EXECUTION VERSION

 

Rosenthal & Rosenthal, Inc.

1370 Broadway

New York, NY 10018

 

October 4, 2018

 

Reed’s Inc.

201 Merritt 7 Corporate Park

Norwalk, Connecticut 06851

 

Re: Intellectual Property Security Agreement

 

We have entered into a Financing Agreement as amended and/or supplemented
effective as of October 4, 2018 among Rosenthal & Rosenthal, Inc., as Lender,
and Reed’s Inc. (hereinafter referred to as “you”) pursuant to which you have
incurred Obligations (as defined in the Financing Agreement).

 

As part of the inducement for us to extend additional credit to you under the
Financing Agreement, you have agreed to execute this Intellectual Property
Security Agreement covering the U.S. Trademarks and Domain Name listed on
Schedule A, the U.S. Patents listed on Schedule B, the U.S. copyrights listed on
Schedule C, the license agreements listed on Schedule D (the “Licenses”) and any
future intellectual property registrations, applications, licenses you may enter
into authorizing third parties to use your intellectual property and all
Proceeds (as hereinafter defined) of such Licenses and any other intellectual
property rights you now have or may obtain in the future.

 

1. DEFINED TERMS

 

As used in this Intellectual Property Security Agreement, terms defined in the
Financing Agreement shall have their defined meanings and the following terms
shall have the following meanings, unless the context otherwise requires:

 

“Code” shall mean the Uniform Commercial Code as the same may from time to time
be in effect in the State of New York.

 

“Collateral” shall have the meaning assigned to it in Section 2 of this
Intellectual Property Security Agreement.

 

“Copyrights” shall mean all copyrights in published and unpublished works, now
or hereafter existing, all right, title and interest therein anywhere in the
world, and all applications, registrations and recordings relating thereto filed
in the United States Copyright Office or in any other government office or
agency anywhere in the world, all whether now owned or hereafter created or
acquired by you. “Copyrights” as used herein includes, without limitation, the
right to print, reprint, publish, reproduce, sell, distribute, perform, display
and make derivative works based on works presently or hereafter owned by or
licensed to you, in whole or in part, and all other rights which you presently
have or hereafter acquire pursuant to any contract that enables you to conduct
its business anywhere in the world, including, without limitation, copyright
assignments, exclusive and non-exclusive licenses; publishing agreements;
printing agreements; distribution agreements; and agreements relating to
translation rights, first and second serial rights, book club, paperback and
secondary publishing rights, and stage, motion picture, television, home video,
phonograph record, merchandising and all other entertainment or
communication-related rights. “Copyrights” as used herein also includes, without
limitation, all of your right, title and interest in all physical materials
embodying works with respect to which you own any Copyrights, including, without
limitation, plates, films, color separations, mechanical art, and original art
and manuscripts.

 

“Default” shall mean, for purposes of this Intellectual Property Security
Agreement, any event of default as defined in the Financing Agreement.

 

 

 

 

“General Intangibles” shall have the meaning assigned to it under Section 9-102
of the Code.

 

“Intellectual Property Security Agreement” shall mean this Intellectual Property
Security Agreement, as the same may from time to time be amended or
supplemented.

 

“Obligations” shall have the meaning assigned to that term in the Financing
Agreement. The term “Obligations” shall also include any and all reasonable
attorney’s fees, costs and other expenses incurred by us or on our behalf in the
collection or enforcement of any of the Obligations and the perfection,
presentation and enforcement of our rights and remedies hereunder and our
security interest in the Collateral.

 

“Patents” shall mean any patent or patent application listed on Schedule B
annexed hereto, all other U.S. patents, U.S. patent applications, foreign
patents, foreign patent applications (including utility models) and
international (PCT) patent applications owned by you, all parents, divisions,
continuations, continuations-in-part, substitutions and changes of applications
of any of the foregoing U.S., foreign or international patents or patent
applications, whether related thereto directly or through one or more
intervening U.S., foreign or international applications, all U.S. and foreign
patents and patent applications (including utility models) corresponding to or
claiming priority from the aforesaid patents and patent applications, including
all patents of addition, issuing on or registered from any of the foregoing
applications, and all reissues, reexaminations, renewals and extensions of any
of the foregoing U.S. and foreign patents, all whether now owned or hereafter
acquired by you, including, but not limited to, those described in Schedule B
annexed hereto.

