RECIPE DEVELOPMENT AGREEMENT

 

This Recipe Development Agreement (this “Agreement”) is made between Reed’s,
Inc., a Delaware corporation (“Reed’s”) and B C Marketing Concepts Inc., dba
Full Sail Brewing Company, an Oregon corporation (“Company”), effective as of
October 11, 2019 (the “Effective Date”).

 

RECITALS

 

Company is engaged in the business of developing recipes for and manufacturing
alcohol beverage products. Reed’s is engaged in the business of developing
recipes for ginger-based non- alcohol beverage products. Reed’s desires to
engage Company, and Company desires to be engaged, to participate and assist in
the development of formulas for ginger-based flavored alcohol beverage products
for Reed’s (the “Products”) as identified in Exhibit A.

 

AGREEMENT

 

The parties agree as follows:

 

1. Definitions. Unless otherwise defined in this Agreement, words with initial
capitalized letters shall have the meanings assigned to such words in this
Section 1:

 

(a) “Applicable Laws and Regulations” shall mean any law, statute, rule,
regulation, ordinance or other binding pronouncements of any duly authorized
court, tribunal, arbitrator, agency, commission, official or other
instrumentality of any federal, state, province, county, city or other political
subdivision (domestic or foreign) having the effect of law in the United States,
any foreign country or territory or any domestic or foreign state, province,
county, city or other political subdivision applicable to the Company or its
business.

 

(b) “Company Intellectual Property” means all Intellectual Property that: (i)
was owned or developed by Company prior to the execution of this Agreement; and
(ii) is or was independently developed or acquired by Company without
contribution or assistance from Reed’s, Reed’s Confidential Information, or
Reed’s Intellectual Property. Company Intellectual Property includes but is not
limited to Company’s know-how and independently developed recipes and alcohol
beverage production processes, including the Company’s proprietary composition
of or recipe for the neutral alcohol beverage base that contributes alcohol to
the Products (“Neutral Alcohol Beverage Base”).

 

(c) “Deliverables” means (a) any Recipe, (b) documentation, samples, prototypes
and other tangible embodiments of or descriptions of Recipes, and (c) any other
Intellectual Property created with during the term of this Agreement and
required to be disclosed to the Development Committee as contemplated by Section
1(b) hereof.

 

(d) “Intellectual Property” means any and all domestic and international rights
in and to: (i) trademarks, service marks, trade dress, logos, trade names and
Internet domain names, together with all goodwill associated therewith; (ii)
patents, patent disclosures, patentable subject matter, inventions, any
improvements thereto and know-how; (iii) copyrights, copyrightable works,
derivative works thereof and moral rights; (iv) trade secrets and confidential
information; (v) other intellectual proprietary property (of every kind and
nature and however designated), whether arising by operation of law, contract,
license or otherwise; and (vi) all registrations, applications, renewals,
extensions, continuations, continuations-in-part, divisions or reissues of the
foregoing now or hereafter in force or hereafter acquired or adopted.

 

   

 

 

(e) “Recipe” means the ingredients and methods of combining and processing
ingredients for the Products, provided that a Recipe will not include the
composition of or recipe for the Neutral Alcohol Beverage Base (it being
understood that the amount of Neutral Alcohol Beverage Base and the process for
combining and processing it with other ingredients shall be included in the
Recipe).

 

(f) “Reed’s Intellectual Property” means all Intellectual Property that: (i) was
owned or developed by Reed’s prior to the execution of this Agreement; (ii) was
or is independently developed by Reed’s without contribution or assistance from
Company or Company’s Intellectual Property; and (iii) the Recipe.

 

(g) “Specifications” means the specifications for the Products to be developed
by the Development Committee (as defined in Section 3).

