Document:

Exhibit
      10.1

     

    Nathan’s
      Famous, Inc.

    2001
      Stock Option Plan, as amended

     

    SECTION 1.  
      GENERAL
      PROVISIONS

     

    1.1  
      Name and General Purpose

     

    The
      name
      of this plan is the Nathan’s Famous, Inc. 2001 Stock Option Plan
      (hereinafter called the “Plan”). The Plan is intended to be a broadly-based
      incentive plan which enables Nathan’s Famous, Inc. (the “Company”) and its
      subsidiaries and affiliates to foster and promote the interests of the Company
      by attracting and retaining officers, directors and employees of, and
      consultants to, the Company who contribute to the Company’s success by their
      ability, ingenuity and industry, to enable such officers, directors, employees
      and consultants to participate in the long-term success and growth of the
      Company by giving them a proprietary interest in the Company and to provide
      incentive compensation opportunities competitive with those of competing
      corporations.

     

    1.2  
      Definitions

     

    
      	
            	a.	
              “Affiliate”
                means any person or entity controlled by or under common control
                with the
                Company, by virtue of the ownership of voting securities, by contract
                or
                otherwise.

            

      	 	 	 

      	 	b.   	“Board”
              means the Board of Directors of the
              Company.

      	 	 	 

      	 	c.	“Change
              in Control”
              means a change of control of the Company, or in any person directly
              or
              indirectly controlling the Company, which shall
              mean:

      	 	 	 

      	 	 	(a)  a change in control as such term is
              presently defined in Regulation 240.12b-(2) under the Securities
              Exchange Act of 1934, as amended (the “Exchange Act”);
              or

      	 	 	 

      	 	 	(b)  if any “person” (as such term is
              used in Section 13(d) and 14(d) of the Exchange Act) other than
              the Company or any “person” who on the date of this Agreement is a
              director or officer of the Company, becomes the “beneficial owner” (as
              defined in Rule 13(d)-3 under the Exchange Act) directly or
              indirectly, of securities of the Company representing twenty percent
              (20%)
              or more of the voting power of the Company’s then outstanding securities;
              or

      	 	 	 

      	 	 	(c)  if during any period of two
              (2) consecutive years during the term of this Plan, individuals who
              at the beginning of such period constitute the Board of Directors,
              cease
              for any reason to constitute at least a majority
              thereof.

      	 	 	 

      	 	d.	“Committee”
              means the Committee referred to in Section 1.3 of the
              Plan.

      	 	 	 

      	 	e. 	“Common
              Stock”
              means shares of the Common Stock, par value $.01 per share, of the
              Company.

      	 	 	 

      	 	f.   	“Company”
              means Nathan’s Famous, Inc., a corporation organized under the laws
              of the State of Delaware (or any successor
              corporation).

      	 	 	 

      	 	g.	“Fair
              Market Value”
              means the market price of the Common Stock on the Nasdaq Stock Market
              on
              the date of the grant or on any other date on which the Common Stock
              is to
              be valued hereunder. If no sale shall have been reported on the Nasdaq
              Stock Market on such date, Fair Market Value shall be determined by
              the
              Committee.

      	 	 	 

      	 	h. 	 “Non-Employee
              Director”
              shall have the meaning set forth in Rule 16(b) promulgated by the
              Securities and Exchange Commission (“Commission”), or any successor
              provision.

      	 	 	 

      	 	i. 	“Option”
              means any option to purchase Common Stock under Section 2 of the
              Plan.

      	 	 	 

      	 	j.     	“Option
              Agreement”
              means the option agreement described in Section 2.4 of the
              Plan.

      	 	 	 

      	 	k.      	“Participant”
              means any officer, director, employee or consultant of the Company,
              a
              Subsidiary or an Affiliate who is selected by the Committee to participate
              in the Plan.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	l.	
              “Subsidiary”
                means any corporation in which the Company possesses directly or
                indirectly 50% or more of the combined voting power of all classes
                of
                stock of such corporation.

            

      	 	 	 

      	 	m.	“Total
              Disability”
              means accidental bodily injury or sickness which wholly and continuously
              disabled an optionee. The Committee, whose decisions shall be final,
              shall
              make a determination of Total
              Disability.

    

     

    1.3  
      Administration of the Plan

     

    The
      Plan
      shall be administered by the Board or by the Committee appointed by the Board
      consisting of two or more members of the Board all of whom shall be Non-Employee
      Directors. The Committee shall serve at the pleasure of the Board and shall
      have
      such powers as the Board may, from time to time, confer upon it.

     

    Subject
      to this Section 1.3, the Committee shall have sole and complete authority
      to adopt, alter, amend or revoke such administrative rules, guidelines and
      practices governing the operation of the Plan as it shall, from time to time,
      deem advisable, and to interpret the terms and provisions of the Plan; provided,
      that the foregoing shall not be construed to permit the Committee to amend
      the
      restriction on Option repricing contained in Section 1.10(b)
      hereof.