 

“Proceeds” shall include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guarantee payable to you from time to time
with respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to you from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental body, authority, bureau or agency (or
any person acting under color of governmental authority), and (iii) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.

 

“Trademarks” shall mean any trademark or domain name listed on Schedule A
annexed hereto, prints and labels on which said trademark has appeared or
appear, and all designs and general intangibles of like nature, now existing or
hereafter adopted or acquired, all right title and interest therein and thereto,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or with any domain name registrar or in any country’s Patent
and Trademark Office or in any similar office or agency of the United States or
any other country, any State thereof, or any political subdivision thereof, all
whether now owned or hereafter acquired by you, including, but not limited to,
those described in Schedule A annexed hereto.

 

2. GRANT OF SECURITY INTEREST

 

As collateral security for your prompt and complete payment and performance of
all Obligations under the Financing Agreement , you hereby pledge and
hypothecate in favor of us, and grant to us a security interest in all of your
right, title and interest (a) in and to the Trademarks and the good will of the
business symbolized by the Trademarks, including, without limitation, all of
your licenses, customer lists and other business records and that of your
subsidiaries and affiliates relating to the Trademarks listed on Schedule A; and
any and all proceeds of the foregoing, including, without limitation, any claims
by you against third parties for infringement of the Trademarks; (b) in and to
the Patents and the good will of the business symbolized by the Patents,
including, without limitation, all of your licenses, lists of licensees and
other business records and that of your subsidiaries and affiliates relating to
the Patents; the patents and patent applications listed in Schedule B and all
other patents and patent applications owned by you; and any and all proceeds of
the foregoing, including, without limitation, any claims by you against third
parties for infringement of the Patents; (c) in and to the Copyrights and the
good will of the business symbolized by the copyrights including without
limitation all of your licenses and other business records and that of your
subsidiaries and affiliates relating to the Copyrights, the copyrights and
copyright applications listed in Schedule C and all other copyrights and
copyright applications owned by you; and any and all proceeds of the foregoing,
including, without limitation, any claims by you against third parties for
infringement of the Copyrights and (d) all of your right, title and interest in,
to and under the following:

 

IP Security Agreement, pg. 2  

 

 

(i) all Licenses;

 

(ii) all Accounts, General Intangibles and contract rights arising under or
relating to each and every License (including, without limitation, (A) all
monies due and to become due under any License, (B) any damages arising out of
or for breach or default in respect of any such License, (C) all other amounts
from time to time paid or payable under or in connection with any such License,
and (D) your right to terminate any such License or to perform and to exercise
all remedies thereunder);

 

(iii) to the extent not otherwise included, all Proceeds and products of any or
all of the foregoing.

 

All of the property referred to in this paragraph 2 is hereinafter collectively
called the “Collateral.”

 

3. OUR RIGHTS; LIMITATIONS ON OUR OBLIGATIONS

 

(a) It is expressly agreed by you that, anything herein to the contrary
notwithstanding, you shall remain liable under each License to observe and
perform all the conditions and obligations to be observed and performed by you
thereunder, all in accordance with and pursuant to the terms and provisions of
each such License. We shall not have any obligation or liability under any
License by reason of or arising out of this Intellectual Property Security
Agreement or its assignment to us or the receipt by us of any payment relating
to any License, pursuant thereto, nor shall we be required or obligated in any
manner to perform or fulfill any of your obligations under or pursuant to any
License, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by us or the sufficiency of any performance
by any party under any License, or to present or file any claim, or to take any
action to collect or enforce any performance or the payment of any amounts which
may have been assigned to us or to which we may be entitled at any time or
times.

 

(b) Upon Default, we may at any time notify parties to the Licenses that we have
a security interest in one or more of the Licenses and notify said parties that
payments shall be made directly to us thereafter. Upon our request at any time,
you will so notify such parties to the Licenses. We may in our own name or in
the name of others communicate with parties to the Licenses in order to verify
with them to our satisfaction the existence, amount and terms of any Licenses.

