes effective, and (B) the Executive’s
death, the Company shall pay the Executive in a lump sum the aggregate value of
the non-qualified deferred compensation that the Company otherwise would have
paid the Executive prior to that date under Section 5(b), (c) or (d) of this
Agreement.
 
(iii) It is intended that each installment of the payments and benefits provided
under Section 5(b), (c) or (d) of this Agreement shall be treated as a separate
“payment” for purposes of Section 409A of the Code.
 
(iv) Neither the Company nor the Executive shall have the right to accelerate or
defer the delivery of any such payments or benefits except to the extent
specifically permitted or required by Section 409A of the Code.
 
7. Excess Parachute Payments.
 
(a) To the extent that any payment, benefit or distribution of any type to or
for the benefit of the Executive by the Company or any of its affiliates,
whether paid or payable, provided or to be provided, or distributed or
distributable pursuant to the terms of this Agreement or otherwise (including,
without limitation, any accelerated vesting of stock options or other
equity-based awards) (collectively, the “Total Payments”) would be subject to
the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”), then the Total Payments shall be reduced (but not below
zero) so that the maximum amount of the Total Payments (after reduction) shall
be one dollar ($1.00) less than the amount which would cause the Total Payments
to be subject to the excise tax imposed by Section 4999 of the Code, but only if
the Total Payments so reduced result in the Executive receiving a net after tax
amount that exceeds the net after tax amount the Executive would receive if the
Total Payments were not reduced and were instead subject to the excise tax
imposed on excess parachute payments by Section 4999 of the Code. Unless the
Executive shall have given prior written notice to the Company to effectuate a
reduction in the Total Payments if such a reduction is required, any such notice
consistent with the requirements of Section 409A of the Code to avoid the
imputation of any tax, penalty or interest thereunder, the Company shall reduce
or eliminate the Total Payments by first reducing or eliminating any cash
severance benefits (with the payments to be made furthest in the future being
reduced first), then by reducing or eliminating any accelerated vesting of stock
options or similar awards, then by reducing or eliminating any accelerated
vesting of restricted stock or similar awards, then by reducing or eliminating
any other remaining Total Payments. The preceding provisions of this Section
7(a) shall take precedence over the provisions of any other plan, arrangement or
agreement governing the Executive’s rights and entitlements to any benefits or
compensation.
 
 
 
-8-

 
 
(b) If the Total Payments to the Executive are reduced in accordance with
Section 7(a), as a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial reduction under Section 7(a), it is
possible that Total Payments to the Executive which will not have been made by
the Company should have been made (“Underpayment”) or that Total Payments to the
Executive which were made should not have been made (“Overpayment”). If an
Underpayment has occurred, the amount of any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive. In the event of an
Overpayment, then the Executive shall promptly repay to the Company the amount
of any such Overpayment together with interest on such amount (at the same rate
as is applied to determine the present value of payments under Section 280G of
the Code or any successor thereto), from the date the reimbursable payment was
received by the Executive to the date the same is repaid to the Company.
 
8. Confidentiality and Restrictive Covenants.
 
(a) Covenant Against Disclosure. All Confidential Information (defined below)
relating to the Business of the Company and its affiliates is, shall be and
shall remain the sole property and confidential business information of them,
free of any rights of the Executive. The Executive shall not make any use of the
Confidential Information except in the performance of his duties hereunder and,
except as he reasonably believes is necessary or appropriate with respect to the
performance of his duties, shall not disclose any Confidential Information to
third parties, without the prior written consent of the Company. “Confidential
Information” includes without limitation such documents as business plans,
source code, documentation, financial analysis, marketing plans, customer names,
customer lists, customer data, contracts and other business information,
including the information of the Company and its affiliates, existing or
prospective customers, clients, investors or other third parties with whom the
Company and its affiliates hereto have relationships or conduct business that
may be disclosed to the Executive as part of the Executive’s employment.
Notwithstanding anything else set forth herein, nothing in this Agreement shall
be construed to prohibit Executive from reporting, without first notifying the
Company or otherwise, possible violations of law or regulation to any
governmental agency or entity.
 
(b) Return of Company Documents. On the Termination Date or on any prior date
upon the Company’s written demand, the Executive will return all Confidential
Information in his possession, directly or indirectly, that is in written or
other tangible form (together with all duplicates thereof).
 