     

    The
      Committee shall keep minutes of its meetings and of action taken by it without
      a
      meeting. A majority of the Committee shall constitute a quorum, and the acts
      of
      a majority of the members present at any meeting at which a quorum is present,
      or acts approved in writing by all of the members of the Committee without
      a
      meeting, shall constitute the acts of the Committee.

     

    1.4  
      Eligibility

     

    Stock
      Options may be granted only to officers, directors, employees or consultants
      of
      the Company or a Subsidiary or Affiliate. All employees are eligible to receive
      Stock Options under the Plan. Any person who has been granted any Option may,
      if
      he is otherwise eligible, be granted an additional Option or
      Options.

     

    1.5  
      Shares

     

    The
      aggregate number of shares reserved for issuance pursuant to the Plan shall
      be
      625,000 shares of Common Stock, or the number and kind of shares of stock or
      other securities which shall be substituted for such shares or to which such
      shares shall be adjusted as provided in Section 1.6. No individual may be
      granted options to purchase more than an aggregate of 125,000 shares of Common
      Stock pursuant to the Plan.

     

    Such
      number of shares may be set aside out of the authorized but unissued shares
      of
      Common Stock or out of issued shares of Common Stock acquired for and held
      in
      the Treasury of the Company, not reserved for any other purpose. Shares subject
      to, but not sold or issued under, any Option terminating or expiring for any
      reason prior to its exercise in full will again be available for Options
      thereafter granted during the balance of the term of the Plan.

     

    1.6  
      Adjustments Due to Stock Splits, Mergers, Consolidation,
      Etc.

     

    If,
      at
      any time, the Company shall take any action, whether by stock dividend, stock
      split, combination of shares or otherwise, which results in a proportionate
      increase or decrease in the number of shares of Common
      Stock theretofore issued and outstanding, the number of shares which are
      reserved for issuance under the Plan and the number of shares which, at such
      time, are subject to Options shall, to the extent deemed appropriate by the
      Committee, be increased or decreased in the same proportion, provided, however,
      that the Company shall not be obligated to issue fractional shares.

     

    Likewise,
      in the event of any change in the outstanding shares of Common Stock by reason
      of any recapitalization, merger, consolidation, reorganization, combination
      or
      exchange of shares or other corporate change, the Committee shall make such
      substitution or adjustments, if any, as it deems to be appropriate, as to the
      number or kind of shares of Common Stock or other securities which are reserved
      for issuance under the Plan and the number of shares or other securities which,
      at such time are subject to Options.

     

    In
      the
      event of a Change in Control, at the option of the Board or Committee,
      (a) all Options outstanding on the date of such Change in Control shall
      become immediately and fully exercisable, and (b) an optionee will be
      permitted to surrender for cancellation any Option or portion of an Option
      which
      was granted more than six (6) months prior to the date of such surrender,
      to the extent not yet exercised, and to receive a cash payment in an amount
      equal to the excess, if any, of the Fair Market Value (on the date of surrender)
      of the shares of Common Stock subject to the Option or portion thereof
      surrendered, over the aggregate purchase price for such Shares under the
      Option.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.7  
      Non-Alienation of Benefits

     

    Except
      as
      herein specifically provided, no right or unpaid benefit under the Plan shall
      be
      subject to alienation, assignment, pledge or charge and any attempt to alienate,
      assign, pledge or charge the same shall be void. If any Participant or other
      person entitled to benefits hereunder should attempt to alienate, assign, pledge
      or charge any benefit hereunder, then such benefit shall, in the discretion
      of
      the Committee, cease.

     

    1.8  
      Withholding
      or Deduction for Taxes

     

    If,
      at
      any time, the Company or any Subsidiary or Affiliate is required, under
      applicable laws and regulations, to withhold, or to make any deduction for
      any
      taxes, or take any other action in connection with any Option exercise, the
      Participant shall be required to pay to the Company or such Subsidiary or
      Affiliate, the amount of any taxes required to be withheld, or, in lieu thereof,
      at the option of the Company, the Company or such Subsidiary or Affiliate may
      accept a sufficient number of shares of Common Stock to cover the amount
      required to be withheld.

     

    1.9  
      Administrative
      Expenses

     

    The
      entire expense of administering the Plan shall be borne by the
      Company.

     

    1.10  
      General
      Conditions

     

    
      	
            	a.	
              The
                Board or the Committee may, from time to time, amend, suspend or
                terminate
                any or all of the provisions of the Plan, provided that, without
                the
                Participant’s approval, no change may be made which would alter or impair
                any right theretofore granted to any Participant; provide further,
                that
                the foregoing shall not be construed to permit the Committee to amend
                the
                restriction on Option repricing contained in Section 1.10(b)
                hereof.

            

      	 	 	 

      	 	b.  	With the consent of the Participant
              affected
              thereby, the Committee may amend or modify any outstanding Option in
              any
              manner not inconsistent with the terms of the Plan, including, without
              limitation, and irrespective of the provisions of Section 2.3(c)
              below, to accelerate the date or dates as of which an installment of
              an
              Option becomes exercisable; provided, that the Committee shall not
              have
              the right to reprice any outstanding Options.