 

2. Consideration. In exchange for Company’s contributions and obligations under
this Agreement, Reed’s grants Company the exclusive right to manufacture,
package, promote, sell and distribute the Products (if and to the extent
approved by the Development Committee), subject to the terms and conditions of a
separate Manufacturing and Distribution Agreement to be entered into by the
parties concurrently with this Agreement, as it may be amended, modified,
supplemented or restated from time to time (the “Manufacturing and Distribution
Agreement”). Company shall be responsible for all costs relating to the
development of the Recipes and Deliverables, except for costs and expenses
relating to the involvement of Reed’s personnel and contractors.

 

3. Development Committee. Representatives of Company and Reed’s, as identified
in Exhibit B, shall meet regularly to discuss and approve development milestones
for the Products, the Recipes, Deliverables, Specifications and other topics as
identified in Exhibit B (the “Development Committee”). The final Recipes,
Deliverables and Specifications for the Products must be agreed to in writing by
at least one member of the Development Committee from each of Reed’s and
Company.

 

4. Rights and Obligations.

 

(a) The parties will collaborate to develop commercial production-ready Products
according to the Specifications as may be developed by the Development
Committee. Reed’s shall have the right to visit the facilities used by Company
to develop the Recipes and Deliverables, at such times as may be reasonably
agreed to in advance by the parties. Company shall perform the work in
connection with this Agreement in a timely, professional and workmanlike manner
consistent with industry standards. Each party shall ensure that all persons
performing work under this Agreement on its behalf shall have the requisite
experience, training, skill and other qualifications needed to develop the
Recipes, Deliverables and Specifications. Company shall keep the Development
Committee informed of the progress of the development of the Recipes and
Deliverables and such other matters as any member of the Development Committee
may reasonably request from time to time.

 

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(b) Company shall promptly disclose to the Development Committee any prospective
or actual new Intellectual Property related to the Products or Product-specific
production processes, whether developed solely by Company or jointly by the
Company and Reed’s, except with regard to the Neutral Alcohol Beverage Base, and
except with regard to the Company’s general know-how and independently developed
production processes not specifically related to the Products.

 

5. Representations and Warranties.

 

(a) By Company. Company represents and warrants that (i) Company has obtained
all authority, permits, licenses and approvals necessary to enter into and
perform its obligations under this Agreement; (ii) the execution and delivery by
Company of this Agreement and the performance of its obligations under this
Agreement does not and will not violate the terms of any other contract,
agreement, obligation or understanding of Company or any Applicable Laws and
Regulations; (iii) the Deliverables will conform to the Specifications; and (iv)
the Company’s Intellectual Property does not infringe or violate the
Intellectual Property of any third parties.

 

(b) By Reed’s. Reed’s represents and warrants that (i) Reed’s has obtained all
authority and approvals necessary to enter into and perform its obligations
under this Agreement; (ii) the execution and delivery by Company of this
Agreement and the performance of its obligations under this Agreement does not
and will not violate the terms of any other contract, agreement, obligation or
understanding of Reed’s or any law or regulation applicable to Reed’s; and (iii)
the Reed’s Intellectual Property does not infringe or violate the Intellectual
Property of any third parties.

 

6. Intellectual Property.

 

(a) Ownership of Intellectual Property.

 

(i) Company will create and provide to Reed’s the Deliverables. Reed’s will
exclusively own all Deliverables. Company will and hereby does, without further
consideration, irrevocably assign to Reed’s any and all worldwide right, title
or interest that Company may now or hereafter possess in or to the Deliverables
in perpetuity (or the maximum period permitted by Applicable Laws and
Regulations) and Reed’s accepts such assignment. Company will execute and
deliver documents reasonably requested by Reed’s to register its Intellectual
Property in the Deliverables.

 

(ii) Company acknowledges that all rights of ownership of Reed’s Intellectual
Property, Deliverables and the goodwill symbolized thereby shall belong
exclusively to and inure to the benefit of Reed’s. Company shall not at any time
acquire any rights, title or interest in Reed’s Intellectual Property or
Deliverables. Company agrees that it will not at any time contest the ownership
or validity of any Reed’s Intellectual Property or Deliverables, nor register or
attempt to register any rights with respect to Reed’s Intellectual Property, nor
do anything that would jeopardize or diminish Reed’s rights to or the value of
Reed’s Intellectual Property or Deliverables.

