reeds_10qa-ex1001.htm


    
      

    

    Exhibit
10.1

     

     

     

     

     

     

     

     

     

     

     

    ASSET
PURCHASE AGREEMENT

    


    


    between

    


    SONOMA
CIDER MILL, INC.

    


    and

    


    REED’S
INC.

     

    


    


    Dated as
of October 19, 2009

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    ASSET PURCHASE
AGREEMENT

     

    This
ASSET PURCHASE AGREEMENT (this "Agreement")
is entered into as of October 19, 2009 between SONOMA CIDER MILL, INC., a California corporation
("Seller"),
and Reed’s Inc, a Delaware Corporation ("Buyer").  Certain
other capitalized terms used herein are defined in Article IX and
throughout this Agreement.

     

    WHEREAS, Seller owns the
Sonoma Sparkler beverage brand business (the "Business").

     

    WHEREAS, Buyer desires to
purchase from Seller, and Seller desires to sell, the Sonoma Sparkler brand, on
the terms and subject to the conditions set forth in this
Agreement.

     

    NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows.

     

    ARTICLE
I

     

    PURCHASE AND SALE OF
ASSETS

     

    1.1   Acquired
Assets.  On the terms and
subject to the conditions set forth in this Agreement, at the Closing (as
defined in Section
2.1) Seller shall sell, convey, transfer, assign and deliver to Buyer,
all of its right, title and interest in the Sonoma Sparkler brand (the “Acquired
Assets”), free and clear of all mortgages, Liens, pledges, charges or
encumbrances of any nature whatsoever.  Without limiting the
generality of the foregoing, the Acquired Assets shall include (without
limitation) the following assets:

     

    (a)   Sonoma Sparkler
Brand.  The Sonoma Sparkler label, Sonoma Sparkler formulas for
all 6 flavors on the market, including, (i) the right to use, copy, modify,
exploit, license, assign, convey and pledge the Intellectual Property Rights;
(ii) the right to exclude others from using the Intellectual Property
Rights; (iii) the right, where applicable, to create derivatives of the
Intellectual Property Rights and retain full ownership thereof; and
(iv) the right to file and prosecute applications for registration and
renewals thereof, now pending or hereinafter initiated, to protect any rights in
the Intellectual Property Rights;

     

    (b)   Customer list and vendor
contact information;

     

    (c)   Licenses and
Permits.  To the extent assignable, the permits, licenses,
certificates of authority, franchises, accreditations, registrations and other
authorizations issued or used in connection with the Business;

     

    (d)   All
books, files, lists, publications, and other records and data

     

    (e)    All inventory
of Seller relating to the Business.

     

    
      
        
        

      

      
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    1.2   Excluded
Assets.  Buyer is purchasing only those assets described in Section
1.1.  Seller agrees that Buyer shall not be obligated to assume or
perform and is not assuming or performing any liabilities or obligations of
Seller, whether known or unknown, fixed or contingent, certain or uncertain, and
regardless of when such liabilities or obligations may arise or may have arisen
or when they are or were asserted, and Seller shall remain responsible for all
retained liabilities, which shall include, without limitation, any and all of
the following obligations or liabilities of Seller:

     

    (a)    Any
compensation or benefits payable to employees or former employees, arising in
connection with their employment by Seller, including without limitation, any
liabilities arising under any employee pension or profit sharing plan or other
employee benefit plan of Seller, any of Seller’s obligations for vacation,
holiday or paid time-off, or the termination by Seller of any of its
employees;

     

    (b)    All accounts
or notes payable, obligations for borrowed money, all purchase money obligations
and any other indebtedness or payment obligations of Seller. Accounts payables
accruing to the date of October 19, 2009, shall remain the sole responsibility
of the Seller and all Payables initiated in the Buyers purchasing department
will be the sole responsibility of the Buyer;

     

    (c)    Any claims,
demands, actions, suits or legal proceedings that have been asserted or
threatened prior to the Closing Date against Seller, the Business or the
Purchased Assets or which may be threatened hereafter against the Purchased
Assets, the Business or Buyer that arises in any way from or in connection with
(i) Seller’s operation of the Business prior to the Closing Date, or
(ii) Seller’s operation of any other business (excluding the Business) or
non-business activities of Seller conducted by Seller prior hereto or
hereafter;

     

    (d)    All Taxes (i)
that have arisen prior to the Closing Date or may arise thereafter out of
business or other operations conducted by Seller; for which Seller is or, at any
time hereafter, may become liable;

     

    (e)    All
Encumbrances on any of the Purchased Assets and all obligations and liabilities
secured thereby.

     

    (f)    Accounts
Receivable from sales on or prior to May 1, 2009 shall remain the property of
the Seller and are not included as part of this transaction. Accounts
receivables arising from sales made on or after October 19, 2009 shall be the
sole property of the Buyer.

     

    1.3   Purchase
Price.  As consideration
for the Acquired Assets, Buyer shall, on the terms and subject to the conditions
and limitations set forth herein, pay $252,000 (the “Purchase
Price”) The purchase price shall be paid to Seller under the following
terms:

     

    (a)    $36,000 paid
semi-monthly at the rate of $12,000 per month during June, July and August 2009
and

     

    
      
        
        

      

      
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    (b)    $216,000
payable at the rate of $9,000.00 per month for 24 months beginning September
1st 2009
and continuing on until paid in full. Should Sonoma Sparkler product sales drop
below $18,000 in any given month, the monthly payment due on the 1st day
of the following month will, at Reed's option, be reduced to $6,000 for one
month only. The difference of $3,000 will be added to last payment of the
purchase term without interest or penalty.