      	 	 	 

      	 	c.	Nothing contained in the Plan shall
              prohibit
              the Company or any Subsidiary or Affiliate from establishing other
              additional incentive compensation arrangements for employees of the
              Company or such Subsidiary or Affiliate.

      	 	 	 

      	 	d.	Nothing in the Plan shall be deemed
              to limit,
              in any way, the right of the Company or any Subsidiary or Affiliate
              to
              terminate a Participant’s employment or service with the Company (or such
              Subsidiary or Affiliate) at any time.

      	 	 	 

      	 	e.	Any decision or action taken by the
              Board or
              the Committee arising out of or in connection with the construction,
              administration, interpretation and effect of the Plan shall be conclusive
              and binding upon all Participants and any person claiming under or
              through
              any Participant.

      	 	 	 

      	 	f.	No member of the Board or of the Committee
              shall be liable for any act or action, whether of commission or omission,
              (i) by such member except in circumstances involving actual bad
              faith, nor (ii) by any other member or by any officer, agent or
              employee.

    

     

    1.11  
      Compliance
      with Applicable Law

     

    Notwithstanding
      any other provision of the Plan, the Company shall not be obligated to issue
      any
      shares of Common Stock, or grant any Option  with respect thereto, unless
      it is advised by counsel of its selection  that it may do so without
      violation of the applicable Federal and State laws pertaining to the issuance
      of
      securities and the Company may require any stock certificate so issued to bear
      a
      legend, may give its transfer agent instructions limiting the transfer thereof,
      and may take such other steps, as in its judgment are reasonably required to
      prevent any such violation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.12  
      Effective
      Dates

     

    The
      Plan
      was adopted by the Board on June 14, 2001, subject to stockholder approval.
      The Plan shall terminate on June 13, 2011.

     

    Section 2.
      OPTION
      GRANTS

     

    2.1         
      Authority
      of Committee

     

    Subject
      to the provisions of the Plan, the Committee shall have the sole and complete
      authority to determine (i) the Participants to whom Options shall be
      granted; (ii) the number of shares to be covered by each Option; and
      (iii) the conditions and limitations, if any, in addition to those set
      forth in Sections 2 and 3 hereof, applicable to the exercise of an Option,
      including without limitation, the nature and duration of  the restrictions,
      if any, to be imposed upon the sale or other disposition of shares acquired
      upon
      exercise of an Option.

     

    Stock
      Options granted under the Plan shall be non-qualified stock
      options.

     

    The
      Committee shall have the authority to grant Options.

     

    2.2         
      Option
      Exercise Price

     

    The
      exercise price set forth in the Option Agreement at the time of grant shall
      not
      be less than the Fair Market Value of the Common Stock at the time that the
      Option is granted.

     

    The
      consideration to be paid for the Shares to be issued upon exercise of an Option
      may consist of (i) cash, (ii) check, (iii) other shares of the
      Company’s Common Stock which have a Fair Market Value on the date of surrender
      equal to the aggregate exercise price of the Shares as to which said Option
      shall be exercised, or (iv) consideration received by the Company under any
      cashless exercise program implemented by the Company in connection with the
      Plan. Stock certificates  will be delivered only against such
      payment.

     

    2.3         
      Option
      Grants

     

    Each
      Option will be subject to the following provisions:

     

    a.   
      Term
      of Option

     

    An
      Option
      will be for a term of not more than five years from the date of
      grant.

     

    b.   
      Exercise

     

    (i)         
      By
      an
      Employee:

     

    Unless
      otherwise provided by the Committee and except in the manner described below
      upon the death of  the optionee, an Option may be exercised only in
      installments as follows:  up to one-half of the subject shares on and after
      the first anniversary of the date of grant, up to all of the subject shares
      on
      and after the second such anniversary of the date of the grant of such
      Option  but in no event later than the expiration of the term of the
      Option.

     

    An
      Option
      shall be exercisable during the optionee’s lifetime only by the optionee and
      shall not be exercisable by the optionee unless, at all times since the date
      of
      grant and at the time of exercise, such optionee is an employee of or providing
      services to the Company, any parent corporation of the Company or any Subsidiary
      or Affiliate, except that, upon termination of all such employment or provision
      of services (other than by death, Total Disability, or by Total Disability
      followed by death in the circumstances provided below), the optionee may
      exercise an Option at any time within three months thereafter but only to the
      extent such Option is exercisable on the date of such termination.

     

    Upon
      termination of all such employment by Total Disability, the optionee may
      exercise such Options at any time within one year thereafter, but only to the
      extent such Option is exercisable on the date of such termination.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      the
      event of the death of an optionee (i) while an employee of or providing
      services to the Company, any parent corporation of the Company or any Subsidiary
      or Affiliate, or (ii) within three months after termination of all such
      employment or provision of services (other than for Total Disability) or
      (iii) within one year after termination on account  of Total
      Disability of all such employment or provision of services, such optionee’s
      estate or any person who acquires the right to exercise such option by bequest
      or inheritance or by reason of the death of the optionee may exercise such
      optionee’s Option at any time within the period of two years from the date of
      death. In the case of clauses (i) and (iii) above, such Option shall
      be exercisable in full for all the remaining shares covered thereby, but in
      the
      case of clause (ii) such Option shall be exercisable only to the extent it
      was exercisable on the date of such termination of employment or
      service.