 

(iii) Reed’s acknowledges that all rights of ownership of Company’s Intellectual
Property and the goodwill symbolized thereby shall belong exclusively to and
inure to the benefit of Company. Reed’s shall not at any time acquire any
rights, title or interest in Company’s Intellectual Property. Reed’s agrees that
it will not at any time contest the ownership or validity of any Company
Intellectual Property, nor register or attempt to register any rights with
respect to Company Intellectual Property, nor do anything that would jeopardize
or diminish Company’s rights to or the value of Company Intellectual Property.

 

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(b) Work Product. Company acknowledges and agrees that all Intellectual Property
created by Company, its affiliates, representatives, or agents in connection
with or resulting from any work or services related to the Products, including
the Deliverables (“Work Product”), but excluding the Neutral Alcohol Beverage
Base and excluding the Company’s general know-how and independently developed
production processes not specifically related to the Products, have been
specially ordered and commissioned by Reed’s, are works-made-for-hire from the
moment of creation and that all such Work Product is and will be the sole and
exclusive property of Reed’s. To the extent not a work-for-hire, Company, its
employees, subcontractors and agents hereby sell, assign and transfer to Reed’s
all right, title and interest in and to the Work Product, including without
limitation, all rights to Intellectual Property therein. Company agrees on
behalf of itself, its employees, subcontractors and agents, not to file for or
register any patents, trademarks, or copyrights in or to the Work Product. No
rights of any kind in the Work Product are reserved to or by Company or will
revert to Company. To the extent permitted by Applicable Laws and Regulations,
Company forever waives and agrees never to assert any “moral rights” in any Work
Product or any derivative of any Work Product. Company shall, without further
compensation, execute and deliver such instruments and take such action as may
be requested by Reed’s to perfect, protect, enforce or evidence Reed’s rights in
the Work Product, Products and Deliverables and to carry out the assignments and
waivers in this Section 6.

 

(c) Use. Company shall not use the Work Product, Products or Deliverables during
the term of this Agreement or after, in perpetuity, for any purpose whatsoever
other than performing Company’s obligations under this Agreement. The
Deliverables shall be considered to be Confidential Information (as defined
below) of Reed’s. This Section 6 shall survive termination or expiration of this
Agreement.

 

7. Confidentiality. Each of Reed’s and Company (a “Receiving Party”) shall hold
in confidence and not make any commercial or other use of any or all
Confidential Information conveyed, acquired or learned from the other party (the
“Disclosing Party”) at any time, except in association with this Agreement.
Except as otherwise expressly permitted herein, Receiving Party shall not
disclose such information to third persons without the prior written consent of
the Disclosing Party. Receiving Party shall limit access to the Confidential
Information to those of its directors, officers, employees, contractors, agents,
attorneys and accountants (the “Representatives”) with the need to know the same
and shall advise such Representatives of, and hold them to, Receiving Party’s
obligations under the terms of this Section 7. Receiving Party and its
Representatives shall be permitted to disclose Confidential Information as
required by law, including to any judicial, regulatory, administrative or other
governmental body (by interrogatories, investigative demands, requests for
information or documents, subpoena, or other similar process), but must (to the
extent legally permissible) promptly notify the disclosing party of the
existence, terms and circumstances surrounding such requirement and give the
disclosing party a reasonable opportunity to obtain a protective order or other
appropriate remedy to resist or narrow such disclosure. “Confidential
Information” means all information of Disclosing Party that is disclosed orally
or in writing by Disclosing Party to Receiving Party that, at the time of
disclosure, is designated as confidential (or like designation), is disclosed in
circumstances of confidence, would be understood by the parties, exercising
reasonable business judgment, to be confidential, or is not generally known to
the public, whether of a business, technical, or other nature, and including,
without limitation, designs, plans, drawings, know-how, recipes, and marketing
and business plans. Upon the expiration or earlier termination of this
Agreement, Receiving Party shall return to Disclosing Party all of Disclosing
Party’s Confidential Information or shall destroy the same at the option of
Disclosing Party. The provisions of this Section 7 shall survive termination or
expiration of this Agreement. The obligations in this Section 7 regarding trade
secrets, in particular, will continue for so long as the information constitutes
a trade secret under applicable law. If an unauthorized use or disclosure of a
Disclosing Party’s Confidential Information occurs, the Receiving Party shall
promptly notify the Disclosing Party, and the Disclosing Party may take, at the
Receiving Party’s expense, all steps which are necessary to recover Confidential
Information disclosed or used in breach of this Agreement and to prevent its
subsequent unauthorized use or dissemination, including availing itself of
actions for seizure and injunctive relief.

