Document:

Blueprint

 

Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (the
“Agreement”) is made and entered into as of this 26th
day of April, 2019 by and
among True Drinks Holdings, Inc., a Nevada corporation (the
“Company”), and the Members and Direct Investors
receiving securities in connection with the Securities Exchange
Agreement by and among the Company, Charlie’s Chalk Dust,
LLC, and the Members and Direct Investors (the
“Exchange
Agreement”). Capitalized
terms used herein have the respective meanings ascribed thereto in
the Exchange Agreement unless otherwise defined herein. Unless
stated otherwise herein, or the context otherwise requires, the
term “Members” as set forth in this Agreement shall
include Direct Investors.

 

The
parties hereby agree as follows:

 

1.             Certain
Definitions.

 

As used
in this Agreement, the following terms shall have the following
meanings:

 

“Affiliate”
means, with respect to any Person, any other Person that (either
directly or indirectly) controls, is controlled by, or is under
common control with the specified Person, and shall also include
any Related Fund of such Person. The term “control” includes the
possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership
of securities, by contract or otherwise.

 

“Common
Stock” means the Company’s common stock, par
value $0.001 per share, and any securities into which such Common
Stock may hereinafter be reclassified.

 

“Conversion
Shares” means the shares of Common Stock issuable upon
conversion of the Preferred Stock issued pursuant to the Exchange
Agreement.

 

“Direct
Investors”
means the investors identified in the Exchange Agreement and any
Affiliate or permitted transferee of any Direct Investor who is a
subsequent holder of any Registrable Securities.

 

“Person”
means an individual, partnership, corporation, unincorporated
organization, joint stock company, limited liability company,
association, trust, joint venture or any other entity, or a
governmental authority.

 

“Preferred
Stock” means those shares of the Company’s
preferred stock, par value $0.001 per share, issued to the Members
or Direct Investors pursuant to the Exchange
Agreement.

 

“Prospectus”
means (i) the prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as
defined in Rule 405 under the 1933 Act.

 

“Members”
means individuals identified in the Exchange Agreement and any
Affiliate or permitted transferee of any Member who is a subsequent
holder of any Registrable Securities.

 

“Register,”
“registered”
and “registration”
refer to a registration made by preparing and filing a Registration
Statement or similar document in compliance with the 1933 Act (as
defined below), and the declaration or ordering of effectiveness of
such Registration Statement or document.

 

“Registrable
Securities” means the shares of Common Stock issued to
the Members and Direct Investors pursuant to the Exchange
Agreement, including the Warrant Shares and Conversion Shares, as
well as any shares of Common Stock
issued or issuable with respect to such shares upon any stock
split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that, a security shall cease
to be a Registrable Security upon sale pursuant to a Registration
Statement or Rule 144 under the 1933 Act.

 

 

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“Registration
Statement” means any registration statement of the
Company filed under the 1933 Act that covers the resale of any of
the Registrable Securities pursuant to the provisions of this
Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.

 

“Related
Fund” means, with respect to any Person, any fund,
account or investment vehicle that is controlled or managed by (i)
such Person, (ii) an Affiliate of such Person or (iii) the same
investment manager, advisor or subadvisor as such Person or an
Affiliate of such investment manager, advisor or
subadvisor.

 

“Required
Members” means, as of any date of determination, the
Members and Direct Investors holding a majority of the Registrable
Securities as of such date.

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

 
“1933
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

 

“1934
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.

 

2. 

Registration.

  

(a)             Registration
Statements.

  

(i)             The
Company shall use its best efforts to prepare and file with the SEC
one Registration Statement (the “Initial Registration Statement”)
covering the resale of all of the Registrable Securities on a
continuous basis pursuant to Rule 415 of the Securities Act or
before 30 days from the date of this Agreement (the
“Filing
Deadline”). The Initial Registration Statement filed
hereunder shall be on Form S-1, or any other form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the resale by the
Members of all the Registerable Securities, provided, that the Company shall
maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by
the staff of the SEC. No Member shall be named as an
“underwriter” in the Initial Registration Statement
without such Member’s prior written consent. Such Initial
Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including
Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities. Such
Initial Registration Statement shall not include any shares of
Common Stock or other securities for the account of any other
Person (including the Company) without the prior written consent of
the Required Members. The Initial Registration Statement (and each
amendment or supplement thereto, and each request for acceleration
of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Members and their counsel prior to its filing
or other submission.

 

(b)             Expenses.
The Company will pay all expenses associated with each Registration
Statement (whether or not such Registration Statement becomes
effective), including filing and printing fees, the Company’s
counsel and accounting fees and expenses, costs associated with
clearing the Registrable Securities for sale under applicable state
securities laws, listing fees, and the reasonable fees and expenses
of counsel to, (i) with respect to the Initial Registration
Statement, the Required Members, (ii) with respect to a Demand
Registration, the Requesting Holders and (iii)
with respect to any Piggyback Registration, Members that at the
relevant time hold at least a majority of the Registrable
Securities held by all Members to be included in such Piggyback
Registration.

 

 

 

 

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(c)             Effectiveness
of Registration Statements. The Company shall use its best
efforts to have the Initial Registration Statement declared
effective by the 120th calendar day following the date of this
Agreement. The Company shall notify the Members by facsimile or
e-mail as promptly as practicable, and in any event, within
twenty-four (24) hours, after any Registration Statement is
declared effective and shall simultaneously provide the Members
with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered
thereby.

 

(d)             Rule
415; Cutback. If at any time the SEC takes the position that
the offering of some or all of the Registrable Securities in any
Registration Statement filed pursuant to the terms and conditions
of this Agreement is not eligible to be made on a delayed or
continuous basis under the provisions of Rule 415 under the 1933
Act or requires any Member to be named as an
“underwriter”, the Company shall use its best efforts
to persuade the SEC that the offering contemplated by such
Registration Statement is a valid secondary offering and not an
offering “by or on behalf of the issuer” as defined in
Rule 415 and that none of the Members is an
“underwriter”. In the event that, despite the
Company’s best efforts and compliance with the terms of this
Section 2(d), the SEC refuses to alter its position, the Company
shall (i) remove from such Registration Statement such portion of
the Registrable Securities that the SEC requires to be removed from
such Registration Statement, while still including the maximum
number of Registrable Securities permitted to be registered by the
SEC under such Registration Statement at such time (such removed
Registrable Securities, the “Cut Back Shares”), and/or (ii)
agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule
415 (collectively, the “SEC
Restrictions”); provided, however, that the Company
shall not agree to name any Member as an “underwriter”
in any Registration Statement without the prior written consent of
such Member. Any cut-back imposed on the Members pursuant to this
Section 2(d) shall be allocated, first, among all securities that
are not Registrable Securities (to the extent previously permitted
by the Required Members, or, in the case of a Demand Registration,
by the Requesting Members), second, among the Series B Members,
third, among Katalyst Securities LLC and its affiliates, and
fourth, among the Members on a pro rata basis, unless the SEC
Restrictions otherwise require or provide or the Members otherwise
agree. In the event of any cut-back imposed on the Members pursuant
to this Section 2(d), the Company will use its best efforts to file
with the SEC, as promptly as allowed by the SEC, one or more
Registration Statements on Form S-1 covering the resale of the Cut
Back Shares or such other form available to register for resale the
Cut Back Shares.

 

(e) 

Right to Piggyback
Registration.

 

(i)             If
at any time following the date of this Agreement that any
Registrable Securities remain outstanding the Company proposes for
any reason to register any shares of Common Stock under the 1933
Act (other than pursuant to a registration statement on Form S-4 or
Form S-8 (or a similar or successor form)) with respect to an
offering of Common Stock by the Company for its own account or for
the account of any of its stockholders, it shall, unless a holder
of Registrable Securities has provided written notice to the
Company that it does not want to receive such information, at each
such time promptly give written notice to the holders of the
Registrable Securities of its intention to do so (but in no event
less than thirty (30) days before the anticipated filing date) and,
to the extent permitted under the provisions of Rule 415 under the
1933 Act, include in such registration all Registrable Securities
with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after receipt of the
Company’s notice (a “Piggyback Registration”). Such
notice shall offer the holders of the Registrable Securities the
opportunity to register such number of shares of Registrable
Securities as each such holder may request and shall indicate the
intended method of distribution of such Registrable
Securities.

\
(ii)             Notwithstanding
the foregoing, (A) if such registration involves an underwritten
public offering, the Members must sell their Registrable Securities
to, if applicable, the underwriter(s) at the same price and subject
to the same underwriting discounts and commissions that apply to
the other securities sold in such offering (it being acknowledged
that the Company shall be responsible for other expenses as set
forth in Section 2(b)) and subject to the Members entering into
customary underwriting documentation for selling stockholders in an
underwritten public offering, and (B) if, at any time after giving
written notice of its intention to register any Registrable
Securities pursuant to Section 2(e)(i) and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
cause such registration statement to become effective under the
1933 Act, the Company shall deliver written notice to the Members
and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. Any
Member may elect to withdraw such Member’s request for
inclusion of Registrable Securities in any Piggyback Registration
by giving written notice to the Company of such request to withdraw
prior to the effectiveness of the Registration Statement or the
pricing of an underwritten offering, as applicable.