     

    (ii)       
      By
      Persons other than Employees:

     

    If
      the
      optionee is not an employee of the Company or the parent corporation of the
      Company or any Subsidiary or Affiliate, the vesting of such optionee’s right to
      exercise his Options shall be established and determined by the Committee in
      the
      Option Agreement covering the Options granted to such optionee.

     

    Notwithstanding
      the foregoing provisions regarding the exercise of an Option in the event of
      death, Total Disability, other termination of employment or provision of
      services or otherwise, in no event shall an Option be exercisable in whole
      or in
      part after the termination date provided in the Option Agreement.

     

    c.         Transferability

     

    An
      Option
      granted under the Plan shall not be transferable otherwise than by will or
      by
      the laws of descent and distribution, or as may be permitted by the Board or
      the
      Committee.

     

    2.4         
      Agreements

     

    In
      consideration of any Options granted to a Participant  under the Plan, each
      such Participant shall enter into an Option Agreement with the Company
      providing, consistent with the Plan, such terms as the Committee may deem
      advisable.THIS
      WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
      THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS
      NOT
      REQUIRED.

     

    Warrant
      No. A - __

     

     

    June
      15, 2007

     

    REED’S,
      INC.

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    ****
      __________ Shares of Common Stock****

     

     

    THIS
      WARRANT CERTIFIES THAT, for value received, _____________, or registered assigns
      (the “Holder”),
      is
      entitled to subscribe for and purchase from Reed’s, Inc., a Delaware corporation
      (the “Company”),
      up to
      and including the number of fully paid and nonassessable shares of common stock,
      par value $0.0001 per share (the “Common
      Stock”)
      of the
      Company set forth above, at the exercise price of $7.50 per share ( the
“Warrant
      Exercise Price”)
      (and
      as adjusted from time to time pursuant to Section 3 hereof), at any time or
      from
      time to time from the date first set forth above (the “Issue
      Date”)
      and
      prior to or upon June 15, 2012 (the “Expiration
      Date”),
      subject to the provisions and upon the terms and conditions hereinafter set
      forth:

     

    1. Method
      of Exercise; Cash Payment; Issuance of New Warrant.
      Subject
      to the provisions of this Warrant, the purchase right represented by this
      Warrant may be exercised by the Holder hereof, in whole or in part and from
      time
      to time, at the election of the Holder hereof, by the surrender of this Warrant
      (with the notice of exercise substantially in the form attached hereto as
Exhibit A
      duly
      completed and executed) at the principal executive offices of the Company and
      accompanied by payment to the Company, by (a) certified or bank check acceptable
      to the Company, (b) cancellation by the Holder of indebtedness of the Company
      to
      the Holder, if agreed to in advance in writing by the Company in the Company’s
      sole and absolute discretion, or (c) by wire transfer to an account designated
      by the Company, or any combination of (a), (b) and (c), of an amount equal
      to
      the then applicable Warrant Exercise Price multiplied by the number of Warrant
      Shares then being purchased; or

     

    The
      person or persons in whose name(s) any certificate(s) representing the shares
      of
      the Company’s capital stock to be issued upon exercise of this Warrant (the
“Warrant
      Shares”)
      shall
      be deemed to have become the holder(s) of record of, and shall be treated for
      all purposes as the record holder(s) of, the shares represented thereby (and
      such shares shall be deemed to have been issued) immediately prior to the close
      of business on the date or dates upon which this Warrant is exercised. In the
      event of any exercise of the rights represented by this Warrant, certificates
      for the Warrant Shares so purchased shall be delivered to the Holder hereof
      as
      soon as possible and in any event within 20 days after such exercise and, unless
      this Warrant has been fully exercised or expired, a new warrant having the
      same
      terms as this Warrant and representing the remaining portion of such shares,
      if
      any, with respect to which this Warrant shall not then have
      been

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    exercised
      shall also be issued to the Holder hereof as soon as possible and in any event
      within such 20-day period.

     

    2. Reservation
      of Shares.
      During
      the period within which the rights represented by this Warrant may be exercised,
      the Company will at all times have authorized, and reserved for the purpose
      of
      the issuance upon exercise of the purchase rights evidenced by this Warrant
      a
      sufficient number of shares of its capital stock to provide for the exercise
      of
      the rights represented by this Warrant.

