MANUFACTURING
AND DISTRIBUTION AGREEMENT


 


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


 


RECITALS


 


WHEREAS,
Company is in the business of manufacturing, packaging, promoting, selling and distributing alcohol beverage products;


 


WHEREAS,
Reed’s possesses all necessary rights in that certain brand known as REED’S and “Reed’s Craft Ginger
Beer” for ginger-based beverage products, including, without limitation, the intellectual property identified on Exhibit
A to this Agreement, and other trademarks, logos, trade dress, copyrights, promotional slogans, product and ingredient claims,
color combinations, distinctive features, documentation and goodwill associated therewith, and all derivative works, updates,
versions, improvements, enhancements and other modifications to the foregoing (the “Reed’s Brand”); and


 


WHEREAS,
Company desires to obtain from Reed’s, and Reed’s is willing to grant to Company, an exclusive license to use the
names and logos identified on Exhibit A (the “Licensed Marks”) in connection with the manufacturing,
packaging, promotion, sale, and distribution of the Products (as defined below) in the Territory (as defined below), in accordance
with and subject to the terms and conditions of this Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the Parties hereto agree as follows:


 


1.
Definitions. As
used in this Agreement, the following terms shall be deemed to have the following meanings:


 


1.1
“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.


 


1.2
“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 neutral alcohol beverage base that contributes
alcohol to the Products (“Neutral Alcohol Beverage Base”).


 




    	 



    	 



    

 


1.3
“Development Committee” has the meaning ascribed
to such term under the Recipe Development Agreement.


 


1.4
“Discounts” means all actual and documented
rebates, discounts, returns, and other promotional allowances.


 


1.5
“Initial Term” means a five (5) year period
beginning on the Effective Date.


 


1.6
“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.


 


1.7
“Gross Sales Revenue” means the actual amount
of invoiced sales by Company in connection with sales of Products.


 


1.8
“Net Revenue” means the Gross Sales Revenue
less all Discounts and applicable excise taxes.


 


1.9
“Products” means the ready-to-drink ginger-based
flavored alcohol beverage products identified on Exhibit B bearing the Licensed Marks and manufactured by Company pursuant
to this Agreement.


 


1.10
“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).


 


1.11
“Reed’s Intellectual Property” means
all Intellectual Property that: (i) was owned or developed by Reed’s prior to the execution of this Agreement, including
the Licensed Marks; (ii) was or is independently developed by Reed’s without contribution or assistance from Company or
Company’s Intellectual Property; and (iii) the Recipe.


 


1.12
“Specifications” means the specifications for
the Products to be developed by the Development Committee.


 


1.13
“Recipe Development Agreement” means the Recipe
Development Agreement entered into by the parties concurrently with this Agreement, as it may be amended, modified, supplemented
or restated from time to time.


 




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1.14
“Renewal Term” means up to three additional
2-year terms following the Initial Term, each such additional term to begin automatically unless either party provides written
notice of non-renewal at least 180 days prior to the end of the then-current term.


 


1.15
“Term” means the Initial Term plus any Renewal
Term.


 


1.16
“Territory” means the United States and Canada.


 


2.
Grant of License.


 


2.1
Licensed Marks License. For the Term, and subject to all
of the terms and conditions of this Agreement, Reed’s hereby grants to Company, and Company accepts, (a) an exclusive right
and license to use the Licensed Marks in connection with manufacturing, packaging, promoting, selling and distributing the Products
in the Territory, and (b) a non-exclusive right and license to use other elements of the Reed’s Brand in sales presentations,
business development collateral and websites operated by Company, and in media in connection with advertising the Products, including
but not limited to print advertising, radio and television advertising, point-of- sale advertising, internet advertising, product
packaging, sales brochures, mailers and inserts (together, the “Marketing and Advertising Materials”) provided
all such materials are approved in writing by Reed’s pursuant to Section 3.3 of this Agreement. The foregoing rights
to promote, sell and distribute are limited to sales in the applicable Territory. All rights not expressly granted herein are
retained by Reed’s including but not limited to the right to license the Reed’s Brand for other beverage products
and in other territories.


