Document:

TRANSITION
SERVICES AGREEMENT

 

This
TRANSITION SERVICES AGREEMENT (this “Agreement”), is entered into on December 31, 2018 (the “Effective
Date”) by and between Reed’s, Inc., a Delaware corporation (“Reed’s”) and California
Custom Beverage, LLC (“CCB”).

 

RECITALS

 

Reed’s
and CCB have entered into that certain Asset Purchase Agreement of even date herewith (the “APA”, all terms
not defined herein shall have the meanings set forth in the APA) for the purchase of the Purchased Assets. The parties anticipate
that Reed’s will need to provide transitional services involving the seconding of employees, insurance coverage and other
potential services.

 

AGREEMENT

 

Now,
therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.
Provision of Services. During the period beginning on the Effective Date and expiring upon January 31, 2019 (the “Service
Period”), Reed’s agrees to provide to CCB all of the services set forth in Schedule 1 attached hereto in
accordance with the terms and conditions of this Agreement (collectively, the “Services”). The Services shall
be provided at cost on a pro-rata basis and shall be promptly reimbursed by CCB upon the five (5) business day anniversary of
the delivery of documented evidence of such costs. Except as explicitly agreed by the parties in writing, Reed’s shall have
no obligation to provide the Services after the expiration of the Service Period.

 

2.
Standard of Performance. Reed’s covenants and agrees that: (a) it will use its commercially reasonable efforts to
cause such Services to be performed in a manner consistent with how Reed’s or Reed’s service providers would perform
such Services for Reed’s; (b) it will maintain, in its reasonable discretion and subject to the availability of the Leased
Employees (as defined below), sufficient resources to perform its obligations pursuant to this Agreement; and (e) it will cause
such Services to be performed in a manner that complies with all applicable statutes, regulations, rules, ordinances, orders,
or other actions of any governmental authority, that are applicable to such Services.

 

3.
Employee Leasing Services. To facilitate the provision of the Services and assist in the transition of the Business to
CCB, Reed’s will provide to CCB the full business time services of the employees identified on Schedule 7.2 of the APA
(such employees, collectively referred to herein as the “Leased Employees”). During the provision of the
Services, Reed’s shall (a) use its reasonable efforts to cause each of the Leased Employees or a replacement thereof to
continue to be employed by Reed’s, provided that any such replacement shall be capable of performing the functions assigned
to the portion of the original Leased Employee, and such replacement shall possess the knowledge and skill set required to perform
the Services and (b) direct each of the Leased Employees to comply with the directives and instructions of CCB in the performance
of the functions assigned to them by CCB solely in connection with the provision of the Services.

 

4.
Cooperation; Access. The parties shall cooperate with each other in good faith to effectuate the orderly transition of
responsibility for the Services from Reed’s to CCB.

 

    	 	1	 

    	 

    

 

5.
Relationship of Parties. Each party is an independent contractor of the other party with respect to the provision of Services
hereunder, and neither Reed’s nor CCB shall be considered or deemed to be an agent, employee, joint venturer or partner
of the other parties hereto, and no other relationship is intended or created by and between Reed’s and CCB. In no event
shall any employees of Reed’s or CCB providing the Services be deemed employees of another party during the Service Period.
Reed’s shall be solely responsible for all costs and expenses attributable to providing the Services.

 

6.
Amendments. This Agreement may be amended and any provision of this Agreement may be waived only in a writing executed
by the party against whom such waiver or amendment is sought to be enforced.

 

7.
Entire Agreement. This Agreement, the schedules hereto and the APA contain the entire understanding of the parties relating
to the subject matter hereof and supersede all prior written or oral and all contemporaneous oral agreements and understandings
relating to the subject matter hereof.

 

8.
Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed
by and construed in accordance with the domestic laws of the State of California, without giving effect to any choice of law or
conflict of law provision (whether of the State of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.

 

9.
Counterparts; Delivery by Facsimile. This Agreement may be executed in two (2) or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered by
facsimile, electronic mail (including any electronic signature complying with the U.S. Federal E-SIGN Act of 2000, or by PDF)
or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.