     

    3. Adjustment
      of Warrant Exercise Price and Number of Shares.
      The
      number and kind of securities purchasable upon the exercise of this Warrant
      and
      the Warrant Exercise Price shall be subject to adjustment to the nearest whole
      share (one-half and greater being rounded upward) and nearest cent (one-half
      cent and greater being rounded upward) from time to time upon the occurrence
      of
      certain events, as follows. Each of the adjustments provided by the
      subsections below shall be deemed separate adjustments and any adjustment
      of this Warrant pursuant to one subsection of this Section 3 shall preclude
      additional adjustments for the same event or transaction by the remaining
      subsections.

     

    (a) Reclassification.
      In case
      of any reclassification or change of securities of the class issuable upon
      exercise of this Warrant (other than a change in par value, or from par value
      to
      no par value, or from no par value to par value, or as a result of a subdivision
      or combination) into the same or a different number or class of securities,
      the
      Company shall duly execute and deliver to the Holder of this Warrant a new
      warrant (in form and substance reasonably satisfactory to the Holder of this
      Warrant), so that the Holder of this Warrant shall thereafter be entitled to
      receive upon exercise of this Warrant, at a total purchase price not to exceed
      that payable upon the exercise of the unexercised portion of this Warrant,
      and
      in lieu of the shares of Common Stock theretofore issuable upon exercise of
      this
      Warrant, the kind and amount of shares of stock, other securities, money and
      property receivable upon such reclassification or change by a holder of the
      number of shares then purchasable under this Warrant. The Company shall deliver
      such new warrant as soon as possible and in any event within 20 days after
      such
      reclassification or change. Such new warrant shall provide for adjustments
      that
      shall be as nearly equivalent as may be practicable to the adjustments provided
      for in this Section 3. The provisions of this subparagraph (a) shall similarly
      apply to successive reclassifications or changes.

     

    (b) Stock
      Splits or Combination of Shares.
      If the
      Company at any time while this Warrant remains outstanding and unexpired shall
      subdivide (by stock split) or combine (by reverse stock split) its outstanding
      shares of capital stock of the class into which this Warrant is exercisable,
      the
      Warrant Exercise Price shall be proportionately decreased in the case of a
      subdivision or increased in the case of a combination, effective at the close
      of
      business on the date the subdivision or combination becomes effective and the
      number of shares of Common Stock issuable upon exercise of this Warrant shall
      be
      proportionately increased in the case of a subdivision or decreased in the
      case
      of a combination, and in each case to the nearest whole share, effective at
      the
      close of business on the date the subdivision or combination becomes effective.
      The provisions of this subparagraph (b) shall similarly apply to successive
      subdivisions or combinations of outstanding shares of capital stock into which
      this Warrant is exercisable.

     

    (c) Common
      Stock Dividends.
      If the
      Company at any time while this Warrant is outstanding and unexpired shall pay
      a
      dividend with respect to Common Stock payable in Common Stock, then (i) the
      Warrant Exercise Price shall be adjusted, from and after the date of
      determination of stockholders entitled to receive such dividend or distribution
      (the “Record
      Date”),
      to
      that price determined by multiplying the Warrant Exercise Price in effect
      immediately prior to such date of determination by a fraction (A) the numerator
      of which shall be the total number of shares of Common Stock outstanding
      immediately prior to such dividend or distribution, and (B) the denominator
      of
      which shall be the total number of shares of Common Stock outstanding
      immediately after such dividend or distribution and (ii) the number of shares
      of

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    Common
      Stock issuable upon exercise of this Warrant shall be proportionately adjusted,
      to the nearest whole share, from and after the Record Date by multiplying the
      number of shares of Common Stock purchasable hereunder immediately prior to
      such
      Record Date by a fraction (A) the numerator of which shall be the total number
      of shares of Common Stock outstanding immediately after such dividend or
      distribution, and (B) the denominator of which shall be the total number of
      shares of Common Stock outstanding immediately prior to such dividend or
      distribution. The provisions of this subparagraph (c) shall similarly apply
      to
      successive Common Stock dividends by the Company.

     

    4. Notice
      of Adjustments.
      Whenever the Warrant Exercise Price or the number of shares of Common Stock
      purchasable hereunder shall be adjusted pursuant to Section 3 above, the Company
      shall deliver a written notice, setting forth, in reasonable detail, the event
      requiring the adjustment, the amount of the adjustment, the method by which
      such
      adjustment was calculated, and the Warrant Exercise Price and the number of
      shares of Common Stock purchasable hereunder after giving effect to such
      adjustment, and shall use commercially reasonable efforts to cause copies of
      such notice to be delivered to the Holder of this Warrant within twenty (20)
      days after the occurrence of the event resulting in such adjustment at such
      Holder’s last known address in accordance with Section 10 hereof.

     

    5. Fractional
      Shares.
      No
      fractional shares will be issued in connection with any exercise hereunder,
      but
      in lieu of such fractional shares, the number of shares of Common Stock to
      be
      issued shall be rounded up to the nearest whole number.