 


2.2
Limited Rights. Company shall not acquire any other right
in the Reed’s Brand other than as set forth in Section 2.1 above. Company shall not apply at any time anywhere in
the world for any trademark or other intellectual property protection in its name for any of the Reed’s Brand. Improvements
and modifications to the Reed’s Brand created by either party during the Term shall, from the time of conception or development,
be the property of Reed’s.


 


2.3
Recipe License. Company acknowledges Reed’s sole
and exclusive ownership, and right to exercise control over the nature and quality, of any Recipe associated with the Products,
together with modifications to the Recipes made by Reed’s or Company, or both parties jointly. Company shall not acquire,
and shall not attempt to authorize or permit any third party to acquire, any right with respect to any Recipe. The Parties agree
that any Recipe is a confidential trade secret of Reed’s and is owned by Reed’s, and confidentiality obligations of
Company related to these trade secrets shall continue perpetually (for so long as they remain trade secrets under Applicable Law
and Regulations). Without limiting the foregoing, Reed’s hereby grants to Company an exclusive limited right and license
during the Term to use each applicable Recipe in connection with manufacturing, packaging, promoting, selling and distributing
the Products in the Territory. Except as set forth in the foregoing sentence, Company shall have no other right to use any Recipe
during the Term, and shall have no right to use any Recipe after the Term.


 


2.4
Alcohol Permitting. Reed’s understands and agrees
that in conjunction with the purpose of this Agreement, Company or its designee may register certain of the Licensed Marks in
connection with the Products with the U.S. Federal Alcohol and Tobacco Taxation and
Trade Bureau (“TTB”) and similar state alcohol beverage regulatory authorities throughout the Territory, including
Canadian and provincial authorities, where the Products will be distributed by or its authorized distributors in accordance with
this Agreement. Upon the expiration or termination of this Agreement, Company agrees to terminate such registrations by Company
and to file written requests to remove the Licensed Marks from Company’s permits and licenses.


 




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3.
Labels; Samples; Advertising and Marketing Materials.


 


3.1
Labels. Company shall be responsible for ensuring that
all label content for the Products is TTB-compliant and complies with any other applicable requirements, laws, rules or regulations,
provided that Company shall be entitled to rely upon the accuracy of any claims associated with the Reed’s Brand that is
an element of any Product labels. Company shall be responsible for ordering all labels for the Products. Reed’s will provide
digital files for the Licensed Marks to be incorporated into the label content in a form sufficient for Company to prepare and
order the production all labels and packaging materials for the Products.


 


3.2
Samples. After approval of a Recipe for a Product pursuant
to the Recipe Development Agreement and subject to the alcohol permitting and label compliance requirements set forth in Sections
2.4 and 3.1 and all other Applicable Laws and Regulations, Company agrees that Reed’s shall have the right, in
its reasonable discretion, to approve or disapprove in advance of sale (i) all Specifications and, without limiting the foregoing,
the quality, style, colors, appearance, and materials associated with the Products, including Product taste and Product labeling
and packaging, and (ii) any and all endorsements, trademarks, trade names, designs and logos (whether a Licensed Mark or not)
used in connection with Products in any form or medium. On completion of trial samples of Products (each, a “Trial Sample”)
and before commencing any commercial scale production of Products, Company shall submit samples of the Trial Samples to the Development
Committee for inspection and approval. Approval of a Trial Sample by the Reed’s- designated members of the Development Committee
shall be deemed approval of the Trial Sample by Reed’s. Prior to commercialization of each Product, Company shall submit
the final commercial scale samples (each, a “Commercial Scale Sample”) of each Product to the Development Committee
for its review and approval. The Commercial Scale Sample of each Product will include the proposed final container and packaging
for such Product. Approval of a Commercial Scale Sample by the Reed’s-designated members of the Development Committee shall
be deemed approval of the Commercial Scale Sample by Reed’s. Reed’s acknowledges that time is of the essence with
respect to approval of the Trial Samples and Commercial Scale Samples, and if Reed’s has not approved or rejected any Trial
Sample or Commercial Scale Sample submitted by Company to the Development Committee within fifteen (15) business days, the submission
shall be deemed approved by Reed’s. Reed’s may not later revoke its approval of particular materials once such approval
has been granted. Any subsequent change to any Product previously approved by Reed’s shall require further approval by Reed’s
in accordance with the terms and conditions of this


Section
3.2.