 

The
parties have duly executed this Transition Services Agreement as of the date first above written.

 

	 	REED’S,
    INC.
	 	 	 
	 	By:	/s/
    Iris Snyder 
	 	 	Iris
    Snyder, Chief Financial Officer
	 	 	 
	 	California
    custom beverage, llc
	 	 	 
	 	By:
    	/s/
    Chris Reed 
	 	 	Chris
    Reed, CEO

 

    	 	2	 

    	 

    

 

Schedule
1 – Services

 

Continued
coverage under that certain Commercial General Liability insurance policy held by Reed’s as of the date hereof.

 

Additional
services as requested in writing such as electrical power supply, water supply, etc.

 

    	 	3REFERRAL
AGREEMENT

 

This
Referral Agreement (“Agreement”), made effective as of December 31, 2018 (the “Effective Date”),
grants Reed’s Inc., a Delaware corporation (“Referral Partner”) the right to refer to California Custom
Beverage, LLC, a Delaware limited liability company (the “Company”), qualifying new customers (“Prospects”)
for the purchase of private label beverage products directly from Company in exchange for a referral commission fee, as set forth
below.

 

RECITALS

 

WHEREAS,
the Company and Referral Partner are parties to that certain Asset Purchase Agreement dated as of the date hereof (the “APA”)
for the Company to purchase the assets of the Referral Partner related to the manufacturing and production of private label beverages
(the “Transaction”);

 

WHEREAS,
after the Transaction, Referral Partner may refer Prospects to the Company based on the terms and conditions set forth in this
Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:

 

1.
Obligations.

 

1.1
Marketing Efforts. Under this Agreement, Referral Partner is not required to and will not promote and market the Company’s
private label beverage products (the “Products”). Referral Partner may however, in the ordinary course of Referral
Partner’s own business, identify and refer Prospect leads on behalf of the Company.

 

1.2
Marketing Practices. Referral Partner will (i) conduct business in a manner that reflects favorably at all times on the
Products and the good name, goodwill, and reputation of the Company, (ii) strictly avoid any and all deceptive, misleading, illegal,
immoral or unethical practices that are or might be detrimental to the Company, the Products, or the public, including but not
limited to, disparagement of the Company or the Products, (iii) make no false or misleading representation with respect to the
Products, (iv) not publish or use any advertising material on behalf of the Company, and (v) make no representations with respect
to the Products that are inconsistent with the literature distributed by the Company, including all warranties and disclaimers
contained in such literature.

 

2.
Referral Eligibility.

 

2.1
Referral of Referral Partner’s Existing Customers. For Prospects that were customers of Referral Partner on or before
the Effective Date, Referral Partner shall be entitled to compensation as set forth in Section 3 below but only for products previously
sold to such existing customers by Referral Partner (i.e., before the Effective Date). Referral Partner shall not be require to
take any action to assist with selling products to existing customers on Company’s behalf.

 

    	 	 	 

    	 

    

 

2.2
Referral of Referral Partner’s New Customers. For Prospects that were not customers of Referral Partner on or before
the Effective Date, Referral Partner will notify Company of Prospects by: (i) completing a form substantially similar to the Prospect
Registration Form annexed hereto as Exhibit A; and (ii) submitting it to a designated officer from Company, as set forth
in Exhibit B, via e-mail. In order to qualify for payment of the Compensation specified in Section 3, Referral Partner
must actually facilitate a meeting between Company and the Prospect or a decision maker of the Prospect, and Prospect must deliver
a valid and binding purchase order for Products (a “Commitment”) within one year following the submission by
Referral Partner of a valid Prospect Registration Form listing such Prospect. Upon receipt of such form, Company will validate
said Prospect by determining that either of the following criteria are met: (a) the Prospect has not been in contact with Company
during preceding eighteen (18) months; or (b) the Prospect was in previous contact with Company during preceding eighteen (18)
months, but the Prospect and Company decided not to subsequently undertake negotiations for the purpose of executing a Commitment.
In the event that Company refuses to validate any Prospect for any reason, Company will provide written notification to Referral
Partner to such effect and include with such notification the basis for such non-validation. If Company does not validate a Commitment
and/ or provide written notification to Referral Partner of validation or non-validation, Commission Fee will accrue to benefit
of Referral Partner.