 

4. REPRESENTATIONS AND WARRANTIES

 

(a) Schedule A to this Intellectual Property Security Agreement contains a
schedule of all the trade names, trademarks and service marks, and their
registrations and pending applications, domain names owned by you or in which
you have any rights and licenses for Trademarks. To the best of your knowledge,
in the use of the Trademarks, domain names or otherwise, you and your affiliates
and subsidiaries have not infringed, and are not now infringing on any trade
name, trademark, service mark, domain name, copyright, patent, right of privacy
or publicity, and are not competing unfairly with, or otherwise violating the
rights of any other party. Except as set forth in Schedule D, you are not a
party to any license, agreement or arrangement, whether as licensor, licensee or
otherwise, with respect to any trademarks, service marks, trade names, or domain
names, trade secrets, know-how, or confidential information.

 

(b) To the best of your knowledge, you and your affiliates and subsidiaries have
not infringed, and are not now infringing on any patent or otherwise violating
the patent rights of any other party, and have not misappropriated, and are not
now misappropriating on any trade secret or otherwise violating the trade
secrets rights of any other party. Except as set forth in Schedule D, you are
not a party to any patent or trade secret license, agreement or arrangement,
whether as licensor, licensee or otherwise.

 

(c) To the best of your knowledge, you and your affiliates and subsidiaries have
not infringed, and are not now infringing on any copyright or otherwise
violating the copyright rights of any other party. Except as set forth in
Schedule D, you are not a party to any copyright license, agreement or
arrangement, whether as licensor, licensee or otherwise.

 

(d) You own all the Trademarks, Patents and Copyrights listed on Schedules A, B
and C for your business as now conducted by you and such use does not, to the
best of your knowledge, and will not, conflict with, infringe on, or otherwise
violate any rights of others and the Trademarks, Patents and Copyrights are
valid and enforceable.

 

IP Security Agreement, pg. 3  

 

 

(e) You are the owner of all the Trademarks, Patents and Copyrights listed on
Schedules A, B and C for the goods and descriptions set forth on said Schedules
throughout the United States, and no persons, other than the licensees
identified in Schedule D, have the right to use the Trademarks, Patents or
Copyrights in the United States.

 

(f) Other than as specifically noted on the Schedules, none of the Trademarks,
Patents or Copyrights listed on Schedules A, B and C have been abandoned.

 

(g) Each License referred to in Schedule D is a bona fide, valid and legally
enforceable obligation by you and the licensees thereto. All consents, approvals
or authorizations required to be obtained, effected or given in connection with
the execution, delivery and performance of each License by each party thereto
and you have been duly obtained, effected or given, are in full force and effect
and do not subject the scope of such License to any materially adverse
limitation, either specific or general in nature. The rights and obligations of
you as Licensor, shall also be for the benefit of us, as a secured lender, to
you and to any subsequent purchaser of such Licenses from us.

 

(h) With respect to each License referred to in Schedule D, neither you nor any
other party to such License is in default or, to the best of your knowledge, is
likely to become in default in the performance or observance of any of the terms
thereof. You have fully performed all of your material obligations under each
License and your right, title and interest in any License is not subject to any
defense, offset, counterclaim or claim, nor have any of the foregoing been
asserted or alleged against you or your predecessor(s) as to any License.

 

(i) The Collateral now owned by you is valid and subsisting and in full force
and effect and you have the sole, full and clear title thereto. You have the
right and power to grant the security interest herein granted and the Collateral
is not subject to any liens, claims, mortgages, assignments, licenses (other
than the licensees set forth on Schedule D hereto) or security interests.

 

(j) No security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering all or any part of the Collateral
is on file or of record in any public office, except such as may have been filed
by you in favor of us pursuant to this Intellectual Property Security Agreement
or to the Financing Agreement. Notwithstanding the foregoing, the parties hereto
acknowledge the subordinate security interest of Raptor/Harbor Reeds SPV LLC
which is subject to the terms of the Subordination Agreement executed
contemporaneously herewith.

 

(k) This Intellectual Property Security Agreement constitutes a valid and
continuing first lien on and first security interest in the Collateral in our
favor, prior to all other liens, encumbrances, security interests and rights of
others and is enforceable as such as against your creditors and customers. All
action necessary or desirable to protect and perfect such security interest in
each item of the Collateral has been duly taken.

 

(l) Your principal place of business and the place where your records concerning
the Collateral are kept is the address set forth above and you will not change
such principal place of business or remove such records without our express
written consent.

 

(m) Except as set forth is Schedule D, you are not a party to any license,
agreement or arrangement with respect to the Trademarks, Patents or Copyrights.