     

    (c)    Default in
Payments.  In
the event buyer fails to make any installment payment when due, Seller shall
provide Buyer written notice of default, and if Buyer has not fully paid such
past-due payment within thirty (30) days after such default notice Seller shall
have the right to immediately accelerate the unpaid balance due under this
Agreement. Buyer shall be responsible for reasonable attorney’s fees
incurred for collection

     

    ARTICLE
II

     

    CLOSING

     

    2.1   Time and
Place. Subject to
satisfaction of the conditions precedent to closing, the closing of the
transactions provided for in this Agreement shall take place on October 19, 2009
or such other date as the parties agree (such closing, the "Closing"
and the date of the Closing, the “Closing
Date”).

     

    2.2   Procedure
at the Closing.
At the Closing, the following shall occur:

     

    (a)   Seller
shall have deliver to Buyer the documents, formulas, customer lists, and
inventory.

     

    (b)   Seller
shall deliver to Buyer, the (a) Assignment and Bill of Sale, in the form
attached hereto as Exhibit
A and (b) Assignment and Assumption other instruments as shall be
sufficient to vest in Buyer good and marketable title to the Acquired
Assets.  Seller agrees to execute and deliver to Buyer from time to
time such further and particular assignments, consents, or other instruments in
writing as Buyer may request as appropriate or desirable to confirm its title in
and to the Acquired Assets.

     

    ARTICLE
III

     

    REPRESENTATIONS AND
WARRANTIES OF BUYER

     

    Buyer
represents and warrants to Seller that, as of the date hereof and as of the
Closing Date:

     

    3.1   Entity
Status.  Buyer is a
Corporation duly formed, validly existing and in good standing under the laws of
the State of Delaware and is authorized and entitled to carry on its business in
California. It has no subsidiaries or affiliates

     

    3.2   Power and
Authority.  Buyer has the
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.  Buyer has taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated
hereby.

     

    
      
        
        

      

      
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    3.3   Enforceability.  This Agreement
has been duly executed and delivered by Buyer and constitutes a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in
equity.

     

    3.4   UCC-1
Search. The
parties hereto authorize the conducting of a UCC-1 search by or on behalf of the
Buyer to determine whether any recorded liens, except as set forth herein, are
in existence against Seller or any of the Assets, the cost of which shall be
paid equally by Seller and Buyer.

     

    ARTICLE
IV

     

    CERTAIN AGREEMENTS AND
COVENANTS OF THE PARTIES

     

    4.1   Further
Assurances.  Each party shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby.

     

    4.2   Confidentiality;
Publicity.  Neither party
shall disclose the terms of this transaction to any third party nor make any
public announcement related to this Agreement or the transactions contemplated
hereby without the written consent of the other party.

     

    4.3   Agreement to Cooperate;
Tax.

     

    (a)   Subject
to the terms and conditions herein, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.  Seller shall execute and deliver to Buyer from time
to time such further and particular assignments, consents, or other instruments
in writing as Buyer (or its assignee) may request as appropriate or desirable to
confirm its title in and to the Acquired Assets.

     

    (b)   In the
event any litigation is commenced against Seller by any person or entity
relating to the transactions contemplated by this Agreement, Buyer shall have
the right, at its own expense, to participate therein, and Seller will not
settle any such litigation without the consent of Buyer, which consent will not
be unreasonably withheld.

     

    (c)   All
sales, use, documentary and/or transfer taxes and other similar taxes, if any,
imposed in connection with the transactions contemplated by this Agreement shall
be borne equally by Buyer and Seller.  Seller shall timely complete
all forms and timely make all filings reasonably requested by Buyer which are
necessary to secure appropriate sale or use tax exemptions with respect to the
Acquired Assets.

     

    
      
        
        

      

      
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    ARTICLE
V

     

    CONDITIONS TO THE
OBLIGATIONS OF BUYER

     

    The
obligations of Buyer to effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part in writing by
Seller.

     

    5.1   Corporate
Resolution. Buyer shall, at
Closing deliver to Seller a duly executed copy of its corporate resolution
authorizing the transaction described herein, which said resolution shall form a
part of this agreement, a copy which is attached as Exhibit B.

     

    5.2   No
Adverse Litigation.  There shall not
be pending or threatened any action or proceeding by or before any court or
other governmental body which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the transactions contemplated hereby, and which,
in the judgment of Buyer, makes it inadvisable to proceed with the transactions
contemplated hereby.

     

    5.3   Third
Party Consents.  All governmental
waivers, consents, orders and approvals legally required for the consummation of
the transactions contemplated hereby, and all consents from lenders required to
consummate the transactions contemplated hereby, including (without limitation)
all required consents or approvals of each person that is a party to a contract
or agreement been obtained and be in effect on the Closing Date.

     

    ARTICLE
VI

     

    REPRESENTATIONS
AND WARRANTIES OF SELLER

     

    Seller
makes the representations and warranties set forth hereinafter in this
Article VI to Buyer:

     

    6.1   Organization and
Standing.  Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and Seller has the requisite corporate power and authority to own the Purchased
Assets, and to use such Purchased Assets in the conduct of the
Business.