     

    6. Compliance
      with Securities Act of 1933; Transfer of Warrant or Shares.

     

    (a) Compliance
      with Securities Act of 1933.
      The
      Holder of this Warrant, by acceptance hereof, agrees that this Warrant, the
      Warrant Shares and the capital stock issuable upon conversion of the Warrant
      Shares (collectively, the “Securities”)
      are
      being acquired for investment and that such holder will not offer, sell,
      transfer or otherwise dispose of the Securities except under circumstances
      which
      will not result in a violation of the Securities Act of 1933, as amended (the
      “Securities
      Act”)
      and
      any applicable state securities laws. Upon exercise of this Warrant, unless
      the
      Warrant Shares being acquired are registered under the Securities Act and any
      applicable state securities laws or an exemption from such registration is
      available, the Holder hereof shall confirm in writing that the Warrant Shares
      so
      purchased are being acquired for investment and not with a view toward
      distribution or resale in violation of the Securities Act and shall confirm
      such
      other matters related thereto as may be reasonably requested by the Company.
      The
      Warrant Shares (unless registered under the Securities Act and any applicable
      state securities laws) shall be stamped or imprinted with a legend in
      substantially the following form:

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE “ACT”).
      THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
      OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
      AN
      OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS
      NOT
      REQUIRED.

     

    Such
      legend shall be removed by the Company, upon the request of a Holder, at such
      time as the restrictions on the transfer of the applicable security shall have
      terminated.

     

    (b) Transferability
      of the Warrant.
      Subject
      to compliance with Section 6(c) below, which provisions are intended to ensure
      compliance with applicable federal and states securities laws, the Securities
      may be transferred by the Holder hereof, in whole or in part and from time
      to
      time.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (c) Method
      of Transfer.
      With
      respect to any offer, sale, transfer or other disposition of the Securities,
      the
      Holder hereof shall prior to such offer, sale, transfer or other
      disposition:

     

    (i) surrender
      this Warrant or certificate representing Warrant Shares at the principal
      executive offices of the Company or provide evidence reasonably satisfactory
      to
      the Company of the loss, theft or destruction of this Warrant or certificate
      representing Warrant Shares and an indemnity agreement reasonable satisfactory
      to the Company,

     

    (ii) pay
      any
      applicable transfer taxes or establish
      to the satisfaction of the Company that such taxes have been paid,

     

    (iii) deliver
      a
      written assignment to the Company in substantially the form attached hereto
      as
Exhibit
      B
      or
      appropriate stock power duly completed and executed prior to transfer,
      describing briefly the manner thereof, and

     

    (iv) deliver
      a
      written opinion of such Holder’s counsel, or other evidence, if reasonably
      requested by the Company, to the effect that such offer, sale, transfer or
      other
      disposition may be effected without registration or qualification (under the
      Securities Act as then in effect and any applicable state securities law then
      in
      effect) of the Securities.

     

    As
      soon
      as reasonably practicable after receiving the items set forth above, the Company
      shall notify the Holder that it may sell, transfer or otherwise dispose of
      the
      Securities, all in accordance with the terms of the notice delivered to the
      Company. If a determination has been made pursuant to this Section 6(c) that
      the
      opinion of counsel for the Holder or other evidence is not reasonably
      satisfactory to the Company, the Company shall so notify the Holder promptly
      with details of such determination. Notwithstanding the foregoing, the
      Securities may, as to such federal laws, be offered, sold or otherwise disposed
      of in accordance with Rule 144 under the Securities Act if the Company satisfied
      the provisions thereof and provided that the Holder shall furnish such
      information as the Company may reasonably request to provide a reasonable
      assurance that the provisions of Rule 144 have been satisfied. Each certificate
      representing this Warrant or Warrant Shares thus transferred (except a transfer
      pursuant to Rule 144 or an effective registration statement) shall bear a legend
      as to the applicable restrictions on transferability in order to ensure
      compliance with applicable federal and state securities laws, unless in the
      aforesaid opinion of counsel to the Holder and to the reasonable satisfaction
      of
      the Company, such legend is not required in order to ensure compliance with
      such
      laws. Upon
      any
      partial transfer of this Warrant, the Company will issue and deliver to such
      new
      holder a new
      warrant (in form and substance similar to this Warrant) with
      respect to the portion transferred and will issue and deliver to the Holder
      a
new
      warrant (in form and substance similar to this Warrant) with
      respect to the portion not transferred as
      soon
      as possible and in any event within 20 days after such transfer.

     

    7. No
      Rights as Shareholders; Information.
      Prior
      to exercise of this Warrant, the Holder of this Warrant, as such, shall not
      be
      entitled to vote the Warrant Shares or receive dividends on or be deemed the
      holder of such shares, nor shall anything contained herein be construed to
      confer upon the Holder of this Warrant, as such, any of the rights of a
      shareholder of the Company or any right to vote for the election of directors
      or
      upon any matter submitted to shareholders at any meeting thereof, or to receive
      notice of meetings, or to receive dividends or subscription rights or otherwise
      until this Warrant shall have been exercised and the shares of Common Stock
      purchasable upon the exercise hereof shall have become deliverable, as provided
      herein.