 

(n) You will promptly notify us of all license agreements covering the
Trademarks, Patents and Copyrights executed after the date of this Intellectual
Property Security Agreement.

 

IP Security Agreement, pg. 4  

 

 

5. COVENANTS

 

You covenant and agree with us that from and after the date of this Intellectual
Property Security Agreement and until the Obligations are fully satisfied:

 

(a) Further Documentation; Pledge of Instruments. At any time and from time to
time, upon our written request, and at your sole expense, you will promptly and
duly execute and deliver any and all such further instruments and documents and
take such further action as we may reasonably deem desirable in obtaining the
full benefits of this Intellectual Property Security Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the liens and security interest granted
thereby. You also hereby authorize us to file any such financing or continuation
statement pertaining to the Collateral without your signature to the extent
permitted by applicable law. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any promissory note or
other instrument, such note or instrument shall be immediately pledged to us
hereunder, duly endorsed in a manner satisfactory to us.

 

(b) Maintenance of Records. You will keep and maintain at your own cost and
expense satisfactory and complete records of the Collateral including, without
limitation, a record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the Collateral. You will
mark your books and records pertaining to the Collateral to evidence this
Intellectual Property Security Agreement and the security interests granted
hereby. For our further security, you agree that we shall have an interest in
all of your books and records pertaining to the Collateral and you shall deliver
and turn over copies of any such books and records to us or to our
representatives at any time after the occurrence and during the continuation of
a Default on our demand, along with a certificate from a duly authorized officer
that the copies accurately reflect the originals.

 

(c) Maintenance of Trademarks, Patents and Copyrights. You will not do any act,
or omit to do any act, whereby the Trademarks, Patents or Copyrights or their
registrations thereof may become abandoned, invalidated, unenforceable, expired
or will otherwise diminish the value of the Trademarks, Patents or Copyrights,
and shall notify us immediately if you know of any reason or have reason to know
of any ground under which this result may occur. Without in any way limiting the
foregoing, you shall take appropriate action at your expense to halt the
infringement of the Trademarks, Patents and Copyrights and shall properly
exercise your duty to control the nature and quality of the goods and/or
services offered by Licensees in connection with the Trademarks, Patents and
Copyrights listed on Schedules A, B and C.

 

(d) Indemnification.

 

(A) You assume all responsibility and liability arising from the use of the
Trademarks, Patents and Copyrights and you hereby agree to indemnify and hold us
harmless from and against any claim, suit, loss, damage or expense (including
reasonable attorneys’ fees) arising out of your business operations.

 

(B) Upon Default, in any suit, proceedings or action brought by us under any
License for any sum owing thereunder, or to enforce any provisions of such
License you will indemnify and keep us harmless from and against all expense,
loss or damage suffered by reason of any defense, set off, counterclaim,
recoupment or reduction or liability whatsoever of the obligee thereunder,
arising out of a breach by you of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such obligee or its successors from you, and all of your such obligations
shall be and remain enforceable against and only against you and shall not be
enforceable against us.

 

(e) Compliance with Laws, etc. You will comply, in all material respects, with
all acts, rules, regulations, orders, decrees, and directions of any
governmental authority applicable to the Collateral or any part thereof or to
the operation of your business; provided, however, that you may contest any act,
regulation, order, decree or direction in any reasonable manner which shall not
in our sole opinion exercised in good faith adversely affect our rights or the
first priority of our security interest in the Collateral.

 

(f) Payment of Obligations. You will pay when due all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect of its
income or profits therefrom, as well as all claims of any kind (including claims
for labor, materials and supplies), except that no such charge need be paid if
(i) the validity thereof is being contested in good faith by appropriate
proceedings, (ii) such proceedings do not involve any danger of the sale,
forfeiture or loss of any of the Collateral or any interest therein and (iii)
such charge is adequately reserved against in accordance with generally accepted
accounting principles.

 

IP Security Agreement, pg. 5  

 

 

(g) Compliance with Terms of Licenses, etc. You will perform and comply in all
material respects with all obligations under the Licenses and all other
agreements to which you are a party or by which you are bound relating to the
Collateral.

 

(h) Limitation of Liens on Collateral. You will not create, permit or suffer to
exist, and will defend the Collateral against and take such other action as is
necessary to remove, any lien, security interest, encumbrance, claim or right,
in or to the Collateral and will defend our right, title and interest in and to
any of your rights under the Licenses and to the Proceeds thereof against the
claims and demands of all persons whomsoever.