(c) Further Covenants. During the Term and through the first anniversary of the
Termination Date, the Executive shall not, directly or indirectly, take any of
the following actions, and, to the extent the Executive owns, manages, operates,
controls, is employed by or participates in the ownership, management, operation
or control of, or is connected in any manner with, any business, the Executive
will use his best efforts to ensure that such business does not take any of the
following actions:
 
(i) persuade or attempt to persuade any customer of the Company or its
affiliates to cease doing business with the Company or its affiliates, or to
reduce the amount of business any customer does with the Company or its
affiliates;
 
(ii) solicit for himself or any entity the business of a person or entity that
was a customer of the Company or its affiliates within the 12 months prior to
the termination of the Executive’s employment, in competition with the Company
or its affiliates; or
 
(iii) persuade or attempt to persuade any employee of the Company or its
affiliates to leave the employ of the Company or its affiliates, or hire or
engage, directly or indirectly, any individual who was an employee of the
Company or its affiliates within 1 year prior to the Executive’s Termination
Date, unless such employee was terminated by the Company. It shall not be a
breach of this provision if the Executive hires one non-executive level employee
of the Company within 1 year of the Termination Date.
 
 
 
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9. D&O Insurance. At the request of the Executive, the Company obtain and
continue for as long as Executive is employed by the Company, Directors and
Officers insurance coverage (“D & O Insurance”), at levels no less than
$10,000,000 with an insurance company rated “A” or higher. In the event that
Company elects to change coverage or carriers for its D & O Insurance, Company
shall notify Executive of such change and purchase, at a minimum, a three-year
tail policy for such former insurance policy at the sole expense of Company and
deliver evidence of such tail policy to Executive within, five (5) days after
termination of Company’s existing D & O Insurance. Upon the termination of the
Executive’s employment the Company shall purchase, at a minimum, a three-year
tail policy at the sole expense of Company and deliver evidence of such tail
policy to Executive.
 
10. Current Employment Agreement. Any shares or share related compensation which
have not yet vested or any bonuses which have not yet been earned pursuant to a
prior employment agreement or otherwise approved by the Board will not be
affected to the detriment of the Executive by this Agreement. Any bonuses or
payments or potential payments previously authorized for the Executive,
including without limitation, those associated with Food Hatch and Company
spinoffs shall remain in effect and be considered a bonus under this Agreement.
 
11. Waiver. Except with respect to opportunities in which the Company would be
interested in the ordinary course of its business and which are presented to the
Executive in his capacity as a director or executive officer of the Company, the
Board has renounced on behalf of the Company and its shareholders all interest
and expectancy to (or being offered any opportunity to participate in) any
opportunity presented to the Executive that may be considered a corporate
opportunity of the Company, and the Executive shall have no obligation to
communicate, offer, or present any opportunity presented to the Executive that
may be considered a corporate opportunity of the Company, whether centered on
geography, land rights, or otherwise (the “Renouncement”). The Company
acknowledges that the Renouncement is a material term of this Agreement and the
Executive is specifically relying on the Renouncement in agreeing to enter into
this Agreement. Except with respect to opportunities in which the Company would
be interested in the ordinary course of its business and which are presented to
the Executive in his capacity as a director or executive officer of the Company,
to the fullest extent permitted by law, the Company hereby prospectively waives
any and all claims arising from any business transacted by the Executive that
could be construed as a corporate opportunity of the Company. A copy of the
Board resolution is attached hereto as Exhibit C.
 
12. No Disparagement. During the Term and through the second anniversary of the
Termination Date, the Executive will not make public statements or
communications that disparage the Company or any of its businesses, services,
products, affiliates or current, former or future directors and executive
officers in their capacity as such. During the Term and through the second
anniversary of the Termination Date, the Company will instruct its directors and
executives not to make public statements or communications that disparage the
Executive. The foregoing obligations shall not be violated by truthful
statements to any governmental agency or entity, required governmental testimony
or filings, or administrative or arbitral proceedings (including, without
limitation, depositions in connection with such proceedings).
 
13. Non-Compete. During the term of this Agreement and for three year after the
termination of this Agreement the Executive shall not, except as a passive
investor holding 5% or less of the equity securities of a publicly traded
company, have an equity, management, employment, consulting relationship with
any person or entity that directly competes with the Company. In addition to the
limitations contained in the preceding sentence, during the term of this
Agreement and for one year after the termination of this Agreement, Employee
will not engage in any form of commercial enterprise with any of the Company’s
customers or potential customers the Company is currently in discussions with,
other than for the retail purchase of food as a normal consumer. If any of the
covenants contained in this section or any part thereof, are held by a court of
competent jurisdiction to be unenforceable because of the duration or geographic
scope of such provision, the activity limited by or the subject of such
provision and/or the geographic area covered thereby, then the court making such
determination shall construe such restriction so as to thereafter be limited or
reduced to be enforceable to the greatest extent permissible by applicable law.
 