 

3.
Compensation. Referral Partner shall receive five percent (5%) of the Gross Revenue (as defined below) from a Commitment,
for a period commencing sixty (60) days after the date the Company first invoices such Prospect for Products and expiring on the
three (3) year anniversary of such effective date (the “Commission Fee”). Except as set forth herein, “Gross
Revenue” shall mean gross revenue having the meaning accorded to such term for purposes of Generally Accepted Accounting
Principles (GAAP), consistently applied. Within ten (10) days after the end of each calendar month, the Company shall pay the
Commission Fee for such previous calendar month, if any, to Referral Partner. If requested by Referral Partner in writing, Company
shall deliver a written commission report which reasonably details how the Commission Fee was calculated for such previous calendar
month. Commission Fees remitted to Referral Partner on orders subsequently charged back to the Company for Prospects 90 days or
more past due will be set off against monthly Commission Fee payments to Referral Partner.

 

4.
Non-Exclusivity. Nothing in this Agreement will be construed as limiting in any manner Company’s marketing or representation
activities or its appointment of other referral partners or agents anywhere in the world.

 

5.
Term and Termination.

 

5.1
Unless terminated earlier as provided herein, this Agreement will have an initial term of three (3) years from the Effective Date
of this Agreement.

 

5.2
This Agreement may be terminated by either party for cause immediately upon the occurrence of any of the following events:

 

(i)
If the other party breaches any provision of this Agreement and fails to cure such breach within thirty (30) days of written notice
describing the breach; or

 

(ii)
If the other will seek protection under any bankruptcy, receivership, trust deed, creditors arrangement, composition or comparable
proceeding, or if any such proceeding is instituted against the other (and not dismissed within one hundred twenty (120) days).

 

    	 	2	 

    	 

    

 

5.3
Upon termination of this Agreement by either party (i) all rights of Referral Partner hereunder will terminate; (ii) Referral
Partner will immediately discontinue making all representations or statements from which it might be inferred that any relationship
exists between Referral Partner and Company; (iii) Partner will immediately return to Company all Confidential Information, catalogues
and literature in its possession, custody or control in whichever form held (including all copies or embodiments thereof) and
will cease using any trademarks, service marks and other designations of Company; (iv) Partner agrees not to act in any way to
damage the reputation or goodwill of Company or the Products; (v) the provisions of Sections 3, 4, 6, 7, 8, 11 and 12 will remain
in effect; and the provisions of Section 7 will remain in effect until the second year anniversary of the date of termination.

 

6.
Taxes. Referral Partner shall be responsible for payment of all taxes to which the Commission Fee is subject. Referral
Partner agrees to indemnify and hold Company harmless against any taxes, including penalties, duties and interest levied by any
government on the Commission Fee.

 

7.
Confidential Information.

 

7.1
Definition of Confidential Information. The parties anticipate that Company may disclose Confidential Information to Referral
Partner. For purposes hereof, “Confidential Information” means any information, technical data or know-how
(whether disclosed before or after the date of this Agreement), including, but not limited to, information relating to business
and product or service plans, financial projections, customer lists, business forecasts, sales and merchandising, human resources,
patents, patent applications, computer object or source code, research, inventions, processes, designs, drawings, engineering,
costs, pricing, marketing plans and other confidential or proprietary or which information would, under the circumstances, appear
to a reasonable person to be confidential or proprietary. Confidential Information does not include information, technical data
or know-how that: (i) is in the possession of Referral Partner at the time of disclosure, as shown by Referral Partner’s
files and records immediately prior to the time of disclosure; or (ii) becomes part of the public knowledge or literature, not
as a direct or indirect result of any improper inaction or action of the Referral Partner. Notwithstanding the foregoing, Referral
Partner may disclose Confidential Information with the prior written approval of the Company or pursuant to the order or requirement
of a court, administrative agency or other governmental body. Without limiting the foregoing, the terms and conditions of this
Agreement is the Confidential Information of both parties.