 


3.3
Marketing Materials and Plans. Company shall develop a
marketing and distribution plan for the Products in the Territory. With respect to
Marketing and Advertising Materials displaying the Licensed Marks or any other element of the Reed’s Brand, Company shall
send to the Development Committee for approval a representative sample of each such
item before Company uses such item on or in connection with any Product. Reed’s
shall have the right, in its reasonable discretion, to approve or disapprove of such Marketing and Advertising Materials. Approval
of Marketing and Advertising Materials by the Reed’s-designated members of the Development Committee shall be deemed approval
of the Marketing and Advertising Materials by Reed’s. Reed’s acknowledges that time is of the essence with respect
to approval of the Marketing and Advertising Materials, and if Reed’s has not approved or rejected any Marketing and Advertising
Materials submitted to the Development Committee within fifteen (15) business days, the submission shall be deemed approved by
Reed’s. No Marketing and Advertising Materials utilizing the Reed’s Brand shall be released without such prior approval
(or deemed approval) by Reed’s. Company shall be responsible for ensuring that all Marketing and Advertising Materials developed
by Company comply with Applicable Laws and Regulations, provided that Company shall be entitled to rely upon the accuracy of any
claims associated with the Reed’s Brand that is an element of any Marketing and Advertising Materials.


 




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3.4
Compliance with Law. Reed’s will market, advertise,
or promote the Reed’s Brand in compliance with applicable law. Each party will consult with the other in good faith with
respect to any proposed cross-category marketing, advertising, or promotional efforts by either or both parties, in order to ensure
that Reed’s marketing, advertising, and promotion of the Reed’s Brand does not cause any violation of Applicable Laws
and Regulations with respect to the marketing, advertising, promotion, sale and distribution of the Products.


 


4.
Manufacturing.


 


4.1
Facilities; Supplies. Company will manufacture the Products
at its licensed facilities in Hood River, Oregon, or such other facility as the Company may designate with the prior written approval
of Reed’s, not to be unreasonably conditioned, withheld, or delayed. With the prior written consent of Reed’s, not
to be unreasonably conditioned, withheld, or delayed.


 


Company
shall have the right to appoint one or more co-packers to assist in the manufacture, sale and distribution of the Products. Company
shall manufacture the Products, or (as applicable) cause the Products to be manufactured by an approved co-packer, in accordance
with the specifications set forth in Exhibit B. Company shall implement quality assurance processes and procedures in accordance
with all Applicable Laws and Regulations at each facility where the Products are manufactured (each, a “Facility”).
If the certification or licensing of a Facility, whether owned and operated by Company or a co-packer, is suspended, revoked,
or canceled, Company will notify Reed’s and will suspend the manufacture, processing, packaging or production of Products
at that Facility until the problem is resolved to Reed’s reasonable satisfaction and such Facility is again certified or
licensed as required.


 


4.2
Inspection Rights; Reports. Company shall, on reasonable
request, make available for physical inspection by Reed’s or Reed’s designated representative at any time during regular
business hours each Facility and the Products held therein as well as the equipment, supplies, work-in-progress, inventories of
Products, books and records related to the performance of Company under this Agreement.


 


4.3
Regulatory Inspections. Company shall notify Reed’s
of any visit to a Facility by an official or regulatory agency, or Company’s receipt of communication (written or oral)
from an official or a regulatory agency, whenever there is a reasonable possibility that such visit or communication may materially
affect Reed’s Intellectual Property or the Products. The Parties shall cooperate in the investigation and resolution of
any of these matters and any out-of- pocket expense in connection with such investigation and resolution shall be paid by Company,
except to the extent such arising solely out of issues deriving from the Reed’s Brand.


 




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4.4
Competitive Products. Company covenants and agrees that,
except for its performance under this Agreement, it shall not, directly or indirectly, for its own account or for the account
of any third party, sell, subcontract, supply, manufacture or produce, or enter into any agreement with any third party to sell,
subcontract, supply, manufacture or produce, at any time during the Term and for a period of ending on the first anniversary of
the expiration or termination of this Agreement, any products which are the same as (or otherwise similar to) the Products, including
without limitation, any products positioned as a mule or hard ginger seltzer (collectively, “Competitive Products”).