     

    8. Call
      Option.
      At any
      time that the Closing Sale Price of the Common Stock shall equal or exceed
      $10.00 per share (and as adjusted from time to time pursuant to Section 3
      hereof) for a period of ten

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    consecutive
      trading days, and provided that a registration statement covering the Warrant
      Shares is available for the resale of the related Warrant Shares during such
      ten
      trading day period, the Company shall have the right, upon twenty days written
      notice to the Holders, to call the Warrants for cancellation in whole. Unless
      on
      or prior to the expiration of such twenty day period, a Holder exercises its
      right to purchase any of the Warrant Shares covered by the Warrant pursuant
      to
      the terms of this Warrant, such Holder shall forfeit its right to do so, and
      the
      Warrants not so exercised shall automatically expire without any consideration
      to the Holder or any further action by the Holder or the Company and the
      Warrants shall be canceled on the books and records of the Company.

     

    For
      purposes of this Section 8, the “Closing
      Sale Price”
of
      one
      share of Common Stock as of a particular date (the “Determination
      Date”)
      shall
      be the average of the closing price quoted on any national securities exchange
      on which such securities are listed or the closing sale prices of the Common
      Stock quoted in the Over-The-Counter Market Summary, whichever is applicable,
      for the five consecutive trading days immediately prior to the Determination
      Date (or, if no sales take place on any such trading day, the average of the
      closing bid and asked prices on such trading day).

     

    9. Modification
      and Waiver; Effect of Amendment or Waiver.
      This
      Warrant and any provision hereof may be modified, amended, waived, discharged
      or
      terminated only by an instrument in writing, designated as an amendment to
      this
      Warrant and executed by a duly authorized officer of the Company and the Holder
      of this Warrant. Any waiver or amendment effected in accordance with this
      Section 9 shall be binding upon the Holder, each future holder of this Warrant
      or of any shares purchased under this Warrant (including securities into which
      such shares have been converted) and the Company.

     

    10. Notices.
      Any
      notice, request, communication or other document required or permitted to be
      given or delivered to the Holder hereof or the Company shall be delivered by
      personal delivery, or shall be sent by certified United States mail, first-class
      postage prepaid or by overnight delivery using a nationally recognized courier
      service, to each such holder at its address as shown on the books of the Company
      or to the Company at the address indicated on the signature page of this
      Warrant. All such notices, requests, communications or other documents shall
      be
      deemed to have been received by the recipient (i) in the case of personal
      delivery, on the date of such delivery, (ii) in the case of delivery by a
      nationally recognized courier service, on the next business day subsequent
      to
      deposit with the courier and (iii) in the case of mailing, on the fourth
      business day following the date of deposit in the United States mails,
      first-class postage prepaid. 

     

    11. Successors.
      The
      obligations of the Company relating to the Warrant Shares shall inure to the
      benefit of the successors and assigns of the Holder hereof and shall be binding
      upon any successor entity whether upon a Change of Control or sale of all or
      substantially all of the assets of the Company. Upon such event, the successor
      entity shall assume the obligations of this Warrant, and this Warrant (or any
      substitute warrant as provided hereinbefore) shall be exercisable for the
      securities, cash and property of the successor entity on the terms provided
      herein.

     

    12. Lost
      Warrants or Stock Certificates.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant or any stock certificate and, in
      the
      case of any such loss, theft or destruction, upon receipt of an indemnity
      agreement reasonably satisfactory to the Company, or in the case of any such
      mutilation upon surrender and cancellation of such mutilated Warrant or stock
      certificate, the Company will issue and deliver a new warrant (containing the
      same terms as this Warrant) or stock certificate, in lieu of the lost, stolen,
      destroyed or mutilated Warrant or stock certificate.

     

    13. Descriptive
      Headings.
      The
      descriptive headings of the several paragraphs of this Warrant are inserted
      for
      convenience only and do not constitute a part of this Warrant. The language
      in
      this Warrant shall be construed as to its fair meaning without regard to which
      party drafted this Warrant.

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    14. Governing
      Law.
      This
      Warrant shall be construed and enforced in accordance with, and the rights
      of
      the parties shall be governed by, the laws of the State of Delaware, without
      reference to principles governing choice or conflicts of laws.

     

    15. Entire
      Agreement.
      This
      Warrant constitutes the full and entire understanding and agreement between
      the
      parties with regard to the subject matter hereof and supersedes all prior and
      contemporaneous agreements, representations, and undertakings of the parties,
      whether oral or written, with respect to such subject matter. 

     

    16. No
      Impairment.
      The
      Company will not, by an voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms to be observed or performed under this
      Warrant by the Company, but will at all times in good faith assist in carrying
      out all the provisions of this Warrant and in the taking of all such actions
      as
      may be necessary or appropriate in order to protect the rights of the Holder
      of
      this Warrant against impairment.