 

(i) Limitations on Modifications of Licenses. You will not (i) amend, modify,
terminate or waive any provision of any License in any manner which could
reasonably be expected to materially adversely affect the value of such License
as Collateral without our prior written consent which consent will not be
unreasonably withheld, (ii) fail to exercise promptly and diligently each and
every material right which you may have under each License (other than any right
of termination) or (iii) fail to deliver to us a copy of each material demand,
notice or document sent or received by you relating in any way to any License.

 

(j) Further Identification of Collateral. You will furnish to us such reports in
connection with the Collateral as we may reasonably request, all in reasonable
detail.

 

(k) Notices. You will advise us promptly, in reasonable detail, (i) of any lien,
or claim made or asserted against any of the Collateral, (ii) of any material
change in the composition of the Collateral, and (iii) of the occurrence of any
other event which would have a material effect on the aggregate value of the
Collateral or on the security interest created hereunder.

 

(l) Right of Inspection. We shall at all times have full and free access during
normal business hours to all of your books, correspondence and records, and we
or our representatives, upon twenty four hours prior notice, may examine the
same, take extracts therefrom and make photocopies thereof, and you agree to
render to us, at your cost and expense, such clerical and other assistance as
may be reasonably requested with regard thereto.

 

(m) Additional Trademarks, Patents and Copyrights and Future Trademark, Patent
and Copyright Applications. In no event shall you adopt or use any Trademark,
Patent or Copyright or register or file an application for the registration of
any Trademark, Patent or Copyright with the United States Patent and Trademark
Office or Copyright Office, Domain Name Registrar or any other country’s Patent,
Trademark or Copyright Office or Domain Name Registrar or any similar office or
agency unless you promptly inform us, and, upon our request, you will execute
and deliver any and all agreements, instruments, documents and papers as we may
request to evidence our interest in your Trademarks, Patents and Copyrights and
the goodwill and general intangibles relating thereto or represented thereby.

 

(n) Limitation on Further Uses of Trademarks, Patents and Copyrights. You will
not assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a
security interest in or lien upon, encumber, grant an exclusive or non-exclusive
license, or otherwise dispose of any of the Collateral, without our prior
written consent, and nothing in this Agreement shall be deemed a consent by us
to any such action. Without in any way limiting the foregoing, we must approve
any future license or use by you of the Trademarks, Patents, and Copyrights
which consent will not be unreasonably withheld.

 

6. OUR APPOINTMENT AS ATTORNEY-IN-FACT

 

(a) You hereby irrevocably constitute and appoint us and any of our officers or
agents, with full power of substitution, as your true and lawful
attorney-in-fact with full irrevocable power and authority in your place and
stead and in your name or in our own name, from time to time in our discretion,
for the purpose of carrying out the terms of this Intellectual Property Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Intellectual Property Security Agreement and, without limiting
the generality of the foregoing, hereby give us the power and right, on your
behalf, without notice to or assent by you to do the following:

 

(i) Upon the occurrence and during the continuance of a Default, to ask, demand,
collect, receive and give acquittance and receipts for any and all moneys due
and to become due under any Licenses and, in your name or our own name or
otherwise, to take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due under any
Licenses and to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by us for the purpose of
collecting any and all such moneys due under any Licenses whenever payable;

 

IP Security Agreement, pg. 6  

 

 

(ii) To pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral; and

 

(iii) Upon the occurrence and during the continuance of any Default, (A) to
direct any party liable for any payment under any of the Licenses to make
payment of any and all moneys due and to become due thereunder directly to us or
as we shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due and to become due at any time in respect of
or arising out of any Collateral; (C) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (D) to defend any suit, action or
proceeding brought against you with respect to any Collateral; (E) to settle,
compromise, or adjust any suit, action or proceeding described above and, in
connection therewith, to give such discharges or release as we may deem
appropriate; (F) to cause your corporate names and domain names and those of
your affiliates and subsidiaries to be changed to names which do not include the
Trademark or any term similar thereto, and neither you nor any of your
affiliates or subsidiaries shall thereafter make any use of the Trademark or any
mark similar thereto for any purpose; and (G) generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though we were the absolute owner thereof
for all purposes, and to do, at our option and your expense, at any time, or
from time to time, all acts and things which we deem necessary to protect,
preserve or realize upon the Collateral and our security interest therein, in
order to effect the intent of this Intellectual Property Security Agreement, all
as fully and effectively as you might do.