 


5.
Royalties; Pricing, Minimum Sales and Costs.


 


5.1
Royalties. As compensation to Reed’s for the rights
granted to Company under this Agreement, Company agrees to pay to Reed’s an earned royalty for Products sold in the Territory
at the rates set forth in Exhibit C (collectively, “Royalties”). The Royalties shall be payable to Reed’s
each calendar quarter, within thirty (30) days following the conclusion of each calendar quarter during the Term. All Discounts
redeemed by Company following payment to Reed’s of applicable earned Royalties for any given quarter of the Term (for which
such Discounts applied) shall be applied against the next payment of Royalties due to Reed’s.


 


5.2
Pricing. Company shall develop a wholesale pricing and
sales plan for the Products (which shall be submitted to Reed’s for its written approval prior to the sale of Products)
for each year during the Term, including quarterly sales forecasts, and estimated Royalties. Company and Reed’s will meet
at least quarterly to discuss such budget, pricing, and sales plans and results for the Products.


 


5.3
Alternate Distributors. Reed’s and Company shall
cooperate as necessary to identify optimal distributors in certain regions of the Territory where Company does not have a strong
presence and where Reed’s may have relationships with other distributors who could distribute the Products. Reed’s
acknowledges that the distribution of alcohol beverage products is highly regulated and subject to various state statutes, regulatory
mechanisms, and contracting norms which may restrict the ability to transition or re-align the distribution of Products in any
portion of the Territory once Products are initially shipped to a particular distributor, or a distributor is otherwise formally
appointed, for such respective portion of the Territory.


 


5.4
Minimum Sales. Company will use commercially reasonable
efforts to maximize sales of the Products. The parties anticipate minimum Royalties from sales of the Products during the Term
as described in Exhibit C (“Annual Minimum Royalty”). In the event that the Annual Minimum Royalty is
not paid to Reed’s in First Year and/or the Second Year (as those terms are defined on Exhibit C), Company may choose,
in its sole discretion, to make up the shortage by paying to Reed’s a lump sum cash payment (at the time the last quarterly
payment for such year is due) in the amount of the difference between the applicable Annual Minimum Royalty and the actual Royalties
paid (the “Lump Sum Minimum Royalty Payment”) for the First Year and the Second Year, as applicable. Reed’s
may elect to terminate this Agreement in accordance with the terms of Section 8 if (i) Company does not pay the Annual
Minimum Royalty in the First Year or the Second Year and does not elect to make the applicable Lump Sum Minimum Royalty Payment;
or (ii) in the Third Year or any Subsequent Year (as those terms are defined on Exhibit C) in which Company does not achieve
the Annual Minimum Royalty.


 




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5.5
Costs. Except as otherwise provided in this Agreement,
all manufacturing, packaging, marketing, sales and distribution costs for the Products shall be at Company’s sole expense,
except as such costs relate to the involvement of Reed’s personnel and contractors.


 


6.
Reports, Records, and Payment of Royalties.


 


6.1
Reports. Company agrees to submit a reasonably detailed
written report to Reed’s with each quarter’s payment of Royalties due hereunder, stating in each such report: (a)
the Gross Sales Revenue, Net Revenue, Discounts and excise tax, all as applicable, and calculation of earned Royalties due for
all Products sold pursuant to Section 5 during the previous calendar quarter; and (b) any customer or consumer feedback
received by Company during the previous calendar quarter. The obligation to make written reports under this Agreement shall begin
with the calendar quarter in which Company first makes a commercial sale of Products, and shall continue thereafter during the
Term.


 


6.2
Records. During the Term and for two years thereafter,
Company shall maintain records in sufficient detail and, upon reasonable notice, shall allow Reed’s or its third party auditor
to examine Company’s books and records pertaining to the Products. Such examinations shall occur only during business hours
following written notification to Company and shall be for the purpose of verifying the calculation of earned Royalties due under
this Agreement. If any such examination reveals an underpayment, Company shall within ten (10) business days pay to Reed’s
the underpaid amount. If any such examination reveals an overpayment, such amount shall be credited against Royalties to become
due to Reed’s. Any information provided to Reed’s or its accountants pursuant to this Section 6.2 shall be
treated as Confidential Information (as defined below) of Company, to be used only for the purpose of the examination in accordance
with this Section 6.2. If an audit discloses that Company has not properly accounted for and paid Royalties to Reed’s
and the amount not properly accounted for exceeds 3% of the Royalties paid, then the reasonable cost of such audit shall be paid
by Company. If, however, the audit discloses that Company has accounted for Royalties as provided or the amount not properly accounted
for is less than 3% of the Commission paid, the cost of such audit shall be paid by Reed’s.