 

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8. Term; Termination.

 

(a) Term. The term of this Agreement shall commence on the Effective Date and
shall continue for the longer of the first anniversary of the Effective Date or
the duration of the Manufacturing and Distribution Agreement (the “Term”). The
Term may be extended by written agreement of the parties.

 

(b) Early Termination. Either party may terminate this Agreement at any time if
any of the following occur: (i) the other party fails to comply with any
requirements or obligations under this Agreement, and such non-compliance is not
cured within 30 days following written notice from the other party identifying
the non-compliance; (ii) the other party becomes insolvent, reorganizes or
liquidates; (iii) the other party makes any assignment for the benefit of
Company’s creditors; or (iv) a receiver is appointed for Company’s property.
Either party may terminate this Agreement upon written notice if the
Manufacturing and Distribution Agreement terminates prior to the first
anniversary of the Effective Date.

 

9. Indemnification. Each party will indemnify, defend and hold harmless the
other party and its respective directors, officers, members, employees,
licensees, agents and independent contractors, from and against any claim or
action, liability, damages, and expense, including but not limited to attorney’s
fees, arising from or resulting from (i) the negligent act or omission of the
party, its employees, agents or contractors, (ii) the party’s breach of this
Agreement, or (iii) the violation of any law by the party, its employees,
agents, or contractors. Reed’s will indemnify, defend and hold harmless Company
and its directors, officers, members, employees, licensees, agents and
independent contractors, from and against any claims for the breach of the
intellectual property rights of a third party based on the Reed’s Intellectual
Property. Company will indemnify defend and hold harmless Reed’s and its
directors, officers, members, employees, licensees, agents and independent
contractors, from and against any claims for the breach of the intellectual
property rights of a third party based on the Company Intellectual Property,
Deliverables and Work Product, except as such claims are solely based on or
limited to the Reed’s Intellectual Property.

 

10. Limitation of Liability. EXCEPT WITH RESPECT TO THE INDEMNIFICATION
OBLIGATIONS SET FORTH IN SECTION 9 WITH REGARD TO CLAIMS BY THIRD PARTIES, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL, INDIRECT, INCIDENTAL,
SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES, LOST PROFITS OR REVENUES OR
DIMINUTION IN VALUE ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH ANY
BREACH OF THIS AGREEMENT OR CLAIM HEREUNDER, REGARDLESS OF (A) WHETHER SUCH
DAMAGES WERE FORESEEABLE, (B) WHETHER OR NOT IT WAS ADVISED OF THE POSSIBLITY OF
SUCH DAMAGES, AND (C) THE LEGAL OR EQUITABLE THEORY (CONTRACT, TORT OR
OTHERWISE) UPON WHICH THE CLAIM IS BASED.

 

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11. Press Releases; Publicity. Reed’s may issue or cause the publication of any
press release or other public announcement with respect to this Agreement or the
relationship of the parties, subject to Company’s prior approval of any such
press release or other public announcement which shall not be unreasonably
withheld, conditioned or delayed, it being understood that such consent shall
not be required in the case of any public announcement required by any law,
regulation, regulatory body or the rules of any exchange to which Reed’s is or
may become subject. Company shall not publicly identify Reed’s or use Reed’s
name in any manner in connection with this Agreement without Reed’s prior
written approval.