 

You hereby ratify all that said attorneys shall lawfully do or cause to be done
by virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable. Notwithstanding the foregoing, you further agree to
execute any additional documents which we may require in order to confirm this
power of attorney, or which we may deem necessary to enforce any of our rights
contained in this Intellectual Property Security Agreement.

 

(b) The powers conferred on us hereunder are solely to protect our interests in
the Collateral and shall not impose any duty upon us to exercise any such
powers. We shall be accountable only for amounts that we actually receive as a
result of the exercise of such powers and neither we nor any of our officers,
directors, employees or agents shall be responsible to you for any act or
failure to act, except for our own gross negligence or willful misconduct.

 

(c) You also authorize us, at any time and from time to time to execute, in
connection with the sale provided for in Section 9 of this Intellectual Property
Security Agreement, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.

 

7. EXECUTION OF POWER OF ATTORNEY

 

Concurrently with the execution and delivery hereof, you are executing and
delivering to us, in the form of Exhibit E hereto, five (5) originals of a Power
of Attorney for the implementation of the assignment, sale or other disposal of
the Trademarks, Patents and Copyrights pursuant to paragraph 6 hereof.

 

8. PERFORMANCE BY US OF YOUR OBLIGATIONS

 

If you fail to perform or comply with any of your agreements contained herein
and we, as provided for by the terms of this Intellectual Property Security
Agreement, shall ourselves perform or comply, or otherwise cause performance or
compliance, with such agreement, our expenses incurred in connection with such
performance or compliance shall be payable by you to us on demand and shall
constitute Obligations secured by.

 

IP Security Agreement, pg. 7  

 

 

9. REMEDIES, RIGHTS UPON DEFAULT

 

(a) If a Default shall occur and be continuing:

 

(i) All payments received by you under or in connection with any of the
Collateral shall be held by you in trust for us, shall be segregated from other
funds of yours, and shall forthwith upon receipt by you, be turned over to us,
in the same form as received by you (duly indorsed by you to us, if required);
and

 

(ii) any and all such payments so received by us (whether from you or otherwise)
may, in our sole discretion, be held by us as collateral security for, and/or
then or at any time thereafter applied in whole or in part by us against all or
any part of the Obligations in such order as we shall elect. Any balance of such
payments held by us and remaining after payment in full of all the Obligations
shall be paid over to you or to whomsoever may be lawfully entitled to receive
the same.

 

(b) If any Default shall occur and be continuing, you agree and consent that we
may succeed to the position of either Licensee or Licensor under the License
Agreement, and receive all rights and benefits of such party under the License
Agreement, including, without limitation, the right to enforce the Licenses and
the right to sublicense the Trademarks and Patents.

 

(c) If any Default shall occur and be continuing, we may exercise in addition to
all other rights and remedies granted to us in this Intellectual Property
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party under
the Uniform Commercial Code. You shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all amounts to which we are entitled, and you will be liable for the fees of any
attorneys employed by us to collect such deficiency.

 

(d) You also agree to pay all of our costs, including attorneys’ fees, incurred
with respect to the collection of any of the Obligations and the enforcement of
any of our rights hereunder.

 

(e) You hereby waive presentment, demand, protest or any notice (to the extent
permitted by applicable law and except as set forth in the Loan Agreement) of
any kind in connection with this Intellectual Property Security Agreement or any
Collateral.

 

10. LIMITATION ON OUR DUTY IN RESPECT OF COLLATERAL

 

Beyond the safe custody thereof, we shall not have any duty as to any Collateral
in our possession or control or in the possession or control of any of our
agents or nominees or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto.

 

11. NOTICES

 

Any notice to either party shall be deemed to have been validly served (a) upon
the earlier of actual receipt or four (4) days after deposit in the United
States Mail, registered or certified mail, return receipt requested, with proper
postage prepaid, (b) upon transmission, when sent by telecopy or other similar
facsimile transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States mail as set forth in
subsection (a) above; (b) one (1) business day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when hand-delivered and
received by the party to be notified.