     

    6.2   Authority and Binding
Effect.  Seller has the full corporate power and
authority to execute and deliver this Agreement.  This Agreement and
the consummation by Seller of its obligations contained herein and therein have
been duly authorized by all necessary corporate actions of Seller, and such
agreements have been duly executed and delivered by Seller.  This
Agreement is a valid and binding agreement of Seller, enforceable against Seller
in accordance with its terms, and, upon execution and delivery will be valid and
binding agreements of Seller and shall be enforceable against it in accordance
with their terms, except as enforceability of the obligations of Seller under
this Agreement may be limited by (i) bankruptcy, insolvency, moratorium or
other similar laws affecting creditors’ rights generally, and (ii) general
principles of equity relating to the availability of equitable remedies (whether
such agreements are sought to be enforced in a proceeding at law or a proceeding
in equity).

     

    
      
        
        

      

      
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    6.3   Absence
of Claims.  As of the
purchase date, there are no

     

    (a)    encumbrances
of any kind on or affecting, any of the Purchased Assets;

     

    (b)    Any damage,
destruction or loss, whether or not covered by insurance, of any of the
Purchased Assets;

     

    (c)    The entry or
violation of any judgment, order, writ or decree that affects or could
reasonably be expected to affect the Purchased Assets;

     

    (d)    Any violation
of any Environmental Laws (as hereinafter defined) affecting any of the
Purchased Assets;

     

    (e)    Any actual
or, to the Knowledge of Seller, threatened amendment, termination or revocation
of any license, permit or franchise required for the continued operation of the
Business; or

     

    (f)    The
occurrence of any other event or circumstance which has or is reasonably likely
to have a Material Adverse Effect on Seller, the Purchased Assets or the
Business.

     

    6.4   Title to
Purchased Assets.  Seller has, and on the Closing Date will
convey and transfer to Buyer, good, complete and marketable title to all of the
Purchased Assets, free and clear of all Encumbrances of any nature
whatsoever.  Seller has the unencumbered right to use, and to sell to
Buyer in accordance with the terms and provisions of this Agreement all of the
Purchased Assets possessed by it without interference from and free of the
rights and claims of others.

     

    6.5   Intellectual
Property.  Seller owns all right, title and interest in
and to, or has the right to use all Intellectual Property Rights free and clear
of all Encumbrances (including without limitation any distribution rights and
royalty rights).

     

    Seller
has the exclusive right to sell, license and dispose of all of its Intellectual
Property Rights, and has the right to bring actions for infringement of all
Intellectual Property Rights owned by Seller, including the right to collect
damages for past, present and future infringements.

     

    Seller
has valid and enforceable Copyrights in all copyrightable material owned by
Seller used in connection with the Business, whether or not registered with the
U.S. Copyright Office or any applicable foreign
authorities.  Consummation of the transactions contemplated hereby
will not alter or impair the validity of any such copyrights or copyright
registrations.

     

    Seller
has not misappropriated any Trade Secrets of any other person or
entity.  Seller has taken reasonable precautions to protect the
secrecy, confidentiality and value of all of its Trade Secrets.

     

    No claims
have been asserted against Seller or, to Seller’s Knowledge, threatened against
Seller by any person challenging Seller’s ownership, use or distribution
(including manufacture, marketing, license or sale) of any Intellectual Property
Rights, or challenging or questioning the validity or effectiveness of any
license or agreement relating thereto and Seller has never been a party to any
action or proceeding that involves or involved any claim of infringement,
misappropriation or other wrongful use or exploitation of the intellectual
property or other proprietary rights of any other party.  The
operation by Seller of the Business did not violate and continued operations of
the Business would not violate, and none of the Intellectual Property rights of
Seller violate, any intellectual property rights of any third party, including,
without limitation, infringement, misappropriation or wrongful use or
exploitation of intellectual property or other proprietary rights, and no third
party has provided notice to Seller of a possible such violation.

     

    
      
        
        

      

      
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    The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby will not (i) breach, violate or conflict with any
instrument, agreement or other right governing any of the Intellectual Property
Rights or portion thereof; (ii) cause the forfeiture or termination, or
give rise to a right of forfeiture or termination, of any Intellectual Property
Rights or portion thereof; (iii) in any way impair the right of Buyer to
use (including distribute, manufacture, marketing, license, sale or other
disposition) any Intellectual Property Rights or portion thereof; or
(iv) give rise to any right to bring any action for infringement of any
Intellectual Property Rights or any portion thereof.

     

    To
Seller’s Knowledge, no party to any contract, commitment or restriction relating
to any Intellectual Property Right intends to cancel, withdraw, modify or amend
such contract.

     

    To
Seller’s Knowledge, no third party is violating, infringing, or misappropriating
any Intellectual Property Right.

     

    This
Agreement (including the Exhibits hereto) does not contain any untrue statement
or omission of a material fact upon which the Buyer hereto is
relying.  There is not fact known to Seller which is not disclosed in
this Agreement which is materially adversely related to: (a) the accuracy of the
representations and warranties contained in this Agreement, (b) any and all
marketplace conditions regarding the Assets, or (c) the Seller’s financial
condition of operations, business or prospects.  All representations
and warranties contained therein will be true and correct at
Closing.