 

 

 

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(f) 

Demand
Registration.

 

(i)             At
any time and from time to time after the Initial Registration
Statement has been declared effective, any Member or group of
Members (acting together) that own or control Registrable
Securities representing at least fifty percent (50%) of the
then-issued and outstanding Registrable Securities (collectively,
the “Requesting
Members”), may deliver to the Company a written notice
(a “Demand Registration
Notice”) informing the Company that such Requesting
Members require the Company to register for resale some or all of
such Requesting Members’ Registrable Securities not otherwise
then registered for resale by the Initial Registration Statement (a
“Demand
Registration”); provided, however, that the Company
will not be required to effect more than two (2) Demand
Registrations in accordance with this Agreement. Upon receipt of
the Demand Registration Notice, the Company will use best efforts
to file with the SEC as promptly as practicable after receiving the
Demand Registration Notice, but in no event more than sixty (60)
days following receipt of the Demand Registration Notice, a
Registration Statement covering all requested Registrable
Securities (the “Demand
Registration Statement”), and agrees to use best
efforts to cause the Demand Registration Statement to be declared
effective by the SEC as soon as practicable following the filing
thereof, but in no event later than ninety (90) days after the
filing of such Demand Registration Statement. The Company agrees to
use best efforts to keep any Demand Registration Statement
continuously effective (including the preparation and filing of any
amendments and supplements necessary for that purpose) until such
time as all of the Registrable Securities covered thereby have been
sold or the date on which all Registrable Securities may be sold
without restriction and without the need for current public
information pursuant to Rule 144 unless such restriction is the
result of a Member being an Affiliate of the Company
(“Minimum Effective
Period”).

 

 
(ii)             Notice
to Members. The Company shall give written notice of the
proposed filing of any Demand Registration Statement to all Members
(other than the Requesting Members) as soon as practicable, and
each such Member who wishes to participate in such Demand
Registration Statement shall notify the Company in writing within
five (5) Business Days after the receipt by such Member of the
notice from the Company, and shall specify in such notice the
number of Registrable Securities held by such Member to be included
in the Demand Registration Statement. Upon the written request of
any Member, delivered to the Company no later than five (5)
Business Days after the Company’s notice is delivered to such
Member (each such Member, a “Joining Member”), to register, on
the same terms and conditions as the Registrable Securities
otherwise being sold pursuant to such Demand Registration, any of
its Registrable Securities, the Company will use its best efforts
to cause such Registrable Securities to be included in the Demand
Registration Statement proposed to be filed by the Company on the
same terms and conditions as any Registrable Securities included
therein.

 

3.             Company
Obligations. The Company will use best efforts to effect the
registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as
expeditiously as possible:

 

(a)             use
best efforts to cause the Initial Registration Statement to become
effective and to remain continuously effective for a period that
will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Initial Registration
Statement as amended from time to time, have been sold, and (ii)
the date on which all Registrable Securities covered by such
Initial Registration Statement may be sold without restriction and
without the need for current public information pursuant to Rule
144 unless such restriction is the result of a Member being an
Affiliate of the Company (the “Effectiveness Period”) and advise
the Members in writing when the Effectiveness Period has
expired;

 

 

 

 

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(b)             prepare
and file with the SEC such amendments and post-effective amendments
to any Registration Statement and Prospectus as may be necessary to
keep such Registration Statement effective for, with respect to the
Initial Registration Statement, the Effectiveness Period and with
respect to any Demand Registration Statement, the Minimum Effective
Period, and in any case to comply with the provisions of the 1933
Act and the 1934 Act with respect to the distribution of all of the
Registrable Securities covered in any Registration
Statement;

 

(c)             provide
copies to and permit counsel designated by the Members to review
each Registration Statement and all amendments and supplements
thereto no fewer than seven (7) days prior to their filing with the
SEC and not file any Registration Statement or other document to
which such counsel reasonably objects;

 

(d)             furnish
to the Members and their legal counsel (i) promptly after the same
is prepared and publicly distributed, filed with the SEC, or
received by the Company (but not later than two (2) Business Days
after the filing date, receipt date or sending date, as the case
may be) one (1) copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and
each amendment or supplement thereto, and each letter written by or
on behalf of the Company to the SEC or the staff of the SEC, and
each item of correspondence from the SEC or the staff of the SEC,
in each case relating to such Registration Statement (other than
any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of
copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as each
Member may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Member that
are covered by the related Registration Statement;

 

(e)             use
best efforts to (i) prevent the issuance of any stop order or other
suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible
moment;

 

(f)             prior
to any public offering of Registrable Securities, use best efforts
to register or qualify or cooperate with the Members and their
counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Members and
do any and all other acts or things necessary or advisable to
enable the distribution in such jurisdictions of the Registrable
Securities covered by any Registration Statement; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section
3(f), or (iii) file a general consent to service of process in any
such jurisdiction;

 

(g)             use
best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange,
interdealer quotation system or other market on which similar
securities issued by the Company are then listed or
quoted;

 

(h)             immediately
notify the Members, at any time prior to the end of the
Effectiveness Period or the Minimum Effective Period, as
applicable, upon discovery that, or upon the happening of any event
as a result of which, any
Prospectus includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly prepare, file with
the SEC and furnish to such holder a supplement to or an amendment
of such Prospectus as may be necessary so that such Prospectus
shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing;

 

 

 

 

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(i)             otherwise
use best efforts to comply with all applicable rules and
regulations of the SEC under the 1933 Act and the 1934 Act,
including, without limitation, Rule 172 under the 1933 Act, file
any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act,
promptly inform the Members in writing if, at any time during the
Effectiveness Period or Minimum Effective Period, as applicable,
the Company does not satisfy the conditions specified in Rule 172
and, as a result thereof, the Members are required to deliver a
Prospectus in connection with any disposition of Registrable
Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable
Securities hereunder; and make available to its security holders,
as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement
covering a period of at least twelve (12) months, beginning after
the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933
Act, including Rule 158 promulgated thereunder (for the purpose of
this subsection 3(i), “Availability Date” means the 45th
day following the end of the fourth fiscal quarter that includes
the effective date of such Registration Statement, except that, if
such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th
day after the end of such fourth fiscal quarter);

 

(j)             if
during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in the Initial Registration Statement,
the Company shall file as soon as reasonably practicable an
additional Registration Statement covering the resale by the
Members of not less than the number of such Registrable Securities;
and

 

(k)             with
a view to making available to the Members the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Members to sell shares of Common
Stock to the public without registration, the Company covenants and
agrees to: (i) make and keep public information available, as those
terms are understood and defined in Rule 144, until the earlier of
(A) six months after such date as all of the Registrable Securities
may be sold without restriction (including without volume or
manner-of-sale restrictions) and without the need for current
public information by the holders thereof pursuant to Rule 144 or
any other rule of similar effect and (B) such date as all of the
Registrable Securities shall have been resold; (ii) file with the
SEC in a timely manner all reports and other documents required of
the Company under the 1934 Act; and (iii) furnish to each Member
upon request, as long as such Member owns any Registrable
Securities,

 

(A) a
written statement by the Company that it has complied with the
reporting requirements of the 1934 Act, (B) a copy of the
Company’s most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail such Member of any rule or
regulation of the SEC that permits the selling of any such
Registrable Securities without registration. The parties agree that
nothing contained herein shall limit the Company’s
obligations under the Exchange Agreement.

 

4.             Due
Diligence Review; Information. The Company shall make
available, upon reasonable advance written notice, during normal
business hours, for inspection and review by the Members, advisors
to and representatives of the Members (who may or may not be
affiliated with the Members and who are reasonably acceptable to
the Company), all financial and other records, all SEC Documents
(as defined in the Exchange Agreement) and other filings with the
SEC, and all other corporate documents and properties of the
Company as may be reasonably necessary for the purpose of such
review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such
information reasonably requested by the Members or any such
representative, advisor or underwriter in connection with such
Registration Statement (including, without limitation, in response
to all questions and other inquiries reasonably made or submitted
by any of them), prior to and from
time to time after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Members and such
representatives, advisors and underwriters and their respective
accountants and attorneys to conduct initial and ongoing due
diligence with respect to the accuracy of such Registration
Statement.

 

The
Company shall not disclose material nonpublic information to the
Members, or to advisors to or representatives of the Members,
unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information
and provides the Members, such advisors and representatives with
the opportunity to accept or refuse to accept such material
nonpublic information for review and any Member wishing to obtain
such information enters into an appropriate confidentiality
agreement with the Company with respect thereto.

 

 

 

 

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5. 

Obligations of the
Members.