 

IP Security Agreement, pg. 8  

 

 

  Any notice shall be addressed as follows:         To: Rosenthal & Rosenthal,
Inc.     1370 Broadway     New York, NY 10018     Attn: Robert Miller, EVP      
    Facsimile No. (212) 356-0910   With a copy to:             Paul H. Shur,
Esq.     Wilentz, Goldman & Spitzer, P.A.     110 William Street     26th Floor
    New York, New York 10038-3927           Facsimile No. (212) 267-3828        
To: Reed’s Inc.     201 Merritt 7 Corporate Park     Norwalk, Connecticut 06851
    Attn: Valentin Stalowir           Facsimile No. [xxx-xxx-xxxx]

 

12. SEVERABILITY

 

Any provision of this Intellectual Property Security Agreement which 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

13. NO WAIVER; CUMULATIVE REMEDIES

 

We shall not by any act, delay, omission or otherwise be deemed to have waived
any of our rights or remedies hereunder and no waiver shall be valid unless in
writing, signed by us, and then only to the extent therein set forth. A waiver
by us of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which we would otherwise have had on
any future occasion. No failure to exercise nor any delay in exercising on our
part, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Intellectual Property Security Agreement may be
waived, altered, modified or amended except by an instrument in writing, duly
executed by us.

 

14. SUCCESSORS AND ASSIGNS; GOVERNING LAW

 

This Intellectual Property Security Agreement and all of your obligations
hereunder shall be binding upon your successors and assigns, and shall, together
with our rights and remedies hereunder, inure to our benefit and our successors
and assigns. However, none of your rights or obligations under this Intellectual
Property Security Agreement may be assigned without our prior written
permission. This Intellectual Property Security Agreement shall be governed by,
and be construed and interpreted in accordance with the laws of the State of New
York.

 

IP Security Agreement, pg. 9  

 

 

15. WAIVER OF TRIAL BY JURY; EXCLUSIVE JURISDICTION; SUBMISSION TO JURISDICTION;
ANSWER TO SUMMONS TRIAL BY JURY IS HEREBY WAIVED BY EACH OF US IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF US AGAINST THE OTHER ON ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR
THE RELATIONSHIP CREATED HEREBY. YOU HEREBY CONSENT TO THE JURISDICTION OF THE
STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, AND OF ANY
FEDERAL COURT IN SUCH COUNTY AND STATE, FOR A DETERMINATION OF ANY DISPUTE AS TO
ANY SUCH MATTERS. IN CONNECTION THEREWITH, YOU HEREBY WAIVE PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREE THAT SERVICE THEREOF MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO YOU AT YOUR ADDRESS SET FORTH
ABOVE, OR SUCH OTHER ADDRESS AS SHALL HAVE PREVIOUSLY BEEN COMMUNICATED OT US BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO YOU AT YOUR ADDRESS SET FORTH ABOVE, OR
SUCH OTHER ADDRESS AS SHALL HAVE PREVIOUSLY BEEN COMMUNICATED TO US BY
REGISTERED OR CERTIFIED MAIL.

 

16. FURTHER INDEMNIFICATION

 

You agree to pay, and to save us harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by
this Intellectual Property Security Agreement.

 

17. CONSTRUCTION WITH RESPECT TO MULTIPLE PARTIES

 

In construing this Agreement, references to “you” or “your” in this Agreement
shall mean each of you singly, both of you jointly and either of you in the
disjunctive, and shall be interpreted in each instance most favorably to us.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK – SIGNATURE PAGE FOLLOWS]

 

IP Security Agreement, pg. 10  

 

 

IN WITNESS WHEREOF, you have caused this Intellectual Property Security
Agreement to be executed by one of your duly authorized officers on the date
first set forth above.

 

  ROSENTHAL & ROSENTHAL, INC.         By: /s/ Robert L. Martucci   Name: Robert
L. Martucci   Title: Senior Vice President

 

The foregoing is acknowledged,

accepted and agreed to:

 

REED’S INC.         By: /s/ Valentin Stalowir   Name: Valentin Stalowir   Title:
Chief Executive Officer  

 

STATE OF CONNECTICUT )

:SS.

COUNTY OF _____________)

 

BE IT REMEMBERED, that on this ____________ day of October, 2018, before me the
subscriber, an officer duly authorized to take acknowledgments for use in the
State of Connecticut, personally appeared Valentin Stalowir, who I am satisfied
is the person who executed the within document as Chief Executive Officer of
Reed’s, Inc., and I having first made known to him the contents thereof, he did
thereupon acknowledge that said document is the voluntary act and deed of
Reed’s, Inc., made by virtue of authority from Reed’s, Inc.’s By-Laws for the
uses and purposes therein expressed.