     

    ARTICLE
VII

     

    CONDITIONS
TO THE OBLIGATIONS OF
SELLER

    


    The
obligations of Seller to effect the transactions contemplated hereby shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part in writing by
Buyer:

     

    7.01   Corporate
Resolution. Seller shall, at
Closing deliver to Seller a duly executed copy of its corporate resolution
authorizing the transaction described herein, which said resolution shall form a
part of this agreement, a copy which is attached as Exhibit
C.

     

    7.02   Delivery
of Acquired Assets.  At the Closing,
Buyer shall duly execute and deliver to Seller, or its assignee, the (a)
Assignment and Bill of Sale in the form attached hereto as Exhibit
A

     

    7.03   Third
Party Consents.
All governmental waivers, consents, orders and approvals legally required
for the consummation of the transactions contemplated hereby, and all consents
from lenders required to consummate the transactions contemplated hereby,
including (without limitation) all required consents or approvals of each person
that is a party to a contract or agreement shall have been obtained and be in
effect on the Closing Date.

     

    ARTICLE VIII

     

    INDEMNIFICATION

     

    8.1   Agreement
by Seller to Indemnify.  Seller shall
protect, defend, indemnify and hold Buyer harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Buyer to the extent resulting from or arising out of (a)
any breach of a representation or warranty made by Seller in or pursuant to this
Agreement, (b) any breach of the covenants or agreements made by Seller in this
Agreement, (c) any inaccuracy in any certificate delivered Seller pursuant to
this Agreement, (d) Seller’s ownership or operation of the Acquired Assets prior
to the Closing, or (e) any Excluded Liability (collectively, “Buyer
Indemnifiable Damages”).  Without limiting the generality of
the foregoing with respect to the measurement of Buyer Indemnifiable Damages,
Buyer shall have the right to be put in the same pre-tax consolidated financial
position as it would have been in had each of the representations and warranties
of Seller hereunder been true and correct and had the agreements and covenants
of Seller been performed in full.  The aggregate liability of Seller
under this Article
VIII shall be limited to the aggregate amount of the Purchase
Price.

     

    8.2   Agreement
by Buyer to Indemnify.  Buyer agrees to
protect, defend, indemnify and hold Seller harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related counsel and paralegal fees and expenses)
incurred or suffered by Seller to the extent resulting from or arising out of
(a) any breach of a representation or warranty made by Buyer in or pursuant to
this Agreement, (b) any breach of the covenants or agreements made by Buyer in
this Agreement or (c) any inaccuracy in any certificate delivered by Buyer
pursuant to this Agreement (collectively, “Seller
Indemnifiable Damages”).  Without limiting the generality of
the foregoing with respect to the measurement of Seller Indemnifiable Damages,
Seller shall each have the right to be put in the same pre-tax financial
position as it would have been in had each of the representations and warranties
of Buyer hereunder been true and correct and had the agreements and covenants of
Buyer hereunder been performed in full.  The aggregate liability of
Buyer under this Article VIII shall be
limited to the aggregate amount of the Purchase Price.

     

    
      
        
        

      

      
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    8.3   Third-Party
Claims.  Within ten (10)
business days after receipt by a person entitled or claiming to be entitled to
indemnification pursuant to this Article VIII (each
an, “Indemnitee”)
of written notice of the commencement of any action or the assertion of any
claim, liability or obligation by a third party, against which claim, liability
or obligation a person is, or may be, required under this Article VIII to
indemnify Indemnitee (“Indemnitor”),
Indemnitee will, if a claim thereon is to be made against Indemnitor, notify
Indemnitor in writing of the commencement or assertion thereof (the “Claim
Notice”) and give Indemnitor a copy of such claim, process and all legal
pleadings relating thereto.  Indemnitor shall have the right to
contest and conduct the defense of such action with counsel reasonably
acceptable to Indemnitee by giving written notice to Indemnitee of its election
to do so within ten (10) business days of the receipt of the Claim Notice, and
Indemnitee may participate in such defense by counsel of its own choosing at its
own expense.  If Indemnitee shall be required by final judgment not
subject to appeal or by a settlement agreement to pay any amount in respect of
any obligation or liability against which Indemnitor has agreed to indemnify
Indemnitee under this Agreement, such amount plus all reasonable expenses
incurred by such Indemnitee in accordance with such obligation or liability
(including, without limitation, reasonable attorneys' fees (other than fees
incurred by counsel to Indemnitee employed pursuant to the immediately preceding
sentence) and costs of investigation) shall be promptly paid by Indemnitor to
Indemnitee, subject to reasonable documentation.  Indemnitee shall not
settle or compromise any claim, action or proceeding without the prior written
consent of Indemnitor, which shall not be unreasonably
withheld.  Failure of Indemnitee to give the Claim Notice to
Indemnitor within the ten (10) business-day period required hereunder shall not
affect Indemnitee's rights to indemnification hereunder, except and only to the
extent that Indemnitor incurs additional expenses or Indemnitor's defense of
such claim is actually prejudiced by reason of such failure to give timely
notice.

     

    8.4   Direct
Claims. With
respect to claims other than third-party claims, Indemnitee shall use reasonable
efforts promptly to notify Indemnitor of such claims, but failure of Indemnitee
so to give notice to Indemnitor shall not affect the rights of Indemnitee to
indemnification hereunder, except and only to the extent that Indemnitor incurs
additional expenses or Indemnitor is actually prejudiced by reason of such
failure to give timely notice.

     

    ARTICLE IX

     

    DEFINITIONS

     

    9.1   Defined
Terms.  As used herein,
the following terms shall have the following meanings:

     

    “Code”
means the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.