 


6.3
Expenses and Costs. All past due sums shall bear interest
at the rate of 1.5% per month until paid in full. In addition, Company shall reimburse Reed’s for all expenses, costs, and
attorney’s fees incurred or expended by Reed’s in enforcing any of its rights hereunder and/or collecting any past
due sums, whether or not suit is commenced.


 


7.
Representations, Warranties, Covenants, etc.


 


7.1
By Company. Company represents, warrants, covenants and
agrees that:


 


(a)
Company has (i) the full right, power and authority to enter into
this Agreement and to carry out its obligations hereunder; and (ii) no obligations to any other party that are inconsistent with
its obligations under this Agreement;


 




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(b)
Company shall at all applicable times hold the proper TTB and
applicable state alcohol beverage regulatory authority licenses and permits and all other applicable permits and licenses necessary
to lawfully produce and sell, as applicable, the Products in the United States, and to export products to Canada, in accordance
with this Agreement;


 


(c)
Company Intellectual Property that is used by Company with respect
to the Company’s manufacturing, packaging, promoting, selling, and distributing the Products (including the Neutral Alcohol
Beverage Base), does not and will not infringe, misappropriate or violate the rights of any third person;


 


(d)
the Products shall (i) be in conformance with the Specifications;
(ii) be in conformance with the Commercial Scale Samples; and (iii) not be adulterated or misbranded within the meaning of Applicable
Laws or Regulations within such portion of the Territory in which the Products are sold by the Company and shall otherwise be
in compliance with all Applicable Laws and Regulations;


 


(e)
the Products shall be of good and merchantable quality;


 


(f)
the Products shall be free from defects and fit for intended purpose,
and able to pass without objection in trade; and


 


(g)
Company shall comply with all Applicable Laws and Regulations
regarding employment practices, health and safety, and product safety and shall maintain (or cause to be maintained) adequate
security at each Facility.


 


7.2
 By Reed’s. Reed’s represents and warrants that:


 


(a)
Reed’s has the full right, power and authority to enter
into this Agreement and carry out its obligations hereunder, including granting to Company the exclusive rights in the License
Marks being licensed under this Agreement.


 


(b)
Company’s use of the Licensed Marks and Reed’s Brand
as authorized hereunder will not infringe, misappropriate or violate the rights of any third person.


 


(c)
Reed’s has no knowledge or notice of any actions pending
or threatened which may impair Reed’s right to grant the rights licensed under this Agreement.


 


(d)
The rights licensed under this Agreement do not violate any obligations
of Reed’s to any other party.


 


8.
Termination. The
rights and licenses granted under this Agreement shall remain in force and effect for the duration of the Term, unless this Agreement
is terminated early in accordance with either party’s termination rights as set forth below.


 




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8.1
By Reed’s.


 


(a)
Subject to the conditions of Section 5.4 above, Reed’s
may terminate this Agreement on thirty (30) days’ notice if Company does not meet the Annual Minimum Royalty set forth in
Exhibit C for the First Year or any subsequent year of the Term.


 


(b)
Reed’s shall have the right to terminate this Agreement
immediately in the event of a change of control or sale of substantially all of the assets of Company involving a Reed’s
competitor identified in Exhibit D.


 


8.2
By Either Party. Either party shall have the right to terminate
this


Agreement:


 


(a)
Immediately upon written notice to the other party in the event
the other party is adjudged bankrupt, makes a general assignment for the benefit of creditors, has a receiver or trustee appointed
for the benefit of its creditors, or files a voluntary petition in bankruptcy;


 


(b)
upon thirty (30) days written notice to the other party in the
event the other party materially breaches or defaults in the performance of its obligations
under the terms of this Agreement, and fails to cure such breach or default within such 30-day period; or


 


(c)
without limiting Reed’s right pursuant to Section 8.1(b),
upon twelve


(12)
months’ prior written notice to the other party in the event of a change of control or sale of substantially all of the
assets of the other party to a third party who is as of the date of this Agreement, or becomes during the Term, a material competitor
of the terminating party.