  

(a)             Each
Member shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held
by it, as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request, including a completed questionnaire in the form attached
to this Agreement as Annex A (a “Selling Securityholder
Questionnaire”) or any update thereto not later than
three (3) Business Days following a request therefore from the
Company.

 

(b)             Each
Member, by its acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of a Registration
Statement hereunder, unless such Member has notified the Company in
writing of its election to exclude all of its Registrable
Securities from such Registration Statement.

 

(c)             Each
Member agrees that, upon receipt of any notice from the Company of
the happening of an event pursuant to Section 3(h) hereof, such
Member will immediately discontinue disposition of Registrable
Securities pursuant to the applicable Registration Statement
covering such Registrable Securities, until the Member is advised
by the Company that such dispositions may again be
made.

 

6. 

Indemnification.

  

(a)             Indemnification
by the Company. The Company will indemnify and hold harmless
each Member and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who
controls such Member within the meaning of the 1933 Act
(collectively, the “Member
Indemnitees”), against any losses, claims, damages or
liabilities, joint or several, to which such Member Indemnitee may
become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any untrue statement
or alleged untrue statement or omission or alleged omission of any
material fact contained in any Registration Statement, any
preliminary Prospectus or final Prospectus, or any amendment or
supplement thereof; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or
other jurisdiction in order to qualify any or all of the
Registrable Securities under the securities laws thereof (any such
application, document or information herein called a
“Blue Sky
Application”); (iii) the omission or alleged omission
to state in a Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not
misleading; (iv) any violation by the Company or its agents of any
rule or regulation promulgated under the 1933 Act or 1934 Act or
any state securities laws in connection with the performance of its
obligations under this Agreement; or (v) any failure to register or
qualify the Registrable Securities included in any such
Registration Statement in any state where the Company or its agents
has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on an
Member’s behalf and will promptly reimburse such Member
Indemnitee for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are
incurred;
provided, however, that the
Company will not be liable in any such case if and to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by such Member or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus.
The indemnity provided in this Section 6(a) shall survive the
transfer of the Registrable Securities by any Member to any other
Person.

 

 

 

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(b)             Indemnification
by the Members. Each Member agrees, severally but not
jointly, to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, its directors, officers, employees,
stockholders and each person who controls the Company (within the
meaning of the 1933 Act) (collectively, the “Company Indemnitees”) against any
losses, claims, damages, liabilities and expense (including
reasonable attorney fees) resulting from any untrue statement of a
material fact or any omission of a material fact required to be
stated in the Registration Statement or Prospectus or preliminary
Prospectus or amendment or supplement thereto or necessary to make
the statements therein not misleading, to the extent, but only to
the extent that such untrue statement or omission is contained in
any information furnished in writing by such Member to the Company
specifically for inclusion in such Registration Statement or
Prospectus or amendment or supplement thereto, including in the
Selling Securityholder Questionnaire attached hereto as Annex A. In
no event shall the liability of a Member be greater in amount than
the dollar amount of the proceeds (net of all underwriter’s
discounts and expenses paid by such Member in connection with any
claim relating to this Section 6 and the amount of any damages such
Member has otherwise been required to pay by reason of such untrue
statement or omission) received by such Member upon the sale of the
Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.

 

(c)             Conduct
of Indemnification Proceedings. Any person entitled to
indemnification under Section 6(a) or Section 6(b) (an
“Indemnitee”)
shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the Indemnitee; provided that any Indemnitee shall have
the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel
shall be at the expense of such Indemnitee unless (a) the
indemnifying party has agreed to pay such fees or expenses, or (b)
the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such
Indemnitee or (c) in the reasonable judgment of any such
Indemnitee, based upon written advice of its counsel, a conflict of
interest exists between such Indemnitee and the indemnifying party
with respect to such claims (in which case, if such Indemnitee
notifies the indemnifying party in writing that such Indemnitee
elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such Indemnitee);
and provided, further, that
the failure of any Indemnitee to give notice as provided herein
shall not relieve the indemnifying party of its obligations
hereunder, except to the extent that such failure to give notice
shall materially adversely affect the indemnifying party in the
defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in
the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys (together with appropriate local
counsel) at any time for all such Indemnitees. No indemnifying
party will, except with the consent of the Indemnitee, consent to
entry of any judgment or enter into any settlement that (i) does
not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release from all
liability in respect of such claim or litigation or (ii) includes a
statement as to, or an admission of, fault, culpability or a
failure to act, by or on behalf of the Indemnitee.

 

(d)             Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (a) and (b) is unavailable to an Indemnitee or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the Indemnitee as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect
the relative fault of the Indemnitee and the indemnifying party, as
well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation within the meaning of
Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not
guilty of such fraudulent misrepresentation. In no event shall the
contribution obligation of a holder of Registrable Securities be
greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such holder in connection with any claim
relating to this Section 6 and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission)
received by it upon the sale of the Registrable Securities giving
rise to such contribution obligation.

 

 

 

-8-

 

 

 

7. 

Miscellaneous.

  

(a)             Amendments
and Waivers. This Agreement may be amended only by a writing
signed by the Company and the Required Members. The Company may
take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall
have obtained the written consent to such amendment, action or
omission to act, of the Required Members.

 

(b)             Notices.
All notices and other communications provided for or permitted
hereunder shall be made as set forth in the Exchange
Agreement.

 

(c)             Assignments
and Transfers by Members. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Members and
their respective successors and assigns. A Member may transfer or
assign, in whole or from time to time in part, to one or more
persons its rights and obligations hereunder in connection with the
transfer of Registrable Securities by such Member to such person,
provided that such Member complies with all laws applicable thereto
and provides written notice of assignment to the Company promptly
after such assignment is effected (such transferee, a "permitted transferee").

 

(d)             Assignments
and Transfers by the Company. This Agreement may not be
assigned by the Company (whether by operation of law or otherwise)
without the prior written consent of the Required Members,
provided, however, that in the event that the Company is a party to
a merger, consolidation, share exchange or similar business
combination transaction in which the Common Stock is converted into
the equity securities of another Person, from and after the
effective time of such transaction, such Person shall, by virtue of
such transaction, be deemed to have assumed the obligations of the
Company hereunder (and shall have acknowledged such assumption in
writing), the term “Company” shall be deemed to refer
to such Person and the term “Registrable Securities” shall be
deemed to include the securities received by the Members in
connection with such transaction unless such securities are
otherwise freely tradable by the Members after giving effect to
such transaction.

 

(e)             Benefits
of the Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement and
except for any Indemnitee not a party hereto (solely with respect
to Section 6).

 

(f)             Counterparts;
Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. This
Agreement may also be executed via facsimile or other electronic
means, which shall be deemed an original.

 

(g)             Titles
and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this
Agreement.

 

(h)             Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the
maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the
parties hereby waive any provision of law which renders any
provisions hereof prohibited or unenforceable in any
respect.

 

(i)             Further
Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions
as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the
agreements herein contained.

 

(j)             Entire
Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject
matter.

 

 

 

 

-9-

 

 

 

(k)             Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New York without regard to the
choice of law principles thereof. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of
the State of New York located in New York County and the United
States District Court for the Southern District of New York for the
purpose of any suit, action, proceeding or judgment relating to or
arising out of this Agreement and the transactions contemplated
hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of
notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any
such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in
such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in
an inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT
COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

 

(l)             Injunctive
Relief. It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would be suffered
if the parties to this Agreement fail to comply with any of the
obligations imposed on them by this Agreement and that in the event
of any such failure, a non-breaching party hereto will be
irreparably damaged and will not have an adequate remedy at law.
Any such Person shall, therefore, be entitled to injunctive relief,
specific performance or other equitable remedies to enforce such
obligations, this being in addition to any other remedy to which
such Person is entitled at law or in equity. Each of the parties
hereto hereby waives any defense that a remedy at law is adequate
and any requirement to post bond or other security in connection
with actions instituted for injunctive relief, specific performance
or other equitable remedies. Each of the parties hereto hereby
agrees not to assert that specific performance, injunctive relief
and other equitable remedies are unenforceable, violate public
policy, invalid, contrary to law or inequitable for any reason. The
right of specific performance, injunctive relief and other
equitable remedies is an integral part of the transactions
contemplated by this Agreement.

 

(m)             Recapitalizations,
Exchanges, Etc. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the
Registrable Securities, to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for or in substitution of, the
Registrable Securities and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations,
recapitalizations and the like occurring after the date
hereof

 

(n)             Independent
Nature of Members’ Obligations and Rights. The
obligations of each Member hereunder are several and not joint with
the obligations of any other Member hereunder, and no Member shall
be responsible in any way for the performance of the obligations of
any other Member hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action
taken by any Member pursuant hereto or thereto,
shall be deemed to constitute the Members as a partnership, an
association, a joint venture or any other kind of group or entity,
or create a presumption that the Members are in any way acting in
concert or as a group or entity with respect to such obligations or
the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Members are not
acting in concert or as a group, and the Company shall not assert
any such claim, with respect to such obligations or transactions.
Without limiting the foregoing, no Member has agreed with any other
Member, and no term, provision, obligation or agreement of any
Member set forth herein shall be deemed to constitute an agreement
with any other Member, to act together for the purposes of
acquiring, holding, voting or disposing of equity securities of the
Company. Each Member shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Member to be
joined as an additional party in any proceeding for such purpose.
The use of a single agreement with respect to the obligations of
the Company contained herein was solely in the control of the
Company, not the action or decision of any Member, and was done
solely for the convenience of the Company and not because it was
required or requested to do so by any Member. It is expressly
understood and agreed that each provision contained in this
Agreement is between the Company and an Member, solely, and not
between the Company and the Members collectively and not between
and among Members.

