Document:

Blueprint

 

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.

 

 

 

-9-

 

 

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.

 

 

 

-10-

 

 

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.

 

 

 

-11-

 

 

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.

 

[REMAINDER
OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

 

 

 

-12-

 

 

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

 

 

 

 

 

 

-13-

 

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.

 

 

 

-15-

 

 

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.

 

 

-16-Blueprint

 

Exhibit 10.8

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 Ryan
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 Operating Officer (“COO”) of the
Company reporting to the Company’s Chief Executive Officer.
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 of Directors (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 COO 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.

 

 

 

-1-

 

 

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.

 

 

 

-2-

 

 

(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.

 

 

 

-3-

 

 

(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 COO, 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.

 

(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
COO; (iii) the assignment of duties to the Executive materially
inconsistent with his position as COO; (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.

 

 

 

-4-

 

 

(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.

 

(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;

 

 

 

-5-

 

 

(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.

 

(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.

 

 

 

-6-

 

 

(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.

 

(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:

 

 

 

-7-

 

 

(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.

 

 

 

-9-

 

 

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.

 

 

 

-10-

 

 

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.

 

 

 

-11-

 

 

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.

 

[REMAINDER
OF THIS PAGE LEFT INTENTIONALLY BLANK]

 

 

 

 

 

-12-

 

 

IN
WITNESS WHEREOF, the parties have executed this Agreement effective
on the date and year first above written.

 

TRUE
DRINK HOLDINGS, INC.

 

By:                                                                       

Name:

Title:

 

 

 

Ryan
Stump

 

 

 

 

-13-

 

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.

 

 

 

 

-15-

 

 

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.

 

 

 

 

-16-

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