     

    “Contract”
means any indenture, lease, sublease, license, loan agreement, mortgage, note,
indenture, restriction, will, trust, commitment, obligation or other contract,
agreement or instrument, whether written or oral, express or
implied.

     

    “Governmental
Authority” means any nation or government, any state, regional, local or
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

     

    
      
        
        

      

      
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    “Lien”
means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).

     

    “Person”
means an individual, partnership, corporation, business trust, joint stock
company, estate, trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.

     

    “Intellectual
Property” means all Patents, Copyrights, Trademarks, Trade Secrets,
business plans, marketing plans, supplier or customer lists, forecasts,
processes, formulas, data, algorithms, techniques, diagrams, drawings, artwork,
designs, product specifications, engineering, manufacturing and testing
techniques or procedures, inspection procedures, technical developments, ideas
and know-how, whether or not subject to Patent, Trademark, Trade Secret,
Copyright, moral rights or mask work protection and whether or not reduced to
practice, and other intellectual property and proprietary rights of Seller,
developed for or acquired in connection with the Business, and all documentation
and files relating to such intellectual property.

     

    ARTICLE X

     

    TERMINATION

     

    10.1   Termination.  This Agreement
may be terminated at any time prior to the Closing Date:  (a) by
mutual written consent of all of the parties hereto at any time prior to the
Closing; or (b) by Buyer in the event of a material breach by Seller of any
provision of this Agreement; or (c) by Seller in the event of a material breach
by Buyer of any provision of this Agreement; or (d) by either Buyer or Seller if
the Closing shall not have occurred by November 30, 2009.

     

    10.2   Effect of
Termination.  Except for the
provisions of Article
III and Article
VI, which shall survive any termination of this Agreement, in the event
of termination of this Agreement pursuant to Section 10.1, this
Agreement shall forthwith become void and of no further force and effect and the
parties hereto shall be released from any and all obligations hereunder; provided, however, that nothing
herein shall relieve any party from liability for the willful breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.

     

    
      
        
        

      

      
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    ARTICLE XI

     

    GENERAL
PROVISIONS

     

    11.01   Notices.  All notices,
requests, demands, claims, and other communications hereunder shall be in
writing and shall be delivered by certified or registered mail (first class
postage pre-paid), guaranteed overnight delivery, or facsimile transmission if
such transmission is confirmed by delivery by certified or registered mail
(first class postage pre-paid) or guaranteed overnight delivery, to the
following addresses and facsimile numbers (or to such other addresses or
facsimile numbers which such party shall designate in writing to the other
party):

     

    if to
Buyer:

     

    Reed’s
Inc.

    13000
South Spring St.

    Los
Angeles, California

    


    if to
Seller:

     

    Sonoma
Cider Mill

    347
A  Healdsburg Avenue,

    Healdsburg,
California 95448

    Attention:
David Cordtz

    Facsimile:  (707)
431-8414

    


    Notice
shall be deemed given on the date sent if sent by facsimile transmission and on
the date delivered (or the date of refusal of delivery) if sent by overnight
delivery or certified or registered mail.

     

    11.02   Entire
Agreement; No Third Party Beneficiaries.  This Agreement
(including the exhibits and schedules attached hereto) and other documents
delivered at the Closing pursuant hereto, contain the entire understanding of
the parties hereto in respect of its subject matter and supersede all prior
agreements and understandings (oral or written) between or among the parties
hereto with respect to such subject matter.  The parties agree that
prior drafts of this Agreement shall not be deemed to provide any evidence as to
the meaning of any provision hereof or the intent of the parties hereto with
respect thereto.  The exhibits and schedules attached hereto
constitute a part hereof as though set forth in full above.  This
Agreement is not intended to confer upon any Person, other than the parties
hereto, any rights or remedies hereunder.

     

    11.03   Expenses.  Except as
otherwise provided herein, the parties shall pay their own fees and expenses,
including their own counsel fees, incurred in connection with this Agreement or
any transaction contemplated hereby.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    11.04   Amendment;
Waiver; Binding Effect; Assignment.  This Agreement
may not be modified, amended, supplemented, canceled or discharged, except by
written instrument executed the parties.  No failure to exercise, and
no delay in exercising, any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege.  The rights and obligations of this Agreement shall bind
and inure to the benefit of the parties and their respective successors and
assigns.  Except as expressly provided herein, the rights and
obligations of this Agreement may not be assigned by Seller without the prior
written consent of Buyer.

     

    11.05   Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one and the same
instrument.  A facsimile signature of any party shall be considered to
have the same binding legal effect as an original signature.

     

    11.06   Governing
Law; Venue; Waiver of Jury Trial.  ( note
arbitration clause in Los Angeles here)   This Agreement shall be
construed in accordance with and governed for all purposes by the laws of the
State of California applicable to contracts executed and to be wholly performed
within such State.  Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this agreement may be
brought against any of the parties hereto in the courts of the State of
California, or in any United States District Court for the Central District of
California if it has or can acquire jurisdiction, and each of the parties hereto
consents to the jurisdiction of such courts and of the appropriate appellate
courts in any such action or proceeding and waives any objection to venue laid
therein.  Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the
world.  Each of the parties hereto waives any defense of inconvenient
forum to the maintenance of any action or proceeding so
brought.  Nothing in this Section 11.06
shall affect the right of any party hereto to serve legal process in any other
manner permitted by law or at equity.  A final judgment in any action
or proceeding so brought shall be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law or at equity.  EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     

    11.07   Severability.  If any word,
phrase, sentence, clause, section, subsection or provision of this Agreement as
applied to any party or to any circumstance is adjudged by a court to be invalid
or unenforceable, the same will in no way affect any other circumstance or the
validity or enforceability of any other word, phrase, sentence, clause, section,
subsection or provision of this Agreement.  If any provision of this
Agreement, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties hereto agree
that the court making such determination shall have the power to reduce the
duration or area of such provision, or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced.