     

    17. Issue
      Taxes.
      The
      Company shall pay any and all issue and other taxes payable in respect of any
      issue or delivery of Common Stock upon the exercise of this Warrant that may
      be
      imposed under the laws of the United States of America or by any state,
      political subdivision or taxing authority of the United States of America;
      provided,
      however,
      that
      the Company shall not be required
      to pay any tax or taxes that may be payable in respect of any transfer involved
      in the issue or delivery of any Warrant or certificates for Common
      Stock in
      a name
      other than that of the registered holder of such Warrant, and no such issue
      or
      delivery shall be made unless and until the person or entity requesting the
      issuance thereof shall have paid to the Company the amount of such tax or shall
      have established to the satisfaction of the Company that such tax has been
      paid.

     

    18. Severability.
      In the
      event that any one or more of the provisions contained in this Warrant shall
      for
      any reason be held to be invalid, illegal or unenforceable in any respect,
      such
      provision(s) shall be ineffective only to the extent of such invalidity,
      illegality or unenforceability, without invalidating the remainder of such
      provision or the remaining provisions of this Warrant and such invalidity,
      illegality or unenforceability shall not affect any other provision of this
      Warrant, which shall remain in full force and effect.

     

    19. Survival
      of Representations, Warranties and Agreements.
      All
      representations and warranties of the Company and the Holder hereof shall
      survive the Issue Date of this Warrant, the exercise or conversion of this
      Warrant (or any part hereof) or the termination or expiration of rights
      hereunder. All agreements of the Company and the Holder hereof contained herein
      shall survive indefinitely, until by their respective terms, they are no longer
      operative.

     

    20. Counterparts.
      This
      Warrant may be executed in two or more counterparts, each of which shall be
      an
      original, and all of which together shall constitute one
      instrument.

     

     

    [REMAINDER
      OF THIS PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Warrant to be duly executed as of the issue
      date
      of this Warrant by its duly authorized officers.

    

    

    REED’S,
      INC.

    a
      Delaware corporation

     

    By: ________________________________

    Name: Christopher
      J. Reed

    Title: Chief
      Executive Officer

    

    

    

    

     

    

    
      
        
          SIGNATURE
            PAGE TO WARRANT TO PURCHASE COMMON STOCK

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    EXHIBIT
      A

     

    NOTICE
      OF EXERCISE

     

    To:
      REED’S, INC. (the “Company”)

     

    1. The
      undersigned hereby:

     

    
      	 	o	
              elects
                to purchase __________ shares of Common Stock of the Company pursuant
                to
                the terms of the attached Warrant, and tenders herewith payment of
                the
                purchase price of such shares in
                full.

            

    

     

    2. Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name or names as are specified below:

     

    _________________________________________

    (Name)

     

    _________________________________________

    (Address)

     

    _________________________________________

    (City,
      State)

    

     

    3. The
      undersigned represents that the aforesaid shares being acquired for the account
      of the undersigned for investment and not with a view to, or for resale in
      connection with, the distribution thereof and that the undersigned has no
      present intention of distributing or reselling such shares, all except as in
      compliance with applicable securities laws, and that the undersigned is an
      “accredited investor” within the meaning of Rule 501 of Regulation D promulgated
      under the Securities Act of 1933, as amended.

     

    _______________

    (Date)

    __________________________________________

    (Signature)

    

    
      	
              NOTICE:
                Signature
                must be guaranteed by a commercial bank or trust company or a member
                firm
                of a major stock exchange if shares of capital stock are to be issued,
                or
                securities are to be delivered, other than to or in the name of the
                registered holder of this Warrant. In addition, signature must correspond
                in all respects with the name as written upon the face of the Warrant
                in
                every particular without alteration or any change
                whatever.

            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    FORM
      OF ASSIGNMENT

    

     

    FOR
      VALUE RECEIVED,
      the
      undersigned holder of the attached Warrant hereby sells, assigns and transfers
      unto _______________________ whose address is
      _______________________________________ and whose taxpayer identification number
      is _________________the undersigned’s right, title and interest in and to the
      Warrant issued by Reed’s, Inc., a Delaware corporation (the “Company”)
      to
      purchase _______ shares of the Company’s Common Stock, and does hereby
      irrevocably constitute and appoint __________________________ attorney to
      transfer said Warrant on the books of the Company with full power of
      substitution in the premises.

     

    In
      connection with such sale, assignment, transfer or other disposition of this
      Warrant, the undersigned hereby confirms that:

     

    
      	 	o	
              such
                sale, transfer or other disposition may be effected without registration
                or qualification (under the Securities Act as then in effect and
                any
                applicable state securities law then in effect) of this Warrant or
                the
                shares of capital stock of the Company issuable thereunder and has
                attached hereto a written opinion of the undersigned’s counsel to that
                effect; or

            

    

     

    
      	 	o	
              such
                sale, transfer or other disposition has been registered under the
                Securities Act of 1933, as amended, and registered and/or qualified
                under
                all applicable state securities
                laws.

            

    

    

     

    _______________

    (Date)

     

    __________________________________________

    (Signature)

    

    
      	
              NOTICE:
                Signature
                must correspond in all respects with the name as written upon the
                face of
                the Warrant in every particular without alteration or any change
                whatever.

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