 
 
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14. Indemnification. During the Term and thereafter, the Company shall indemnify
and hold the Executive and the Executive’s heirs and representatives harmless,
to the maximum extent permitted by law, against any and all damages, costs,
liabilities, losses and expenses (including reasonable attorneys’ fees) as a
result of any claim or proceeding (whether civil, criminal, administrative or
investigative), or any threatened claim or proceeding (whether civil, criminal,
administrative or investigative), against the Executive that arises out of or
relates to the Executive’s service as an officer, director or employee, as the
case may be, of the Company, or the Executive’s service in any such capacity or
similar capacity with any affiliate of the Company or other entity at the
Company’s request, both prior to and after the Effective Date, and to promptly
advance to the Executive or the Executive’s heirs or representatives such
expenses, including litigation costs and attorneys’ fees, upon written request
with appropriate documentation of such expense and the Company shall also
indemnify Executive for any claims related to this Agreement. During the Term
and thereafter, the Company also shall provide the Executive with coverage under
its then current directors’ and officers’ liability policy to the same extent
that it provides such coverage to its other executive officers. If the Executive
has any knowledge of any actual or threatened action, suit or proceeding,
whether civil, criminal, administrative or investigative, as to which the
Executive may request indemnity under this provision, the Executive will give
the Company prompt written notice thereof; provided that the failure to give
such notice shall not affect the Executive’s right to indemnification. The
Company shall be entitled to assume the defense of any such proceeding and the
Executive will use reasonable efforts to cooperate with such defense. To the
extent that the Executive in good faith determines that there is an actual or
potential conflict of interest between the Company and the Executive in
connection with the defense of a proceeding, the Executive shall so notify the
Company and shall be entitled to separate representation at the Company’s
expense by counsel selected by the Executive which counsel shall cooperate, and
coordinate the defense, with the Company’s counsel and minimize the expense of
such separate representation to the extent consistent with the Executive’s
separate defense. This Section 14 shall continue in effect after the termination
of the Executive’s employment or the termination of this Agreement.
 
15. Disputes.
 
(a) Any dispute or controversy arising out of or relating to this Agreement or
Executive’s employment shall be brought solely in the state and federal courts
located in the State and County of New York. Provided however, the Executive
shall have the right to submit any such dispute to binding arbitration to by AAA
or JAMS to take place in New York NY with all such costs to be paid by the
Company.
 
(b) BOTH THE COMPANY AND THE EXECUTIVE HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE FEDERAL OR STATE LAW.
 
(c) The Company shall pay all of Executive’s legal expenses with respect to any
such dispute regardless of who initiates the suit or any claims being made
regarding the conduct of the Executive. Such payments shall be made on a monthly
basis and shall be billed directly to the Company and will be considered an
obligation of the Company. The Executive shall be entitled to seek preliminary
injunctive relief from a Court or Arbitrator as appropriate to ensure such
payments are made.
 
16. Integration. This Agreement, together will all other documents or agreement
referenced herein, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements between
the parties concerning such subject matter.
 
17. Successors. This Agreement shall inure to the benefit of and be enforceable
by the Executive’s personal representatives, executors, administrators, heirs,
distributees, devisees and legatees. In the event of the Executive’s death after
his termination of employment but prior to the completion by the Company of all
payments due him under this Agreement, the Company shall continue such payments
to the Executive’s beneficiary designated in writing to the Company prior to his
death (or to his estate, if the Executive fails to make such designation). The
Company shall require any successor to the Company to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
 
 
 
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18. Enforceability. If any portion or provision of this Agreement (including,
without limitation, any portion or provision of any section of this Agreement)
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law. The Company and Executive agree that this
agreement is subject to review by tax counsel and in the event any provision of
this Agreement would result in severe negative tax treatment for the Executive
or the Company such provision will be deleted, and the Company and Executive
shall negotiate in good faith to amend this Agreement to provide the Executive
with a similar benefit without the negative tax treatment. Any ambiguity in any
provision in this Agreement or in any other agreement between the Executive and
the Company will be construed in a manner most beneficial to the Executive. The
limitations and restrictions contained in Sections 8(c), and 13 shall not apply
if the agreement is terminated by the Executive for Good Reason or by the
Company without Cause.
 
19. Survival. The provisions of this Agreement shall survive the termination of
this Agreement and/or the termination of the Executive’s employment to the
extent necessary to effectuate the terms contained herein.
 
20. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
 
21. Notices. Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and delivered in person
or sent by a nationally recognized overnight courier service or by registered or
certified mail, postage prepaid, return receipt requested, to the Executive at
the last address the Executive has filed in writing with the Company or, in the
case of the Company, at its main offices.
 
If to Executive:
 
 
If to Company:                                                      
 
True Drink Holdings, Inc.
 