     

    11.08   Arm’s
Length Negotiations.  Each party hereto
expressly represents and warrants to all other parties hereto that (a) before
executing this Agreement, said party has fully informed itself of the terms,
contents, conditions and effects of this Agreement; (b) said party has relied
solely and completely upon its own judgment in executing this Agreement; (c)
said party has had the opportunity to seek and has obtained the advice of
counsel before executing this Agreement; (d) said party has acted voluntarily
and of its own free will in executing this Agreement; (e) said party is not
acting under duress, whether economic or physical, in executing this Agreement;
and (f) this Agreement is the result of arm’s length negotiations conducted by
and among the parties and their respective counsel.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    11.09   Construction.  The parties
hereto agree and acknowledge that they have jointly participated in the
negotiation and drafting of this Agreement.  In the event of an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumptions or burdens
of proof shall arise favoring any party by virtue of the authorship of any of
the provisions of this Agreement.  Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.  If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.  The mere listing
(or inclusion of copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein (unless the
representation or warranty relates solely to the existence of the document or
other items itself).

     

    11.10   Non-Competition. Seller and its
directors, officers, and shareholders, individually at Closing shall agree that
each shall not, and will not, for a period of two (2) consecutive years after
Closing, directly or indirectly, engage in a competitive business with Buyer
regarding the Assets and in the manufacturing, marketing and sale of any 750 ml
celebratory, sparkling fruit juice beverages marketed by Buyer in a worldwide
geographical locale, provided that Buyer is not in default under any terms of
the Agreement; nor aid or assist anyone else, except the Buyer, to do so within
these limits; nor have any interest, directly or indirectly, in such business,
excepting as a employee of Buyer.  The parties shall execute a
Non-Competition Agreement, in the form attached hereto Exhibit
D.

     

    11.11   Operations
Prior to Closing.  Seller hereby agrees, form the date of
execution of this agreement to Closing, to carry its business activities and
operations diligently in substantially the same manner as has been customary in
the past.

     

    11.12   Loss/Damage.  In
the event there is any loss or damage to the Assets at the time prior to
Closing, the risk of loss shall be upon the Seller.  From Closing and
thereafter, all risk of loss or damage shall be upon the Buyer.

     

    11.13   Confidentiality.  Buyer
agrees the Buyer will, and will cause its officers, directors and employees and
other representative to, hold in strict confidence any information obtained in
connection with this Agreement or the transactions contemplated by the Agreement
unless and until that information is or becomes publicly available, except
insofar as this information may be required by law or regulation to be included
in a public report or otherwise disclosed.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    11.14   Standstill
Provision. From date of full
execution hereof through date of Closing(or notification of failure of a
contingency), Seller shall not directly or indirectly offer, solicit or receive
offers, promote or market Company for sale, exchange, acquisition of other
disposition.

     

    11.15   Arbitration.  Any
controversy arising from this agreement or its breach shall be determined by one
arbitrator mutually acceptable to the parties to this agreement or by three
arbitrators appointed as set out below:

     

    A.    Within ten
(10) days after a notice by any party (the “claimant”) to the other requesting
arbitration and stating the basis of the claimant's claim, one arbitrator shall
be appointed by the claimant and one by the other party.  Notices of
the appointment shall be given by each to the other when made.

     

    B.    The two
arbitrators shall immediately and in any event within ten (10) days of their
appointment choose a third arbitrator to act with them.  If a party
fails to select an arbitrator within the time allowed or if the two arbitrators
fail to select a third arbitrator within ten (10) days after their appointment,
on application by any party the additional arbitrator shall be promptly
appointed by the then presiding judge of the Superior Court of the judicial
district in which Corporation has its principal place of business, acting as an
individual.  The party making the application shall give the other
party ten (10) days prior notice of the application.

     

    C.    The
arbitration shall be conducted under Code of Civil Procedure section 1280
through 1294.2.  Hearings shall be held in city of the principal place
of business of the Corporation.

     

    D.    The decision
of the arbitrator(s) shall be final and binding between the parties, and a
judgment containing the decision of the arbitrator(s) may be obtained from a
court having jurisdiction on application by either party hereto.

     

    E.    The losing
party in the arbitration, as determined by the arbitrator(s), shall be
responsible for all costs of arbitration.

    


    [signature
page follows]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN WITNESS HEREOF, the parties
hereto have caused this Asset Purchase Agreement to be duly executed and
delivered as of the day and year first written above.

     

     

    
      	 	
              SONOMA CIDER MILL, INC.

              


              By: 
      /s/ David H.
      Cordtz                                       

              Name:  David
      H. Cordtz

              Title:   
      CEO

              


              REED’S
      INC.