 


8.3
Post-Termination Rights Upon any termination of this Agreement,
other than a termination by Reed’s pursuant to Section 8.2(b) as a result of the Company’s breach or default
of any Sections 4.1 through 4.4, Sections 7.1(d) through (f), then Company shall have the right to
continue to manufacture the Products for up to a 24-month period following such termination, at fair market rates with respect
to comparable products, on terms and conditions to be reasonably negotiated in good faith and agreed to by the parties (“Post-Termination
Co-Packing”). It is understood and agreed by Company that from and after the termination of this Agreement, all of Company’s
rights to use the Reed’s Brand and Licensed Marks shall cease, except as necessary for Post-Termination Co-Packing or as
otherwise expressly provided herein. If there is a termination subject to this Section 8.3, but a Post-Termination Co-Packing
agreement is not reached, then Reed’s shall be obligated to purchase or reimburse Company, at its cost, for up to for up
to sixty (60) days inventory of Company supplies of ingredients and packaging materials which were reasonably procured by Company
in good faith in anticipation of the continued manufacturing of Products.


 


8.4
Manufactured Products. Any Products that may have been
manufactured Company prior to the termination of this Agreement, or which were in the process of manufacture by Company, or are
required to fill purchase orders from customers accepted by Company on or prior to the date of termination, may be sold by Company
during the three (3) month period following the date of termination, provided that Company shall continue to pay to Reed’s
earned Royalties with respect to such sales at the rates and in the manner specified in Section 5 of this Agreement. Following
the 3-month grace period, if exercised, Reed’s shall have the right, but not the obligation, to purchase any Products remaining
in Company’s inventory at Company’s actual cost plus 25%. Any Products not purchased by Reed’s after the end
of such 3-month post- termination period pursuant to this Section 8.4 will be destroyed by Company, unless otherwise then
agreed between Reed’s and Company.


 




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8.5
Earned Royalties. Termination of this Agreement for any
reason shall not terminate Company’s obligation to pay all quarterly earned Royalties which accrue up to the date of such
termination. Company’s obligation to report Royalties due and submit its books and records for inspection as provided in
Section 6 shall continue until Company’s royalty obligations have been fully determined and discharged by proper
payment.


 


9.
Indemnification and Limitation on Liability.


 


9.1
By Company. Company shall defend, indemnify and hold Reed’s,
its affiliates and their authorized representatives, and their respective directors, officers, stockholders, members, managers,
employees, agents and assigns, harmless against all causes of action, claims, suits, proceedings, costs, damages, losses and expenses
(including reasonable attorneys’ fees) and judgments incurred or sustained by Reed’s or such persons, or claimed or
sustained by third parties, arising out of: (a) any negligence or intentional wrongdoing by Company or any of its employees, contractors
or agents; (b) the breach by Company of its representations and obligations under this Agreement; or (c) any third party claims
for damage arising from the Company’s manufacture, handling, or distribution of the Products, including but not limited
to claims of infringement with respect to Company’s Intellectual Property or product liability claims.


 


9.2
By Reed’s. Reed’s shall defend, indemnify and
hold Company, its affiliates and its authorized representatives (including its sublicensees), and their respective directors,
officers, stockholders, members, managers, employees, agents and assigns, harmless against all causes of action, claims, suits,
proceedings, costs, damages, losses and expenses (including reasonable attorneys’ fees) and judgments incurred or sustained
by Company or such persons, or claimed or sustained by third parties, arising out of: (a) any claim that the Reed’s Brand
or any of the Licensed Marks or Reed’s Intellectual Property infringes the rights of a third party; (b) any negligence or
intentional wrongdoing by Reed’s or any of its employees or agents in connection with their obligations under this Agreement;
or (c) the material breach by Reed’s of its representations and obligations under this Agreement.


 


9.3
Limitation of Liability; Disclaimer of Warranties. EXCEPT
WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS OF COMPANY SET FORTH IN SUBSECTION (D) OF SECTION 9.1 CONCERNING 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, 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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10.
Confidentiality.