 

 

 

-10-

 

  

 

(o)             No
Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities,
that would have the effect of impairing the rights granted to the
Members in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Company nor any of its Subsidiaries
has previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person that
have not been satisfied in full.

 

(p)             Prohibition
on Filing Other Registration Statements. The Company shall
not file any other registration statements until all Registrable
Securities are registered pursuant to the Initial Registration
Statement that is declared effective by the staff of the
Commission, provided that
this Section 7(p) shall not prohibit the Company from filing
amendments to registration statements filed prior to the date of
this Agreement.

 

 

 

 

 

(Signature
Pages Follow)

 

 

 

-11-

 

 

 

IN
WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the
date first above written.

 

 

The
Company:

TRUE DRINKS
HOLDINGS, INC.

 

 

 

 

By:

Name:
Robert VanBoerum

Title:
Chief Executive Officer

 

 

 

 

[Member and Direct Investor Signature Page Attached]

 

 

 

 

-12-

 

 

 

The Members and
Direct Invesors:

 

 

 

 

 

By:

Name: 

Title:

 

 

 

-13-

 

 

 

 

 

 

 

 

 

 

ANNEX
A

 

 

SELLING
SECURITYHOLDERS QUESTIONNAIRE

 

 

 

 

 

 

 

 

-14-Blueprint

 

Exhibit
10.4

 

KATALYST SECURITIES LLC

630 THIRD AVENUE, 5TH
FLOOR

NEW YORK, NY 10017

TEL: 212-400-6993 FAX: 212-247-1059

Member: FINRA & SIPC

 

 

 

February 15, 2019

 

STRICTLY CONFIDENTIAL

 

Mr.
Brandon Stump

CEO

Charlie’s Chalk Dust LLC 

1007 Brioso Drive

Costa Mesa, CA 92627

            

            

 

 

Dear Mr. Stump:

 

This letter (the “Agreement”) constitutes our understanding with
respect to the engagement of Katalyst Securities LLC
(“Katalyst”), registered broker dealer and member of
the Financial Industry Regulatory Authority
(“FINRA”) and SIPC, as an exclusive placement agent
(hereinafter referred to as “Placement
Agent”), by
Charlie’s Chalk Dust LLC, a Delaware limited liability
company (the “Company”) to assist the Company with (i) a minimum
Sixteen Million Five Hundred Thousand Dollars ($16,500,000) private
placement financing of the Company (the “Offering”) of equity securities by the Company
immediately preceding the proposed merger (the
“Merger”) with a wholly owned subsidiary
(“Acquisition Sub”) of True Drinks Holdings, Inc., a
Nevada corporation (“TRUE”) or simultaneously with or immediately
after the Merger, and (iii) to assist the Company with other
filings required by FINRA, United States Securities and Exchange
Commission (the “SEC”) and as required under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”). The terms and
conditions of the Merger will be negotiated between and mutually
agreed upon between the Company and TRUE and nothing herein implies
that the Placement Agent would have the power or authority to bind
the Company or TRUE or an obligation of the Company or TRUE to
accept a proposed Merger, issue any Securities (as defined herein),
or complete an Offering. The Offering will be made pursuant to the
exemptions afforded by Section 4(a)(2) of the Securities Act of
1933, as amended (the “Act”), and Regulation D promulgated thereunder
and applicable state securities laws. Following the Merger, the
“Company” shall be deemed to include TRUE and
Acquisition Sub. The proposed capitalization table of TRUE, post
reorganization, private placement offering is set forth in Exhibit
A, attached herewith, is not final and subject to
changes.

 

A. APPOINTMENT
OF KATALYST.

 

During
the Term (as defined below), the Company hereby engages the
Placement Agent to serve as its exclusive placement agent in
connection with the Offering.

 

The
Placement Agent hereby accepts such engagement on a
“reasonable best efforts” basis upon the terms and
conditions set forth herein. The Company acknowledges and agrees
that the Placement Agent will be entitled to provide services, in
whole or in part, through any current or future affiliate or
sub-agent(s) selected by the Placement Agent and references to the
Placement Agent shall, where the context so requires, include
reference to any such affiliate or sub-agent(s).

The Company acknowledges and agrees that Katalyst’s
engagement hereunder is not an agreement or commitment, express or
implied, by Katalyst or any of its affiliates to underwrite or
purchase any securities or otherwise provide financing. The
proposed private placement is to be made directly by the Company to
the purchasers pursuant to agreements entered into between the
purchasers and the Company. Purchases of Securities may be made by
the Placement Agent and any selected sub-dealers and their
respective officers, directors, employees and affiliates and by the
officers, directors, employees and affiliates of the Company
(collectively, the “Affiliates”) for the Offering and such purchases will
be made by the Affiliates based solely upon the same information
that is provided to the investors in the
Offering.

 

 

 

-1-

 

 

 

The proposed Offering will seek to raise a minimum
of gross proceeds of Sixteen Million Five Hundred Thousand Dollars
($16,500,000) through the sale of units (such units, together with
the Class A Units, the Warrants and the Brokers Warrants (each as
defined herein) ,the “Securities”) consisting of (i) one Class A Unit of the
Company’s (the “Class A Unit”), and (ii) warrants
to purchase 0.50 Class A Units (the “Warrants”)
immediately preceding the Merger or TRUE common stock
simultaneously with or immediately after the Merger (in either
case, the “Common
Stock”), (the
“Minimum
Offering”), and a maximum
of gross proceeds of Twenty Million Dollars ($20,000,000) (the
“Maximum
Offering”). The Warrants
shall have a five (5) year life and an exercise price equal to
$2.50. The Warrants shall convert into similar warrants of TRUE
following consummation of the Merger. The Minimum Offering will
include the participation of to be identified strategic investor(s)
(the “Strategic Investor”) in the amount of at least
Five Million Dollars ($5,000,000). The offering price for each Unit
is $2.50 (the “Purchase
Price”). The minimum
subscription is Twenty Five Thousand Dollars ($25,000) provided,
however, subscriptions in lesser amounts may be accepted by the
Company in its sole discretion.

 

The Closing, as defined below, of the Offering is
anticipated on or before March 31, 2019, or at such time and place
as mutually agreed to by the Company and the Placement Agent. (the
“Offering
Period”).

 

B. FEES
AND EXPENSES.

 

1. FINANCING
FEE.

 

(a) CASH
PORTION.
Subject to the Closing of the Offering
and the Merger, the Company hereby agrees to pay (or cause TRUE to
pay) the Placement Agent (or the designees authorized by such
Placement Agent), at the Closing of the Offering, as compensation
for their services hereunder, a cash fee (the
“Financing
Fee”) in the amount of
Ten Percent (10.0%) of the gross proceeds from any sale of
Securities in the Offering to Investors. The Financing Fee shall be
paid to the Placement Agent in cash by wire transfer from the
escrow account in which the Offering proceeds are deposited,
concurrently with the delivery of the net proceeds to the Company
at the Closing of the Offering.

 

(b) WARRANT
PORTION. At
the Closing of the Merger, the Company

will issue to the Placement Agent (or the designees authorized by
such Placement Agent), as compensation for its services hereunder,
warrants to purchase shares of TRUE’s common stock equal to
Ten Percent (10%) of the Class A Units sold in the Offering (as
adjusted pursuant to the terms of the Merger) to Investors plus Ten
Percent (10%) of the Warrants sold in the Offering (as adjusted
pursuant to the terms of the Merger) to Investors (the
“Broker
Warrants”), with a term
of five (5) years from the final closing of the Offering and an
exercise price of $2.50 per share. The Broker Warrants shall be the
same as the warrants issued to the Investors upon the Merger. The
Financing Fee and the Broker Warrants are sometimes referred to
collectively as the “Broker
Fees”). The Broker
Warrants may be issued directly to the Placement Agent’s
employees and affiliates at the Placement Agent’s written
request.