               

              By: 
      /s/ Chris
      Reed                                        

              Name:  Chris
      Reed

              Title:    President

            


    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    


    LIST OF EXHIBITS AND
SCHEDULES

     

     

    EXHIBIT
A       FORM OF
ASSIGNMENT AND BILL OF SALE

    


    EXHIBIT
B       BUYER
CORPORATE RESOLUTION

    


    EXHIBIT
C       SELLER
CORPORATE RESOLUTION

    


    EXHIBIT
D       NON-COMPETITION
AGREEMENT

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
EXHIBIT
A TO ASSET PURCHASE AGREEMENT

     

    ASSIGNMENT AND BILL OF
SALE

    


    SONOMA
CIDER MILL, INC., a California corporation (“Seller”), for good
and valuable consideration, the receipt and sufficiency of which is
acknowledged, hereby assigns, delivers and sells to Reed’s Inc. (“Buyer”) all Seller’s
right, interest and title in and to the Acquired Assets as defined in Article I
of the Asset Purchase Agreement dated as of October 19, 2009 between Seller and
Buyer as follows:

     

    (a)   Sonoma Sparkler
Brand.  The Sonoma Sparkler label, Sonoma Sparkler formulas for
all 6 flavors on the market, including, (i) the right to use, copy, modify,
exploit, license, assign, convey and pledge the Intellectual Property Rights;
(ii) the right to exclude others from using the Intellectual Property
Rights; (iii) the right, where applicable, to create derivatives of the
Intellectual Property Rights and retain full ownership thereof; and
(iv) the right to file and prosecute applications for registration and
renewals thereof, now pending or hereinafter initiated, to protect any rights in
the Intellectual Property Rights;

     

    (a)   Customer list and vendor
contact information;

     

    (b)   Licenses and
Permits.  To the extent assignable, the permits, licenses,
certificates of authority, franchises, accreditations, registrations and other
authorizations issued or used in connection with the Business;

     

    (c)   All
books, files, lists, publications, and other records and data

     

    (e)    All inventory
of Seller relating to the Business.

     

    Seller
confirms that, as of the date hereof and after giving effect to this Bill of
Sale, Buyer shall succeed to all of Seller’s right, title and interest in and to
the Acquired Assets.

     

    This
instrument shall be construed as an assignment and a bill of sale.

     

    IN
WITNESS WHEREOF, this Assignment and Bill of Sale is executed on and shall be
effective as of October 19, 2009.

    
    

     

    
      	 	
              Sonoma
      Cider Mill, Inc.

              


              By: 
      /s/ David
      Cordtz                        

              David
      Cordtz, CEO

            
	 	 
	
              AGREED
      AND ACCEPTED:

              Reed’s
      Inc.

              


              


              By: 
      /s/ Chris
      Reed                               

              Chris
      Reed, President

            	 


    

     

    
      
        
        

      

      
        Exhibit A
- 1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B    BUYER
CORPORATE RESOLUTION

     

    MINUTES
OF A MEETING OF THE BOARD OF DIRECTORS

     

    OF

     

    REED’S,
INC.

    A
Delaware corporation

    


    A meeting
of the Board of Directors of Reed’s, Inc., a Delaware corporation (the
“Corporation”), was held at telephonically at 4:45 pm. on October 16, 2009,
pursuant to notice duly given in accordance with the Bylaws.

     

    Christopher
J. Reed, Chairman of the Board was present and, Mark Harris, Dr. D.S.J.
Muffoletto, N.D., and Judy Holloway Reed were present telephonically,
constituting a quorum of the Directors of the Corporation. Christopher Reed
presided over the meeting as Chairman and James Linesch, chief financial
officer, was invited to serve as Secretary.

     

    APPROVAL OF ASSET PURCHASE
AGREEMENT

    


    WHEREAS; the President and
Chief Financial Officer believe that it is in the best interests of the
Corporation to purchase certain assets from Sonoma Cider Mill, Inc. relating to
their Sonoma Sparkler brand of products.

     

    RESOLVED, that the form, terms
and conditions of the Asset Purchase Agreement dated as of June 1, 2009 between
Sonoma Cider Mill, Inc. and the Corporation be, and the same hereby are approved
in all respects.

     

    Other
Matters

     

    RESOLVED,
that the Chief Executive Officer of the Corporation be, and each hereby is,
authorized in the name and on behalf of the Corporation, to execute, deliver or
file or cause to be executed, delivered or filed, all such other agreements,
undertakings, certificates, documents or instruments or to perform such other
acts as such officer may deem necessary or appropriate in order to effect the
purpose and intent of the foregoing recitals and resolutions;

     

    FURTHER
RESOLVED, that all actions of the officers of the Corporation previously taken
to effect the purpose and intent of the foregoing recitals and resolutions be,
and they hereby are, ratified and approved as valid corporate
action;

    


    There
being no further business to come before the meeting, upon motion duly made and
unanimously carried, the meeting was adjourned.

     

    /s/ James
Linesch                                 

    James
Linesch, Secretary of Meeting

     

    Attest:

    


    /s/
Christopher J.
Reed                        

    Christopher
J. Reed, Chairman

    


    
      
        
        

      

      
        Exhibit B
- 1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C    SELLER
CORPORATE RESOLUTION

     

    Sonoma
Sparkler

    Board
of Directors Meeting

    10/23/09

    Minutes

    


    The
Board of Directors meeting was called ot order at 2:03 pm on October 23,
2009.