 


10.1
Non-Disclosure. During the course of performance of this
Agreement, each party may disclose certain Confidential Information to the other party. The receiving party shall maintain the
secrecy of all Confidential Information of the disclosing party, and shall not use, disclose or otherwise exploit any Confidential
Information of the disclosing party for any purpose not specifically authorized by this Agreement. Each party understands and
agrees that the other party will suffer irreparable harm in the event that the receiving party breaches any of its obligations
under this Section 10 and that monetary damages will be inadequate to compensate the non-
breaching party for such breach. In the event of a breach or threatened breach of any of the provisions of this Section
10, the non-breaching party, in addition to and not in limitation of any other rights, remedies or damages available to it
at law or in equity, shall be entitled to a temporary restraining order, preliminary injunction and/or permanent injunction in
order to prevent or to restrain any such breach by the other party.


 


10.2
Confidential Information. As used
herein, the term “Confidential Information” shall
mean all information of any kind, whether written or oral, regarding a party or any of its businesses or operations that
is proprietary and not generally known or used by others and which gives, or may give, such party an advantage over its competitors,
including, without limitation, the Recipes in the case of Reed’s and other information concerning such party’s products,
formulas, recipes, services, data, applications, business plans, strategies, business partners and alliances, finances, operations,
assets, suppliers and customers, whether such information is obtained before or after the date of this Agreement. Notwithstanding
the foregoing, Confidential Information shall exclude information: (a) available to the public other than by a breach of this
Agreement; (b) rightfully received by the receiving party from a third party not in breach of a contractual, fiduciary or other
obligation of confidentiality; (c) known to the receiving party at the time of disclosure as evidenced by the written records
of the receiving party at the time of disclosure; or (d) produced in compliance with any law, rule, regulation or court or administrative
order; provided, however, that the receiving party gives the disclosing party reasonable notice that such Confidential
Information is being sought by a third party so as to afford the disclosing party the opportunity to limit or prevent such disclosure.
The provisions of this Section 10 shall survive termination or expiration of this Agreement and the obligations regarding
trade secrets, in particular, will continue for trade secrets for so long as the information constitutes a trade secret under
applicable law.


 


11.
Insurance. While
this Agreement remains in effect and for a period of not less than the later of two years thereafter, Company shall obtain and
maintain comprehensive general liability insurance (including for acts, omissions and products liability) with a minimum combined
single limit in the amount of not less than $2,000,000 per occurrence and $10,000,000 in the aggregate for bodily harm or personal
injury to, illness of, or death of persons and damage to property occurring as a result of the activities to be conducted and
the Products to be produced and sold under this Agreement. Company shall also maintain recall insurance in the amount of not less
than $2,000,000 per occurrence. All such insurance pursuant to this Section 11 shall name Reed’s as an additional
insured. Upon request, Company will furnish to Reed’s one or more current certificates evidencing that the insurance required
herein has been obtained and is in full force and effect, and that Reed’s has been named as an additional insured. Such
insurance shall not be canceled until at least thirty (30) days’ written notice has been given to Reed’s. Company
shall maintain the above-referenced insurance carrying a Best’s rating of at least ‘A-’. Company shall also
maintain the statutory requirements for Workers’ Compensation insurance.


 




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12.
Recalls; Complaints.


 


12.1
Protocol. If either party becomes aware of any incident
involving potential contamination of any Product, such party shall provide immediate telephone notice to the other party, and
Company shall identify and remove from sale any Products suspected of contamination. The parties agree to cooperate fully and
to provide all information necessary for the parties to make a determination as to whether a recall or market withdrawal of the
Product is necessary. The parties agree to cooperate with such a recall or market withdrawal in all aspects, including, but not
limited to, assistance with tracing Products, locating Products, producing records and documents, coordinating returns of Products,
disposing of Products, and communicating with government authorities.


 


12.2
Recalls. In the event of a recall or market withdrawal,
Reed’s and Company shall promptly consult with one another to develop a joint plan reasonably acceptable to each party for
the manner of implementing the recall or withdrawal. Company will carry out the recall or replacement in accordance with the joint
plan, in compliance with applicable laws and regulations, in as expeditious a manner as feasible, and in such a way as to protect
customers and preserve the reputation of Company, Reed’s, the Products, and the Reed’s Brand. Company shall be responsible
for all costs and expenses of either party associated with any recall or withdrawal, including but not limited to customer notification,
refunds to customers, transportation costs, the cost of employee’s time, and lost profits. The obligations in this Section
12 will be in addition to any other rights and remedies to which the parties may be entitled to by
law or equity.