 

 

 

-2-

 

 

 

(c) TAIL
PROVISIONS.
The Company shall also pay to the
Placement Agent the Financing Fee and the Broker Warrants
calculated in the manner provided in Sections B.1(a) and 1(b) above
with respect to any subsequent public or private offering or other
financing or capital-raising transaction of any kind
(“Subsequent
Financing”) to the extent
that such financing or capital is provided the Company, or to any
Affiliate of the Company, by investors whom the Placement Agent had
“introduced” (as defined below), directly or
indirectly, to the Company during the Offering Period if such
Subsequent Financing is consummated at any time within the twelve
(12) month period following the earlier of the expiration or
termination of this Agreement or the closing of the Offering (the
“Tail
Period”). A party
“introduced” by the Placement Agent shall mean an
investor who either (i) participated in the Offering, (ii) met with
the Company and/or had a conversation with the Company either in
person or via telephone regarding the Offering, (iii) was provided
by the Placement Agent with a copy of the Company’s offering
memorandum (or other materials prepared and/or approved by the
Company in connection with the Offering), or (iv) contacted by the
Placement Agent during the Offering Period, in each case based upon
such investor expressing an interest, directly or indirectly, to
the Placement Agent in investing in the Offering. An
“Affiliate” of an entity shall mean any individual or
entity controlling, controlled by or under common control with such
entity and any officer, director, employee, stockholder, partner,
member or agent of such entity.

 

2. EXPENSES.
In addition to the compensation
payable pursuant to Section B(1), the Company hereby agrees to pay
Katalyst a non-accountable expense allowance in the amount of One
Hundred Twenty Five Thousand Dollars ($125,000) (the
“Katalyst Expense
Fee”) paid directly from
the escrow account at the time of the Closing from the gross
proceeds. The Katalyst Expense Fee is separate and apart from the
Broker Fees. Regardless whether the Offering is consummated and if
there is no Closing, the Katalyst Expense Fee will be due and
payable within five (5) days of written request to the Company by
wire transfer. The Katalyst Expense Fee is in addition to the
reimbursement of fees and expenses relating to attendance by the
Placement Agent at proceedings or to indemnification and
contribution as contemplated elsewhere in this
agreement.

 

C. TERM AND
TERMINATION
OF ENGAGEMENT.
Except as set forth below, the term of this Agreement begins on the
date of this Agreement and shall end automatically upon the earlier
to occur of (i) after final Closing of the Offering or (ii) the
date of termination of the Offering (the “Term”). Notwithstanding the Term of this
Agreement, this Agreement may be earlier terminated (a) immediately
by Company in the event of the Placement Agent’s failure to
perform any of its material obligations hereunder or fraud, illegal
or willful misconduct or gross negligence or (b) without cause by
either the Company or the Placement Agent, on written notice of no
less than ten (10) business days, provided that no such notice may
be given by the Company for a period of 30 days from the date of
this Agreement. Notwithstanding any such expiration or termination,
the terms of this Agreement other than Paragraphs A and B shall all
remain in full force and effect and be binding on the parties
hereto, including the exculpation, indemnification and contribution
obligations of the Company, the confidentiality obligations, and
provided the Agreement is not terminated by the Company pursuant to
subclause (a) of this paragraph C, the right of the Placement Agent
to receive any earned but unpaid Broker Fee hereunder and the right
of the Placement Agent to receive reimbursement for its expenses in
accordance with paragraph B(2) above.

 

 

 

-3-

 

 

 

D. SUBSCRIPTION
AND CLOSING
PROCEDURES.

 

(a) The
Company shall cause to be delivered to the Placement Agent copies
of the Subscription Documents and has consented, and hereby
consents, to the use of such copies for the purposes permitted by
the Act and applicable securities laws and in accordance with the
terms and conditions of this Agreement, and hereby authorizes the
Placement Agent and its agents and employees to use the
Subscription Documents in connection with the sale of the
Securities until the earlier of (i) the Termination Date or (ii)
the final Closing, and no person or entity is or will be authorized
to give any information or make any representations other than
those contained in the Subscription Documents or to use any
offering materials other than the Subscription Documents in
connection with the sale of the Securities, unless the Company
first provides the Placement Agent with notification of such
information, representations or offering materials.

 

(b) The
Company shall make available to the Placement Agent and its
representatives such information, including, but
not limited to, financial information, and other information
regarding the Company (the “Information”), as may be reasonably requested in making
a reasonable investigation of the Company and its affairs. The
Company shall provide access to the officers, directors, employees,
independent accountants, legal counsel and other advisors and
consultants of the Company as shall be reasonably requested by the
Placement Agent. The Company recognizes and agrees that the
Placement Agent (i) will use and rely primarily on the Information
and generally available information from recognized public sources
in performing the services contemplated by this Agreement without
independently verifying the Information or such other information,
(ii) does not assume responsibility for the accuracy of the
Information or such other information, and (iii) will not make an
appraisal of any assets or liabilities owned or controlled by the
Company or its market competitors.

 

(c) Each
prospective purchaser will be required to complete and execute the
Subscription Documents, Anti-Money Laundering Form, Accredited
Investor Certification and other documents which will be forwarded
or delivered to the address identified in the Subscription
Documents.

 

(d) Simultaneously with the delivery to the Placement
Agent of the Subscription Documents, the subscriber’s check
or other good funds will be forwarded directly by the subscriber to
the escrow agent and deposited into a non interest bearing escrow
account (the “Escrow
Account”) established for
such purpose with Delaware Trust Company (the
“Escrow
Agent”). All such funds
for subscriptions will be held in the Escrow Account pursuant to
the terms of the escrow agreement among the Company, the Placement
Agent and Delaware Trust Company (the “Escrow
Agreement”). The Company shall (or shall cause TRUE to) pay all
fees related to the establishment and maintenance of the Escrow
Account. Subject to the receipt of subscriptions for the amount for
Closing, the Company will either accept or reject, for any or no
reason, the Subscription Documents in a timely fashion and at the
Closing will countersign the Subscription Documents and provide
duplicate copies of such documents to the Placement Agent. The
Company will forward directly to the subscribers the documents
countersigned by the Company. The Company will give notice to the
Placement Agent of its acceptance of each subscription. The
Company, or the Placement Agent on the Company’s behalf, will
promptly return to subscribers incomplete, improperly completed,
improperly executed and rejected subscriptions and give written
notice thereof to the Placement Agent upon such
return.

 

(e) If
subscriptions for at least the Minimum Amount for closing have
been accepted prior to the Termination Date, the funds
therefor have been collected by the Escrow Agent and all of the
conditions set forth elsewhere in this Agreement are fulfilled, a
closing shall be held promptly with respect to the Securities sold
(the “Closing”). Delivery of payment for the accepted
subscriptions for the Securities from the funds held in the Escrow
Account will be made at the Closing at the Placement Agent’s
office against delivery of the Securities by the Company at the
address set forth in Section 12 hereof (or at such other place as
may be mutually agreed upon between the Company and the Placement
Agent), net of amounts agreed upon by the parties herein,
including, the Blue Sky counsel as of the Closing. Executed
certificates for the post-merger shares of TRUE will be in such
authorized denominations and registered in such names as the
Placement Agent may request on or before the date of the Closing
(“Closing
Date”). The certificates
will be forwarded to the subscriber directly by either the Company
or the stock transfer agent within ten (10) business days following
the Closing. At the Closing, the Company will cause TRUE to deliver
irrevocable issuance instruction to its stock transfer agent, if
applicable, for the issuance of certificates representing the
Shares being sold and will deliver the warrants for the purchase of
TRUE common stock in exchange for the Warrants.

 

 

 

-4-

 

 

 

(f) If
Subscription Documents for the Minimum Offering Amount for
Closing have
not been received and accepted by the Company on or before the
Termination Date for any reason, the Offering will be terminated,
no Securities will be sold, and the Escrow Agent will, at the
request of the Placement Agent, cause all monies received from
subscribers for the Securities to be promptly returned to such
subscribers without interest, penalty, expense or deduction. The
Company will be responsible for all the fees charged by the Escrow
Agent.

 

E. REPRESENTATIONS, WARRANTIES
AND COVENANTS.
The Company represents and warrants to, and agrees with, the
Placement Agent that:

 

1. The
Company represents and warrants that it has all requisite power
and authority
to enter into and carry out the terms and provisions of this
Agreement. The execution, delivery and performance of this
Agreement and the Offering of Securities will not violate or
conflict with any provision of the charter or bylaws of the Company
or, except as would not have a material adverse effect, any
agreement or other instrument to which the Company is a party or by
which it or any of its properties is bound. Any necessary
approvals, governmental and private, will be obtained by the
Company prior to any Closing, except as may be waived or obtained
or filed following any Closing and except where the failure to
obtain any such approval would not have a material adverse
effect.

 

2. The
Securities will be offered and sold by the Company and TRUE
in compliance
with the requirements for the exemption from registration pursuant
to Section 5 of the Securities Act of 1933, as amended (including
any applicable exemption therefrom), and with all other securities
laws and regulations. The Company or TRUE will file appropriate
notices with the Securities and Exchange Commission and with other
applicable securities authorities.

 

3. The
information in any presentation materials, memorandum or
other offering
documents furnished to investors in the Offering by the Company is
true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated or necessary to make the statements
therein not misleading.