 

_______________________________________

(Signature and Office of Individual taking acknowledgment)

 

[NOTARY STAMP]

 

STATE OF New York)

ss:

COUNTY OF New York)

 

On the ____ day of ___________, in the year ____________, before me, the
undersigned, personally appeared ___________________________________ personally
known to me or proved to me on the basis of satisfactory evidence to the
individual(s) whose name(s) is (are) subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their capacity
(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person upon behalf of which the individual(s) acted,
executed the instrument.

 

_______________________________________

(Signature and Office of Individual taking acknowledgment)

 

[NOTARY STAMP]

 

IP Security Agreement, pg. 11  

 

 

SCHEDULE A

 

(Trademarks and Domain Names in the United States)

 

  Trademark   Serial/Reg. No.   Filing Date  

REED’S ORIGINAL GINGER BREW

ALL-NATURAL JAMAICAN

STYLE GINGER ALE

  86035664/4513979   August 12, 2013   VIRGIL’S   78867175/3213043   April 21,
2006   DR. BETTER   85892888/4432318   April 2, 2013   BELIEVE THE UNBELIEVABLE!
  87836349   March 15, 2018   REED’S   87721630   December 14, 2017

 

Domain Names

 

IP Security Agreement, pg. 12  

 

 

SCHEDULE B

 

(Patents in United States)

 

Patent   Serial No.   Reg. No.   Date Issued  

Expires

                 

 

NONE

 

IP Security Agreement, pg. 13  

 

 

SCHEDULE C

 

(Copyrights in United States)

 

NONE

 

IP Security Agreement, pg. 14  

 

 

SCHEDULE D

 

Licenses

 

IP Security Agreement, pg. 15  

 

 

SCHEDULE E

 

SPECIAL POWER OF ATTORNEY

 

STATE OF   )       ) ss.: COUNTY OF   )  

 

KNOW ALL MEN BY THESE PRESENTS, that Reed’s Inc., a corporation formed under the
laws of the State of Delaware, with its principal office at 201 Merritt 7
Corporate Park, Norwalk, Connecticut 06851 (hereinafter called the “Company”),
hereby appoints and constitutes Rosenthal & Rosenthal, Inc., a New York
corporation with offices at 1370 Broadway, New York, NY 10018 (hereafter called
the “Lender”), its true and lawful attorney, with full power of substitution,
and with full power and authority to perform the following acts on behalf of the
Company:

 

1. To execute, endorse, register and record any and all documents, statements,
certificates or other paper in the Company’s name that are necessary or
advisable to properly and completely effect the transfer to Lender of all right,
title and interest of the Company in and to any trademarks, service marks, trade
names, licenses, copyrights, patents and domain names wherever located, and all
applications and registrations thereof filed in any government or other office
anywhere in the world (hereinafter, the “Intellectual Property Security
Agreement”); and

 

2. To execute, endorse, register and record any and all documents, statements,
certificates or other papers necessary or advisable in order to obtain the
purposes described above as the Lender may in its sole discretion determine.

 

This Power of Attorney is made pursuant to an Intellectual Property Security
Agreement, effective as of October 4, 2018 executed by the Company and may not
be revoked until the payment in full of all Obligations as defined in such
Intellectual Property Security Agreement.

 

  REED’S INC.         By: /s/ Valentin Stalowir   Name: Valentin Stalowir  
Title: Chief Executive Officer

 

STATE OF CONNECTICUT )

:SS.

COUNTY OF _____________)

 

BE IT REMEMBERED, that on this ____________ day of October, 2018, before me the
subscriber, an officer duly authorized to take acknowledgments for use in the
State of Connecticut, personally appeared Valentin Stalowir, who I am satisfied
is the person who executed the within document as Chief Executive Officer of
Reed’s, Inc., and I having first made known to him the contents thereof, he did
thereupon acknowledge that said document is the voluntary act and deed of
Reed’s, Inc., made by virtue of authority from Reed’s, Inc.’s By-Laws for the
uses and purposes therein expressed.

 

_______________________________________

(Signature and Office of Individual taking acknowledgment)

 

[NOTARY STAMP]

 

IP Security Agreement, pg. 16