    


    Rhe
roll call was taken and the following directors were present via
teleconference:

    


    Bill
Wilber

    Bob
Morgensen

    David
Cordtz

    Ari
Smith Cordtz

    Morgan
Wolaver

    


    The
board reviewed the minutes from the previous meeting of May 12,
2009.  It was moved to approve the minutes as they stand.

    


    Moved
by:    Morgan
Wolaver

    


    Seconded
by:    Bill
Wilber

    


    Passed
unanimously

    


    After
a lengthy discussion, there was a motion to accept the Asset Purchase Agreement
from Reed’s, Inc. dated October 19, 2009.

    


    Moved
by:    Morgan
Wolaver

    


    Seconded
by:    Bob
Morgensen

    


    Passed
unanimously.

    


    A
financial report was given

    


    There
being no further business to come before the meeting, upon duly made, seconded
and unanimously carried, the meeting was declared adjourned at approximately
3:03 pm.

    


    Respectfully
submitted,

    


    /s/
Ari Smith Cordtz      

    Ari
Smith Cordtz

    Corporate
Secretary

     

    
      
        
        

      

      
        Exhibit C
- 1

        
          

        

      

      
        
        

      

    

    
EXHIBIT
D    NON-COMPETITION
AGREEMENT

     

    NON-COMPETITION
AGREEMENT

    


    THIS AGREEMENT, made AS OF
October 19, 2009, between SONOMA CIDER MILL, INC., a California corporation
("Seller"),
and Reed’s Inc, a Delaware Corporation ("Buyer").

     

    NOW THEREFORE, in
consideration of the mutual promises and agreements contained herein, the
receipt and sufficiency of which is hereby acknowledged, it is agreed by the
parties hereto as follows:

     

    1. Seller
this date has sold to Buyer certain assets of Sonoma Cider Mill, Inc.,
(hereinafter “Business”) which is engaged in the manufacture, marketing and sale
of any beverages business.  The purchase price for the Business
includes a substantial amount for the goodwill of such Business, which goodwill
is largely associated with the Seller and which can only be preserved hereafter
by preventing Seller and Individual from engaging in the manufacture, marketing
and sale of any beverages business.  The consideration for the
agreement of Seller hereunder includes a portion for the purchase price for the
Business.  This Non-Competition Agreement is specifically ancillary to
the Asset Purchase Agreement, dated October 19, 2009 (hereinafter “Agreement”),
between the parties herein.

     

    2. As
long as Purchaser is not in default under the Agreement, Seller and Individual
agree not to do any of the following:

     

    (a)
Interfere in any way with any contractual or other business relationships of
Purchaser which exist as of the date hereof;

     

    (b)
Entice or hire the employees hereafter employed by Purchaser; or

     

    (c)
Disclose to any third party or utilize in any way adverse to the Purchaser any
of the proprietary and/or confidential information or any type or nature
included in the Business and transferred to the Purchaser under the Asset
Purchase Agreement between the parties herein.

     

    3. As
long as Purchaser is not in default under the Agreement, for a period of two (2)
years after the date hereof, Seller and Individual agree not to compete with
Purchaser within a worldwide geographical locale of the Business Location or
Purchaser, directly or indirectly, in the manufacture, marketing and sale of
any 750 ml celebratory, sparkling fruit juice beverages or any other
activity competitive with the Business.  For purposes of this
Agreement, direct and indirect competition shall include, but not be limited to,
competition as a sole proprietor, partner, corporate officer, director,
shareholder, employee, agent, independent contractor, trustee, or any other
manner in which the Seller holds any beneficial interest in a competitive
business, derive any income from such business, or provide any service,
including the benefit of its reputation or know-how, to such
business.

     

    
      
        
        

      

      
        Exhibit D
- 1

        
          

        

      

      
        
        

      

    

     

    4. In
the event that any provision of this Agreement is found to be illegal or
unenforceable, such provision shall be severed or modified to the extent
necessary to make it enforceable and as so severed or modified, the remainder of
this Agreement shall remain in full force and effect.

     

    5. The
parties acknowledge that the provisions of this Agreement are essential for the
protection of the Purchaser and that breach or threat of breach of this
Agreement would cause immediate and irreparable damage to Purchaser, for which
monetary relief would be inadequate or impossible to
ascertain.  Accordingly, the parties hereto agree that upon the
existence of any breach or threatened breach hereof, Purchaser may, without
limitation of any other rights, obtain a restraining order, preliminary
injunction or other appropriate form of adequate relief to enforce the
provisions hereof.

     

    6. The
undersigned recognize and agree that this covenant extends in favor of
Purchaser, the Purchaser’s successors and assigns, and in favor of anyone else
to whom Purchaser assigns the rights hereunder.  In such an event the
obligations imposed by this Agreement shall continue in full force and effect
after such assignment in accordance with the terms hereof.

     

    7. All
questions arising hereunder shall be governed by the laws of the State of
California and exclusive jurisdiction shall be in the courts of the State of
California.

     

    
    

     

    
      	
              SELLER:

              Sonoma Cider Mill, Inc. 

               

              By:  /s/ David
      Cordtz                                   

                      David Cordtz, CEO

            	
              PURCHASER:

              Original Beverage Corporation

               

              By:  /s/ Chris
      Reed                                           
      

                      Chris Reed, President
      & CEO

            
	 	 
	
               

               

              /s/ David
      Cordtz                                           

              David
      Cordtz, Individually

            	 


    

     

    
      
        
        

      

      
        Exhibit D
- 2