 

7.2
Confidentiality Obligations. Referral Partner will not use Company’s Confidential Information, except as necessary
for the performance of this Agreement, and will not disclose such Confidential Information to any third party, except to those
that need to know such Confidential Information for the performance of this Agreement, provided that each such person is subject
to a written agreement that includes binding use and disclosure restrictions that are at least as protective as those set forth
herein. Referral Partner will use all reasonable efforts to maintain the confidentiality of Company’s Confidential Information
in its possession or control, but in no event less than the efforts that it ordinarily uses with respect to its own confidential
information of similar nature and importance.

 

8.
Use of Trademark. The Referral Partner may make use of Company’s trademarks for the sole purpose of promoting the
Products. Any such use shall be in accordance with the Company’s trademark policies. It is expressly understood that this
Agreement does not grant the Referral Partner any interest in the Company’s trademarks or any other intellectual property
rights.

 

    	 	3	 

    	 

    

 

9.
Independent Contractor. Referral Partner’s relationship with Company will be that of an independent contractor and
not that of an employee. Referral Partner will not be eligible for any employee benefits, nor will Company make deductions from
payments made to Referral Partner for employment or income taxes, all of which will be Referral Partner’s responsibility.
Referral Partner will have no authority to enter into contracts that bind Company or create obligations on the part of Company
without the prior written authorization of Company.

 

10.
No Conflicts. Referral Partner represents that Referral Partner’s compliance with the terms of this Agreement will
not violate any duty which Referral Partner may have to any other person or entity (such as a present or former employer), and
Referral Partner agrees that Referral Partner will not do anything in the performance of this Agreement that would violate any
such duty. In addition, Referral Partner agrees that, during the term of this Agreement, Referral Partner shall promptly notify
the Company in writing of any direct competitor of the Company which Referral Partner is also offering the Products. It is understood
that in such event, the Company will review whether Referral Partner’s activities are consistent with Referral Partner remaining
as a Referral Partner of the Company.

 

11.
Limited Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE)
OR OTHERWISE, FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST SAVINGS, LOST PROFIT OR BUSINESS INTERRUPTION
EVEN IF COMPANY IS NOTIFIED IN ADVANCE OF SUCH POSSIBILITY) ARISING OUT OF OR PERTAINING TO THE SUBJECT MATTER OF THIS AGREEMENT.

 

12.
General Provisions

 

12.1
Waiver. The failure or forbearance of Referral Partner or Company to enforce any right or claim against the other party
shall not be deemed to be a waiver by Referral Partner or Company of such right or claim or any other right or claim hereunder.
The waiver by Referral Partner or Company of a breach hereof shall not operate or be construed as a waiver of any subsequent breaches
of the same or any other provision.

 

12.2
Force Majeure. Neither party shall be responsible for failure or delay in performing its obligation under this Agreement
if the failure or delay is due, directly or indirectly, to any law or any governmental rule, order or regulation, or to any embargo,
strike or other labor trouble, or to war or riot, or to fire, storm or weather condition, or to the failure or delay of carriers
in transporting any item or of suppliers in furnishing any item, or to any other cause beyond the control of the parties. Where
the force majeure does arise and continues for more than thirty (30) days, either party shall be entitled to terminate the agreement
in whole or in part by a providing written notice to the other party, with a full refund of all related payments.

 

12.3
Severability. If any provision hereof is determined in any proceeding binding upon the parties hereto to be invalid or
unenforceable, that provision shall be deemed severed from the remainder of the Agreement, and the remaining provisions of the
Agreement shall continue in full force and effect.