 

4. The
Company hereby permits the Placement Agent to rely on the
representations and warranties made or given by the Company, TRUE
or Acquisition Sub to any acquirer of Securities in any agreement,
certificate or otherwise in connection with the
Offering.

 

F. INDEMNIFICATION
AND CONTRIBUTION.
The Company agrees to (and will cause TRUE and Acquisition Sub,
upon consummation of the Merger, to undertake to) indemnify
Katalyst and its controlling persons, representatives and agents in
accordance with the indemnification provisions set forth in
Appendix
I. These provisions will apply
regardless of whether any Offering is
consummated.

 

G. LIMITATION
OF ENGAGEMENT TO
THE COMPANY.
The Company acknowledges that Katalyst has been retained only by
the Company, that Katalyst is providing services hereunder as an
independent contractor (and not in any fiduciary or agency
capacity) and that the Company’s engagement of Katalyst is
not deemed to be on behalf of, and is not intended to confer rights
upon, any shareholder, owner or partner of the Company or any other
person not a party hereto as against Katalyst or any of its
respective affiliates, or any of their respective officers,
directors, controlling persons (within the meaning of Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the “Exchange
Act”), employees or
agents. Unless otherwise expressly agreed in writing by Katalyst,
no one other than the Company is authorized to rely upon this
Agreement or any other statements or conduct of Katalyst, and
except for TRUE following the Merger, no one other than the Company
is intended to be a beneficiary of this Agreement. The Company
acknowledges that any recommendation or advice, written or oral,
given by Katalyst to the Company in connection with
Katalyst’s engagement is intended solely for the benefit and
use of the Company’s management and directors in considering
a possible Offering, and any such recommendation or advice is not
on behalf of, and shall not confer any rights or remedies upon, any
other person or be used or relied upon for any other purpose.
Katalyst shall not have the authority to make any commitment
binding on the Company. The Company, in its sole discretion, shall
have the right to reject any investor introduced to it by Katalyst,
or its respective designees, affiliates or
sub-dealers.

 

 

 

-5-

 

 

 

H. LIMITATION
OF PLACEMENT
AGENT’S
LIABILITY
TO THE COMPANY.
Katalyst shall not have any liability to the Company, TRUE or
Acquisition Sub for any Losses attributable to the gross
negligence, intentional misrepresentation or willful misconduct of
another Placement Agent or Investment Banker.

 

I. GOVERNING
LAW.
This Agreement shall be deemed to have been made and delivered in
New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws
of the State of New York applicable to contracts to be wholly
performed in said state.

 

J. INFORMATION; RELIANCE.
The Company shall furnish, or cause to be furnished, to the
Placement Agent all information reasonably requested by the
Placement Agent for the purpose of rendering services hereunder and
shall further make available to the Placement Agent all such
information to the same extent and on the same terms as such
information is available to the Company and potential lenders and
investors (all such information being the
“Information”).
The Company shall notify the Placement Agent of any material
adverse change, or development that may lead to a material adverse
change, in the business, properties, operations or financial
condition or prospects of the Company or any other material
Information. In addition, the Company agrees to make available to
the Placement Agent upon request from time to time the officers,
directors, accountants, counsel and other advisors of the Company.
The Company recognizes and confirms that the Placement Agent (a)
will use and rely on the Information, including any documents
provided to investors in each Offering(the
“Offering
Documents,” which shall
include any Purchase Agreement) and if any prepared by the Company,
a private placement memorandum, and on information available from
generally recognized public sources in performing the services
contemplated by this Agreement without having independently
verified the same; (b) do not assume responsibility for the
accuracy or completeness of the Offering Documents or the
Information and such other information, except for any written
information furnished to the Company by the Placement Agent
specifically for inclusion in the Offering Documents; and (c) will
not make an appraisal of any of the assets or liabilities of the
Company. Upon reasonable request, the Company will meet with the
Placement Agent or its representatives to discuss all information
relevant for disclosure in the Offering Documents and will
cooperate in any investigation undertaken by the Placement Agent
thereof, including any document included therein. At each Offering
and the closing of the Merger, at the request of the Placement
Agent, the Company shall deliver copies of such officer’s
certificates, in form and substance reasonably satisfactory to the
Placement Agent and its counsel as is customary for such
Offering.

 

K. USE OF
INFORMATION.
The Company authorizes the Placement Agent to transmit to the
prospective purchasers of Securities the Company’s power
point presentation prepared by the Company and private placement
memorandum (if any, and if prepared by the Company) (the
“Presentation
Materials”). The Company
represents and warrants that the Presentation Materials (i) will be
prepared by the management of the Company; and (ii) will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading. The Company will advise the
Placement Agent promptly if it becomes aware of the occurrence of
any event or any other change known to the Company which results in
the Presentation Materials containing an untrue statement of a
material fact or omitting to state a material fact required to be
stated therein or necessary to make the statements therein or
previously made, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, if any
Placement Agent elects to not transmit Presentation Materials to
prospective purchasers, such Placement Agent shall direct qualified
prospective purchasers to an electronic data room in which the
Company makes available the Presentation Materials for review by
qualified prospective purchasers.

 

 

 

-6-

 

 

 

L. ANNOUNCEMENT
OF TRANSACTION.
The Company and the Placement Agent
acknowledge and agree that Katalyst may, subsequent to the Closing
of the Offering and to the extent Katalyst receives a Broker Fee
for Securities sold in the Offering, make public its involvement
with the Company and TRUE; provided that any such public
announcement or other public disclosure (other than customary
tombstone presentations or other investment banking presentation
materials containing only publicly available information) shall be
approved by the Company and TRUE, which approval shall not be
unreasonably withheld.

 

M. ADVICE TO
THE BOARD.
The Company acknowledges that any advice given by the Placement
Agent to the Company is solely for the benefit and use of the
Company’s board of directors and officers, who will make all
decisions regarding whether and how to pursue any opportunity or
transaction, including a potential Merger or Offering. The
Company’s board of directors and senior management may
consider the Placement Agent’s advice, but will base their
decisions on the advice of legal, tax and other business advisors
and other factors which they consider appropriate. Accordingly, as
an independent contractor, Katalyst will not assume the
responsibilities of a fiduciary to the Company or its stockholders
in connection with the performance of its services. Any advice
provided may not be used, reproduced, disseminated, quoted or
referred to without the Placement Agent’s prior written
consent. Katalyst does not provide accounting, tax, or legal
advice. Katalyst is not responsible for the success of any
Offering.

 

N. ENTIRE
AGREEMENT.
This Agreement was drafted by the Company and the Placement
Agent’s respective counsels and constitutes the entire
Agreement between the parties and supersedes and cancels any and
all prior or contemporaneous arrangements, understandings and
agreements, written or oral, between them relating to the subject
matter hereof.

 

O. AMENDMENT.
This Agreement may not be modified except in writing signed by each
of the parties hereto.

 

P. NO PARTNERSHIP.
The Company is a sophisticated business enterprise that has
retained the Placement Agent for the limited purposes set forth in
this Agreement. The parties acknowledge and agree that their
respective rights and obligations are contractual in nature. Each
party disclaims an intention to impose fiduciary obligations on the
other by virtue of the engagement contemplated by this
Agreement.

 

 

 

-7-

 

 

 

Q. NOTICE.
All notices and other communications required hereunder shall be in
writing and shall be deemed effectively given to a party by (a)
personal delivery; (b) upon deposit with the United States Post
Office, by certified mail, return receipt requested, firstclass
mail, postage prepaid; (c) delivered by hand or by messenger or
overnight courier, addressee signature required, to the addresses
below or at such other address and/or to such other persons as
shall have been furnished by the parties;

 

 

 

If to the Company:

                             

 

Charlie’s
Chalk Dust LLC

Mr.
Brandon Stump, CEO

1007
Brioso Drive

Costa Mesa, CA 92627

Email:
brandon@charlieschalkdust.com
 

 

With a copy
to:       

(which
shall not constitute notice)    

 

Eliezer
Drew, Esq.

Grushko
& Mittman, P.C.515

Rockaway
Avenue

Valley
Stream, NY 11581

(212)
697-9500

(212)
697-3575 (f) eli@grushkomittman.com

If
to Katalyst Securities LLC.

 

Katalyst
Securities, LLC

630 Third Avenue, 5th
Floor

New
York, NY 10017      
          

Attention: Michael Silverman

Managing Director

 

     

With a copy
to:                                     
           

(which
shall not constitute notice)

 

Barbara
J. Glenns, Esq.

Law
Office of Barbara J. Glenns, Esq.

30 Waterside Plaza, Suite 7

New York, NY 10010

 

R. SEVERABILITY. If
any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction to be invalid, void or
unenforceable or against public policy, the remainder of the terms,
provisions and restrictions contained herein will remain in full
force and effect and will in no way be affected, impaired or
invalidated.