 

12. Independent Contractors. Company and Reed’s agree that neither party has
authority to bind the other party as its agent. Company and Reed’s recognize and
agree that Company is not an employee of Reed’s and is furnishing services as an
independent contractor. This Agreement does not constitute and shall not be
construed as constituting a partnership or joint venture or grant of a franchise
between Reed’s and Company. Neither party shall have the right to bind the other
party to any obligations to third parties.

 

13. Assignment. Company may not assign or transfer its rights or obligations
under this Agreement, whether by operation of law, contract or otherwise,
without the prior written consent of Reed’s, which shall not be unreasonably
withheld (it being understood that a purported assignment to a Reed’s competitor
identified or referred to in Exhibit D of the Manufacturing and Distribution
Agreement shall be considered to be a reasonable basis for withholding consent).
This Agreement shall be binding on and inure to the benefit of the parties and
their heirs, personal representatives, successors, and assigns.

 

14. Governing Law; Venue. This Agreement shall be governed by, and any dispute
arising hereunder shall be determined in accordance with, the laws of State of
New York (without giving effect to conflict of laws principles) including all
matters of construction, validity and performance. The parties agree that any
claim or dispute arising under this Agreement shall be resolved by a court
located in New York City, New York.

 

15. Force Majeure. No party shall be liable or responsible to the other party,
nor be deemed to have defaulted under or breached this Agreement, for any
failure or delay in fulfilling or performing any term of this Agreement (except
for any obligations to make payments to the other party hereunder), when and to
the extent such failure or delay is caused by or results from the following
force majeure events (“Force Majeure Events”): (a) acts of God; (b) flood, fire,
earthquake or explosion; (c) war, invasion, hostilities (whether war is declared
or not), terrorist threats or acts, riot or other civil unrest; (d) government
order or law; (e) actions, embargoes or blockades in effect on or after the date
of this Agreement; (f) action by any governmental authority; (g) national or
regional emergency; (h) strikes, labor stoppages or slowdowns or other
industrial disturbances; (i) shortage of adequate power or transportation
facilities; and (j) other similar events beyond the reasonable control of the
party impacted by the Force Majeure Event (the “Impacted Party”). The Impacted
Party shall give notice within seven (7) days of the Force Majeure Event to the
other party, stating the period of time the occurrence is expected to continue.
The Impacted Party shall use diligent efforts to end the failure or delay and
ensure the effects of such Force Majeure Event are minimized. The Impacted Party
shall resume the performance of its obligations as soon as reasonably
practicable and to the greatest extent possible after the removal of the cause.
In the event that the Impacted Party’s failure or delay remains uncured for a
period of thirty (30) days following written notice given by it under this
Section 15, either party may thereafter terminate this Agreement upon thirty
(30) days’ written notice.

 

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16. Integration, Severability and Amendment. This Agreement (including the
exhibits) sets forth the entire understanding of the parties with respect to the
subject matter of this Agreement and supersedes any and all prior understandings
and agreements, whether written or oral, between the parties with respect to
such subject matter. This Agreement will be deemed severable, and the invalidity
or unenforceability of any term or provision hereof will not affect the validity
or enforceability of this Agreement or any other term herein. This Agreement may
not be amended or otherwise modified except in a written agreement signed by
each party.

 

17. Waiver. A provision of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. No waiver of any provision
of this Agreement shall constitute a waiver of any other provision, whether or
not similar, nor shall any waiver constitute a continuing waiver. Failure of
either party to exercise promptly any right, power or privilege granted by this
Agreement, or to require strict performance of any obligation undertaken by the
other party pursuant to this Agreement, will not be deemed to be a waiver of
such right, power or privilege or of the right to demand subsequent performance
of any and all such obligations undertaken by the other party.