 

    	 	4	 

    	 

    

 

12.4
Applicable Law and Venue. This Agreement shall be governed and construed in all respects in accordance with the laws of
the State of California, without regard to its conflict of laws principles.

 

12.5
Press Releases. Referral Partner shall not release any news release, public announcement, advertisement or other publicity
concerning this Agreement, a referral or any Commitment without obtaining the prior written approval of the Company, which shall
not be unreasonably withheld or delayed; provided however, the terms of this Agreement and copy of this Agreement will be disclosed
by Referral Partner in its filings with the Securities Exchange Commission without prior approval of the Company

 

12.6
Equitable Relief. Each party acknowledges that a violation of this Agreement by the other party may cause irreparable harm
to such party and that the party may have no adequate remedy at law. Accordingly, each party agrees that the other party shall
have the right, in addition to any other rights and remedies it may have, at law, in equity or otherwise, to seek injunctive relief
in any court of competent jurisdiction to restrain any breach or threatened breach of this Agreement or otherwise to specifically
enforce any provision of this Agreement.

 

12.7
Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. Counterparts may be delivered by facsimile, electronic
mail (including any electronic signature complying with the U.S. Federal E-SIGN Act of 2000, or by PDF) or other transmission
method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for
all purposes.

 

12.8
Arbitration. Except for the right of either party to apply to a court of competent jurisdiction for a Temporary Restraining
Order, Preliminary Injunction, or other equitable relief to preserve the status quo or prevent irreparable harm pending the selection
and confirmation of the arbitrator, any and all disputes, controversies, or claims arising out of or relating to this Agreement
or a breach thereof shall be submitted to and finally resolved by arbitration under the rules of the American Arbitration Association
(“AAA”) then in effect. There shall be one arbitrator, and such arbitrator shall be chosen by mutual agreement
of the parties or in accordance with AAA rules. The findings of the arbitrator shall be final and binding on the parties, and
may be entered in any court of competent jurisdiction for enforcement. Legal fees shall be awarded to the prevailing party in
the arbitration.

 

12.9
Assignment. Referral Partner may not transfer or assign its rights hereunder without the prior written consent of the Company.

 

12.10
Entire Agreement. This Agreement, together with all Schedules and Exhibits, constitutes the entire agreement between the
parties with respect to the subject hereof and supersedes all prior proposals, agreements, negotiations, correspondence, demonstrations,
and other communications, whether written or oral, between Referral Partner and Company. No modification or waiver of any provision
hereof shall be effective unless made in writing signed by both Referral Partner and Company.

 

[signature
page to follow]

 

    	 	5	 

    	 

    

 

BY
SIGNING BELOW, BOTH PARTIES ACKNOWLEDGE THEY HAVE READ, UNDERSTAND AND AGREE TO ALL OF THE TERMS AND CONDITIONS HEREIN.

 

Agreed
as of DECEMBER 31, 2018

 

	REFERRAL
    PARTNER:	 
	 	 
	REED’S
    INC.	 
	 	 
	By:	 /s/
    Valentin Stalowir	 
	Name:	Valentin
    Stalowir	 
	Title:	CEO
    	 
	 	 	 
	COMPANY:	 
	 	 
	CALIFORNIA
    CUSTOM BEVERAGE, LLC	 
	 	 
	By:	 /s/
    Chris Reed	 
	Name:	Chris
    Reed	 
	Title:	Chief
    Executive Officer	 

 

    	 	6	 

    	 

    

 

EXHIBIT
A

 

PROSPECT
REGISTRATION FORM

 

1.
Prospect name:

 

2.
Name of Decision Maker affiliated with Prospect, if applicable:

 

3.
Contact information for Prospect and/or Decision Maker:

 

4.
Specific needs for Prospect:

 

5.
Date Decision Maker/Prospect was contacted to confirm interest:

 

    	 	7	 

    	 

    

 

EXHIBIT
B

 

DESIGNATED
OFFICERS

 

	●	Chris
    Reed, Chief Executive Officer

 

    	 	8

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