 


12.3
Customer Complaints and Inquiries. Company shall provide
all assistance reasonably requested by Reed’s in investigating customer and consumer complaints regarding any Product. Company
shall be responsible for responding to all material customers’ and consumers’ inquiries and/or complaints relating
to the Products and the recordkeeping relating thereto.


 


13.
Miscellaneous.


 


13.1
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.


 


13.2
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.


 




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13.3
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 transfer to a Reed’s competitor
listed or referred to on Exhibit D hereof is 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.


 


13.4
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.


 


13.5
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 13.5, either party may thereafter terminate this Agreement upon thirty (30)
days’ written notice.


 


13.6
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.


 


13.7
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.


 




    	13



    	 



    

 


13.8
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 13.8 by written notice hereunder
given to the other party.


 


13.9
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.


 


13.10
Survival. Sections 2, 8, 9, and 10-13
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 10 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 13.4.


 


13.11
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.


 


13.12
Fees and Expenses. Each party shall be responsible for
its own fees and expenses in connection with the preparation and execution of this Agreement.


 


13.13
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.


 


13.14
Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.


 


[Signature
page follows]


 







    	14



    	 



    

 


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 Manufacturing and Distribution Agreement – Signature Page


 



    	15



    	 



    




 


Exhibit
A


 


Licensed
Marks


 











 


Amended and Restated Manufacturing and Distribution Agreement - Exhibit A


 






    	 



    	 



    

 


Exhibit
B


 


Products
and Specifications


 


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 Manufacturing and Distribution Agreement - Exhibit B


 




    	 



    	 



    

 


Exhibit
C 


 


Royalty
Schedule


 


Royalty
Rates


 


	Sales
    Tier*	 	Amount
    of Product Sales by 

    Case Per Calendar Year	 	Royalty
    Rate
	Tier
    A	 	The
    first 500,000 cases per year	 	The
    greater of 8% on Net Revenue or $1.76 per case
	Tier
    B	 	All
    case sales above 500,000 per year	 	The
    greater of 6% on Net Revenue or $1.32 per case
	Costco
    San Diego**	 	All
    case sales to the applicable distributor for San Diego and depleted by such distributor to Costco San Diego during for the
    first 12 months of the Term	 	12%
    of Net Revenue**


 


*”Tier
A” and “Tier B” sales shall apply to mean all customers in the U.S. or Canada, excluding sales to the applicable
distributor for San Diego and depleted by such distributor to Costco San Diego during the first 12 months of the Term.


 


**Following
the first twelve months of the Term, the royalty rate for subsequent sales to Costco San Diego will be included with the Tier
A and Tier B sales tier, per the amount of applicable case sales for such each year.


 


Minimum
Royalties


 


	 	 	Time
    Period	 	Minimum
    Royalty Amount

    ($ or Formula)
	“First
    Year”	 	Effective
    Date through December 31, 2020.	 	$250,000
	“Second
    Year”	 	January
    1, 2021 through March 30, 2022.	 	$800,000
	“Third
    Year”	 	April
    1, 2022 through March 30, 2023.	 	$1,200,000
	“Subsequent
    Years”	 	Each
    twelve month period beginning on April 1, 2023 and ending on each March 30 of the subsequent calendar year.	 	5%
    increase in each calendar year over the prior calendar year’s minimum royalty amount


 


Amended
and Restated Manufacturing and Distribution Agreement - Exhibit C


 




    	 



    	 



    

 


Exhibit
D


 


Reed’s
Competitors


 


	●	Fever
    Tree
	●	Bundaberg
	●	Goslings
	●	Q
    Drinks
	●	Boylans
	●	Jones
    Soda
	●
       Any other entity making or selling a ready-to-drink
    mule or hard ginger seltzer product (unless such entity is acknowledged in writing, in advance, by Reed’s as not a competitor
    for the purposes of this Agreement).





 


Amended and Restated Manufacturing and Distribution Agreement - Exhibit D