 

18. Notice. Any notice, request or demand to be made under this Agreement shall
be in writing and shall be deemed to have been duly made (a) upon delivery, if
delivered personally (by courier service or otherwise), as evidenced by written
receipt or other written proof of delivery (which may be a printout of the
tracking information of a courier service that made such delivery), or (b) five
(5) days after deposit in the mail, if sent by certified or registered mail with
return receipt requested, postage prepaid, addressed to the party for whom
intended at the address listed on the signature page. A party may change its
address for the purposes of this Section 18 by written notice hereunder given to
the other party.

 

19. Further Documentation. Each party agrees, at the reasonable request of the
other, to promptly execute and deliver all such further documents, and to
promptly take or forbear from all such action, as may be reasonably necessary or
appropriate in order to more effectively confirm or carry out the provisions of
this Agreement.

 

20. Survival. Sections 6, 7, 9, 10 and 14-24 of this Agreement shall survive the
termination or expiration of this Agreement. To the extent that Company receives
any trade secrets of Reed’s, Company’s obligation to protect such trade secrets
and abide by the terms of Section 7 shall survive for so long as such
information is a bona fine trade secret pursuant to the laws of the governing
jurisdiction identified in Section 14.

 

21. Remedies. All rights and remedies of either party hereto are cumulative of
each other and of every other right or remedy such party may otherwise have at
law or in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies. The parties acknowledge that any material breach, including without
limitation the disclosure of Confidential Information, will cause irreparable
injury. In addition to any other legal or equitable remedies that may be
available, either party will be able to obtain immediate injunctive relief in
the form of a temporary restraining order, preliminary injunction or permanent
injunction against the other party to enforce the terms of this Agreement.

 

22. Fees and Expenses. Each party shall be responsible for its own fees and
expenses in connection with the preparation and execution of this Agreement.

 

23. Headings. The headings contained in this Agreement are for the purposes of
convenience only and are not intended to define or limit the contents of this
Agreement.

 

24. Counterparts. This Agreement may be executed in more than one counterpart,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

 

[Signature Page immediately follows]

 

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The parties set forth below have executed this Agreement as of the Effective
Date.

 

REED’S:   COMPANY:           Reed’s, Inc.   B C Marketing Concepts Inc., dba
Full Sail
Brewing Company           By: /s/ John Bello   By: /s/ Cory Comstock Name: John
Bello   Name: Cory Comstock Title: CEO   Title: CEO

 

Address:   Address:       Reed’s, Inc.   B C Marketing Concepts Inc. dba Full
Sail Attn: John Bello   Brewing Company 201 Merritt 7   Attn: Cory Comstock
Norwalk, CT 06851   506 Columbia Street     Hood River, OR 97031

 

Amended and Restated Recipe Development Agreement – Signature Page

 

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EXHIBIT A

 

Products

 

  1. Ready-to-drink Mule: Specifications to be determined by the Development
Committee         2. Ready-to-drink Hard Ginger Seltzer: Specifications to be
determined by the Development Committee

 

Amended and Restated Recipe Development Agreement – Exhibit A

 

   

 

 

EXHIBIT B

 

Development Committee

 

Committee Members

 

For Company:

 

  ● Brewmaster   ● Director of Quality   ● Director of Marketing

 

For Reed’s:

 

  ● Vice President, Marketing   ● Vice President, Sales   ● Vice President,
Operations

 

Committee Meetings

 

Until the Products are initially launched on a commercial basis, the Development
Committee will confer (in person at the Company’s brewery, or by telephone) at
least weekly, and thereafter will confer (in person at the Company’s brewery, or
by telephone) at least monthly or as otherwise agreed by the Development
Committee.

 

Topics and Responsibilities

 

Topics and responsibilities for each meeting will be determined by Development
Committee prior to a meeting.

 

Amended and Restated Recipe Development Agreement – Exhibit B