 

 

 

-8-

 

 

 

S. GOVERNING
LAW
AND JURISDICTION.
This Agreement shall be deemed to have been made and delivered in
New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws
of the State of New York without regard to principles of conflicts
of law thereof.

 

THE PARTIES HERETO AGREE TO SUBMIT ALL CONTROVERSIES TO THE
EXCLUSIVE JURISDICTION OF FINRA ARBITRATION IN ACCORDANCE WITH THE
PROVISIONS SET FORTH BELOW AND UNDERSTAND THAT (A)

ARBITRATION IS FINAL AND BINDING ON THE PARTIES, (B) THE PARTIES
ARE WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE
RIGHT TO A JURY TRIAL, (C) PRE-ARBITRATION DISCOVERY IS GENERALLY
MORE LIMITED AND DIFFERENT FROM COURT PROCEEDINGS, (D) THE
ARBITRATOR’S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING AND ANY PARTY’S RIGHT TO APPEAL
OR TO SEEK MODIFICATION OF RULES BY ARBITRATORS IS STRICTLY
LIMITED, (E) THE PANEL OF FINRA ARBITRATORS WILL TYPICALLY INCLUDE
A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE
SECURITIES INDUSTRY, AND (F) ALL CONTROVERSIES WHICH MAY ARISE
BETWEEN THE PARTIES CONCERNING THIS AGREEMENT SHALL BE DETERMINED
BY ARBITRATION PURSUANT TO THE RULES THEN PERTAINING TO FINRA. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
JUDGMENT ON ANY AWARD OF ANY SUCH ARBITRATION MAY BE ENTERED IN THE
SUPREME COURT OF THE STATE OF NEW YORK OR IN ANY OTHER COURT HAVING
JURISDICTION OVER THE PERSON OR PERSONS AGAINST WHOM SUCH AWARD IS
RENDERED. THE PARTIES AGREE THAT THE DETERMINATION OF THE
ARBITRATORS SHALL BE BINDING AND CONCLUSIVE UPON THEM. THE
PREVAILING PARTY, AS DETERMINED BY SUCH ARBITRATORS, IN A LEGAL
PROCEEDING SHALL BE ENTITLED TO COLLECT ANY COSTS, DISBURSEMENTS
AND REASONABLE ATTORNEY’S FEES FROM THE OTHER PARTY. PRIOR TO
FILING AN ARBITRATION, THE PARTIES HEREBY AGREE THAT THEY WILL
ATTEMPT TO RESOLVE THEIR DIFFERENCES FIRST BY SUBMITTING THE MATTER
FOR RESOLUTION TO A MEDIATOR, ACCEPTABLE TO ALL PARTIES, AND WHOSE
EXPENSES WILL BE BORNE
EQUALLY BY ALL PARTIES. THE MEDIATION WILL BE HELD IN THE
COUNTY
OF NEW YORK, STATE OF NEW YORK, ON AN EXPEDITED BASIS. IF THE
PARTIES CANNOT SUCCESSFULLY RESOLVE THEIR DIFFERENCES THROUGH
MEDIATION, THE MATTER WILL BE RESOLVED BY ARBITRATION. THE
ARBITRATION SHALL TAKE PLACE IN THE COUNTY OF NEW YORK, THE STATE
OF NEW YORK, ON AN EXPEDITED BASIS.

 

T.

OTHER
INVESTMENT
BANKING
SERVICES.
The Company acknowledges that

Katalyst and its affiliates are securities firms engaged in
securities trading and brokerage activities and providing
investment banking and financial advisory services. In the ordinary
course of business, the Placement Agent and its affiliates,
registered representatives and employees may at any time hold long
or short positions, and may trade or otherwise effect transactions,
for their own account or the accounts of customers, in the
Company’s or TRUE’s debt or equity securities, the
Company’s affiliates or other entities that may be involved
in the transactions contemplated by this Agreement. In addition,
the Placement Agent and its affiliates may from time to time
perform various investment banking and financial advisory services
for other clients and customers who may have conflicting interests
with respect to the Company, TRUE, the Merger, or an Offering. The
Company also acknowledges that the Placement Agent and its
affiliates have no obligation to use in connection with this
engagement or to furnish to the Company, confidential information
obtained from other companies. Furthermore, the Company
acknowledges the Placement Agent may have fiduciary or other
relationships whereby the Placement Agent or its affiliates may
exercise voting power over securities of various persons, which
securities may from time to time include securities of the Company
or TRUE or others with interests in respect of any Merger or
Offering. The Company acknowledges that the Placement Agent or such
affiliates may exercise such powers and otherwise perform their
functions in connection with such fiduciary or other relationships
without regard to the defined relationship to the Company
hereunder.

 

 

 

-9-

 

 

 

U.

MISCELLANEOUS.

 

(1) This
Agreement shall be binding upon and inure to the benefit of the
Placement Agent and the Company and their respective assigns,
successors, and legal representatives.

 

(2) This
Agreement may be executed in counterparts (including facsimile or
in pdf format counterparts), each of which shall be deemed an
original but all of which together shall constitute one and the
same instrument.

 

(3) Notwithstanding
anything herein to the contrary, in the event that the Placement
Agent determines that any of the terms provided for hereunder shall
not comply with a FINRA rule, including but not limited to FINRA
Rule 5110, then the Company shall agree to amend this Agreement in
writing upon the request of the Placement Agent to comply with any
such rules; provided that any such amendments shall not provide for
terms that are less favorable to the Company.

 

V. CONFIDENTIALITY.

 

(a) The
Placement Agent will maintain the confidentiality of the
Information and, unless and until such Information shall have been
made publicly available by the Company or by others without breach
of a confidentiality agreement, shall disclose the Information only
as provided for herein, authorized by the Company or as required by
law or by request of a governmental authority, FINRA or court of
competent jurisdiction. In the event the Placement Agent is legally
required to make disclosure of any of the Information, the
Placement Agent will give prompt notice to the Company prior to
such disclosure, to the extent the Placement Agent can practically
do so.

 

(b) The
foregoing paragraph shall not apply to information
that:

 

(i) at
the time of disclosure by the Company, is or thereafter becomes,
generally available to the public or within the industries in which
the Company conducts business, other than as a result of a breach
by the Placement Agent of its obligations under this Agreement;
or

 

(ii) prior
to or at the time of disclosure by the Company, was already in the
possession of, the Placement Agent or any of its affiliates, or
could have been developed by them from information then lawfully in
their possession, by the application of other information or
techniques in their possession, generally available to the public;
at the time of disclosure by the Company thereafter, is obtained by
the Placement Agent or any of its affiliates from a third party who
the Placement Agent reasonably believes to be in possession of the
information not in violation of any contractual, legal or fiduciary
obligation to the Company with respect to that information; or is
independently developed by the Placement Agent or its
affiliates.

 

The
exclusions set forth in sub-section (b) above shall not apply to
pro forma financial information of the Company, which pro forma
Information shall in all events be subject to sub- section (a)
above.

 

(c) Nothing
in this Agreement shall be construed to limit the ability of the
Placement Agent or its affiliates to pursue, investigate, analyze,
invest in, or engage in investment banking, financial advisory or
any other business relationship with entities other than the
Company, notwithstanding that such entities may be engaged in a
business which is similar to or competitive with the business of
the Company, and notwithstanding that such entities may have actual
or potential operations, products, services, plans, ideas,
customers or supplies similar or identical to the Company’s,
or may have been identified by the Company as potential merger or
acquisition targets or potential candidates for some other business
combination, cooperation or relationship. The Company expressly
acknowledges and agrees that it does not claim any proprietary
interest in the identity of any other entity in its industry or
otherwise, and that the identity of any such entity is not
confidential information.

 

 

 

-10-

 

 

 

W. DISCLOSURE.
The Company acknowledges that some of
the shareholders of TRUE may be registered representatives, agents
or employees affiliated with the Placement Agent and may receive
selling commissions or payment as per the terms of this executed
Agreement.

 

X. NO
DISQUALIFICATION
EVENTS.

 

(a) The
Company represents and warrants the following:

 

(i) None of Company, any director, executive officer,
other officer of the Company participating in the Offering, any
beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the
time of sale (each, an “Issuer Covered
Person” and, together,
“Issuer Covered
Persons”) is subject to
any Disqualification Event (as defined below), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3) or has
been involved in any matter which would be a Disqualification Event
except for the fact that it occurred before September 23, 2013. The
Company has exercised reasonable care to determine whether any
Covered Person is subject to a

Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and
has furnished to the Placement Agent a copy of any disclosures
provided thereunder.

 

(ii) The
Company will promptly notify Katalyst in writing of (A) any
Disqualification Event relating to any Issuer Covered Person and
(B) any event that would, with the passage of time, become a
Disqualification Event relating to any Issuer Covered
Person.