 
With a copy to:
 
 
22. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Company.
 
23. Governing Law. This is a New York contract and shall be construed under and
be governed in all respects by the laws of New York for contracts to be
performed in that State and without giving effect to the conflict of laws
principles of New York or any other State.
 
24. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be taken to be an original;
but such counterparts shall together constitute one and the same document.
 
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IN WITNESS WHEREOF, the parties have executed this Agreement effective on the
date and year first above written.
 
TRUE DRINK HOLDINGS, INC.
 
By:  /s/ Robert Van Boerum

Name: Robert Van Boerum

Title: Principal Executive Officer and Principal Financial Officer

 
Brandon Stump
/s/ Brandon Stump

 
 
 
 
 
 
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Exhibit A
 
Market Capitalization Milestones
 
If the Company’s common stock is publicly traded during the Term and the market
capitalization of the Company is for 20 consecutive trading days during the Term
at or above the following milestones, the Executive shall receive, within five
business days following such 20th consecutive trading day, an award of shares of
Company common stock (a) which shall vest quarterly over a three year period
after the grant, and (b) that, upon the date of the grant, shall have an
aggregate value equal the percentage of the market capitalization set forth next
to the applicable milestone* below based on the closing price of the common
stock on the Principal Market on the date of the grant (the “Fair Market
Value”):
 
Company
Market Capitalization Milestone
Percentage
$100,000,000
0.0%
$150,000,000
.5%
$200,000,000
1.0%
$250,000,000
1.0%
$300,000,000
1.5%
$350,000,000
1.5%
$400,000,000
2.5%
$450,000,000
3.0%
$500,000,000
3.5%
every additional $100,000,000 thereafter (cumulated with the applicable
immediately preceding milestone)
 
3.5%

 
Each milestone above is a separate milestone for which the Executive may earn
the applicable percentage. The Executive will be entitled to earn the applicable
percentage for each milestone only once. The Company’s market capitalization for
each applicable milestone and measurement period will be determined based on the
market capitalization reported by Bloomberg LP.
 
* For example:
 
If the Company’s market capitalization is at least $250,000,000 as of market
close for at least 20 consecutive trading days and the Fair Market Value is
$12.50 per share, Executive shall receive 800,000 fully vested shares of common
stock of the Company (800,000 *$12.50 = $10,000,000 which is 4% of
$250,000,000).
 
Financial Milestones
 
EBIDTA. If the Company’s EBIDTA for any fiscal year shall exceed $50,000,000.00
then the Company shall pay the Executive an additional cash bonus of $500,000.
 
 
-14-

 
 
Exhibit B
 
Annual Award
 
An annual award of shares of Company common stock having an aggregate value
equal to half the Executive’s then Base Salary (“Stock Compensation”). The
shares shall vest quarterly in equal amounts over a three-year period after the
grant.
While the Executive acknowledges that he is responsible to pay income taxes
applicable to any issuances of stock pursuant to meeting the Annual Award, the
Company agrees that it shall withhold and pay the taxes on behalf of the
Executive and will cover any additional taxes owed by the Executive via a net
issuance at time of issuance of any shares related to the Annual Award and/or at
the time of a Code 83(b) election, if so requested by the Executive.
 
Treatment upon termination of employment
 
Death or Disability
 
All unvested award shares immediately vest on the applicable Termination Date.
 
Voluntary quit
 
All unvested award shares that did not yet vest will be cancelled on the last
day of employment.
 
Termination for Cause
 
All unvested award shares that did not yet vest will be cancelled on the last
day of employment.
 
Termination without Cause or for Good Reason
 
All unvested award shares immediately vest on the applicable Termination Date.
 

 
 
The terms of any award under this Exhibit B shall be more fully set forth in an
Award Agreement. It is expressly acknowledged and agreed that this Exhibit B is
a summary of the contemplated terms of the applicable Award Agreement, which
shall be subject to the Company’s receipt of all corporate approvals required by
applicable law or the applicable rules and regulations prior to effectiveness
thereof. To the extent that there is any conflict between the terms of this
Exhibit B and the applicable Award Agreement, the terms of the Award Agreement
shall govern.
 
 
 
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Exhibit C
 
(Board Resolutions for Prospective Waiver of Corporate Opportunities)
 
The Board of the Company has been advised by the Executive that he has a
minority ownership interest in a retail CBD business known as Bellerose CBD
Trade Co (“Bellerose”). It is currently located at 1288 South Broadway, Denver,
CO 80210. The Company waives any and all rights to the Executive’s interest in
Bellerose and the Executive shall be allowed to maintain its ownership interest
in Bellerose even though some of Bellerose’s business may compete with the
Company.
 
 
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