 

(iii) The Company is aware that other persons (other
that any Issuer Covered Persons and the Placement Agent Covered
Person (as defined below) will be paid (directly or indirectly)
remuneration for solicitation of purchasers in connection with the
sale of any Securities. (b) The
Placement Agent represents and warrants the
following:

 

(i) No
Disqualification Events. Neither it nor TRUE, nor to its
knowledge

any of their respective directors, executive officers, general
partners, managing members or other officers participating in the
Offering (each, a “Placement Agent Covered
Person” and, together,
“Placement Agent Covered
Persons”), is subject to
any of the “Bad Actor” disqualifications currently
described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification
Event”) or has been
involved in any matter which would be a Disqualification Event
except for the fact that it occurred before September 23,
2013.

 

(ii) Other
Covered Persons. The Placement Agent is aware that other persons
(other than any Issuer Covered Person or Placement Agent Covered
Person) will be paid (directly or indirectly) remuneration for
solicitation of purchasers in connection with the sale of any
Securities.

 

(iii) Notice
of Disqualification Events. The Placement Agent will notify the
Company promptly in writing of (A) any Disqualification Event
relating to any Placement Agent Covered Person not previously
disclosed to the Company in accordance with the provisions of this
Section and (B) any event that would, with the passage of time,
become a Disqualification Event relating to any Placement Agent
Covered Person.

 

 [Signature
Page Follows]

 

 

-11-

 

 

 

In
acknowledgment that the foregoing correctly sets forth the
understanding reached by the Placement Agent and the Company,
please sign in the space provided below, whereupon this letter
shall constitute a binding Agreement as of the date first indicated
above.

 

Charlie’s Chalk Dust LLC.

 

 

By: /s/ Brandon
Stump        
         

Brandon Stump

CEO

 

KATALYST SECURITIES LLC

 

 

 

By: /s/
Michael A. Silverman

Michael A. Silverman

Managing Director

 

     

True Drinks Holdings, Inc. agrees that upon completion of the
Merger, and only following the Merger, (i) the term
“Company” as used in this Agreement shall also apply to
True Drinks Holdings, Inc., (ii) it becomes a party to this
Agreement as if signed by True Drinks Holdings, Inc. as of the date
hereof and (iii) it will guarantee the obligations of Acquisition
Sub, including the indemnification and tail provisions of this
Agreement.

 

TRUE DRINKS HOLDINGS, INC.

 

 

 

By: /s/ Robert Van
Boerum

Name: Robert Van Boerum

Title:
Principal Executive Officer and Principal Financial
Officer

 

 

 

 

-12-

 

 

 

APPENDIX I

 

INDEMNIFICATION AND CONTRIBUTION

 

 The Company agrees to indemnify and hold harmless the
Placement Agent, its affiliates, officers, directors, employees,
agents and controlling persons (each an “Indemnified
Person”) from and against
any and all losses, claims, damages, liabilities and expenses, to
which any such Indemnified Person may become subject arising out of
or in connection with the transactions contemplated in the
Agreement to which this Appendix I
is attached (the
“Agreement”), insofar as such loss, claim, damage,
liability or expense arises out of or is based upon any untrue
statement of a material fact or omission to state a material fact
in Offering Documents required to be stated therein or necessary to
make the statements therein not misleading in any litigation,
investigation or proceeding (collectively, the
“Proceedings”), regardless of whether any of such
Indemnified Person is a party to the Agreement, and to reimburse
such Indemnified Persons for any reasonable and documented legal or
other expenses as they are incurred in connection with
investigating, responding to or defending against in any
Proceeding, provided that the foregoing indemnification will not,
as to any Indemnified Person, apply to losses, claims, damages,
liabilities or expenses to the extent that they are finally
judicially determined to have resulted primarily and directly from
the fraud, gross negligence or willful misconduct of an Indemnified
Person; and provided, further, that the foregoing indemnification
will not apply to any loss, claim, damage, liability or expense
arising out of or based upon any written information furnished to
the Company by the Placement Agent specifically for inclusion in
the Offering Documents; provided further that the Company shall
only have the obligation to reimburse an Indemnified Person if such
Indemnified Person provides to the Company a written undertaking of
such Indemnified Person to repay to the Company the amount so
advanced to the extent that any such reimbursement is so held to
have been improper in a final judgment by a court of competent
jurisdiction, and if the court of competent jurisdiction holds that
such reimbursement was improper, such Indemnified Person shall
promptly return any amount advanced to it by the Company. The
Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract, tort or
otherwise) to the Company its affiliates, officers, directors
employees, agents, creditors or stockholders, directly or
indirectly, for or in connection with the Agreement, any
transactions contemplated in the Agreement, or the Placement
Agent’s role or services in connection with the Agreement,
except to the extent that any liability for losses, claims,
demands, damages, liabilities or expenses incurred by the Company
are finally judicially determined to have resulted primarily from
the fraud, gross negligence or willful misconduct of such
Indemnified Person or have resulted from any written information
furnished to the Company by the Placements Agent specifically for
inclusion in the Offering Documents. The Company will be liable to
pay the legal fees, expenses and costs incurred by Katalyst’s
legal team related to any lawsuit but will not be obligated to pay
the legal fees of a sub dealer brought in by Katalyst if named in
the lawsuit, unless agree to by the Company. If the Company engages
additional Placement Agents in addition to Katalyst, then the
Company will be liable for those Placement Agents’ legal
fees, expenses and costs separate and apart to the legal fees,
expenses and costs incurred by and due Katalyst’s legal
team.

 

 If for any reason the foregoing indemnification is
unavailable to any Indemnified Person or insufficient to hold it
harmless, then the Company and the Placement Agent in accordance
with the contributions provisions herein, shall contribute to the
amount paid or payable by such Indemnified Person as a result of
such loss, claim, damage, liability or expense in such proportion
as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and Katalyst on the other
hand, but also the relative fault of the Company and Katalyst, as
well as any relevant equitable considerations; provided that, in no
event, will the aggregate contribution of Katalyst hereunder exceed
the amount of fees actually received by Katalyst pursuant to this
Agreement and in no event will the aggregate contribution of the
Company hereunder exceed the amount of proceeds received by the
Company (or TRUE) through the sale of Securities in the Offering to
investors first contacted by Katalyst. The indemnity, reimbursement
and contribution obligations of the Company under this Agreement
will bind and inure to the benefit of any successors, assigns,
heirs and personal representatives of the Company and any
Indemnified Person.

 

 

 

-13-

 

 

 

 Promptly
after receipt by an Indemnified Person of notice of the
commencement of any Proceedings, that Indemnified Person will, if a
claim is to be made under this indemnity agreement against the
Company in respect of the Proceedings, notify the Company in
writing of the commencement of the Proceedings; provided that (i)
the omission so to notify the Company will not relieve the Company
from any liability that the Company may have under this indemnity
agreement except to the extent the Company has been materially
prejudiced by such omission, and (ii) the omission to so notify the
Company will not relieve the Company from any liability that the
Company may have to an Indemnified Person otherwise than on account
of this indemnity agreement. In case any Proceedings are brought
against any Indemnified Person and it notifies the Company of the
commencement of the Proceedings, the Company will be entitled to
participate in the Proceedings and, to the extent that it may elect
by written notice delivered to the Indemnified Person, to assume
the defense of the Proceedings with counsel reasonably satisfactory
to the Indemnified Person; provided that, if the defendants in any
Proceedings include both the Indemnified Person and the Company and
the Indemnified Person concludes that there may be legal defenses
available to the Indemnified Person that are different from or in
addition to those available to the Company, the Indemnified Person
has the right to select separate counsel to assert those legal
defenses and to otherwise participate in the defense of the
Proceedings on its behalf at its sole expense. Upon receipt of
notice from the Company to the Indemnified Person of its election
to assume the defense of the Proceedings, the Company will not be
liable to the Indemnified Person for expenses incurred by the
Indemnified Person in connection with the defense of the
Proceedings (other than reasonable costs of investigation) unless
the Company authorizes, in writing, the employment of counsel for
the Indemnified Person and expressly agrees in writing to be liable
for the reasonable expenses of such legal counsel.

 

 The
Company will not be liable for any settlement of any Proceedings
effected without its written consent (which consent must not be
unreasonably withheld), but if settled with the Company’s
written consent or if a final judgment for the plaintiff in any
such Proceedings is delivered, the Company agrees to indemnify and
hold harmless each Indemnified Person from and against any and all
losses, claims, damages, liabilities and expenses by reason of such
settlement or judgment. The Company may not, without the prior
written consent of an Indemnified Person (which consent shall not
be unreasonably withheld), effect any settlement of any pending or
threatened Proceedings in respect of which indemnity could have
been sought under this indemnity agreement by such Indemnified
Person unless the settlement includes an unconditional release of
the Indemnified Person, in form and substance reasonably
satisfactory to the Indemnified Person, from all liability on
claims that are the subject matter of such
Proceedings.

 

The
Company’s reimbursement, indemnity and contribution
obligations hereunder will be in addition to any liability that it
may otherwise have.

 

Capitalized terms used but not defined in
this Appendix I
have the meanings assigned to such
terms in the Agreement.

 

 

-14-

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