Document:

ex_96355.htm

Exhibit 4.2

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

HELIOS AND MATHESON ANALYTICS INC.

 

	Warrant Shares:	Date Issued:

              

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Palladium Capital Advisors, LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after six (6) months following the issue date set forth above (the “Initial Exercise Date”) and on or prior to the close of business on the fifth (5th) year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Helios and Matheson Analytics Inc., a Delaware corporation (the “Company”), up to [_________] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated August 16, 2017, among the Company and the buyers signatory thereto.

 

 

 

 

Section 1.     Exercise.

 

(a)     Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise in the form annexed hereto and within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

(b)     Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $[____], subject to adjustment hereunder (the “Exercise Price”).

 

(c)     Cashless Exercise. If at any time after the one year anniversary of the date of the Purchase Agreement, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

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(d)     Mechanics of Exercise.

 

i.     Delivery of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. 

 

ii.     Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.     Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

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iv.     Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.     No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.     Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

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vii.     Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(e)     Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s affiliates (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers, directors and holders of at least 10% of Holder’s outstanding equity interests and voting power are “affiliates” without conceding that any such Persons are “affiliates” for purposes of federal securities laws, “Affiliates”), and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company convertible into or exercisable for Common Stock subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the 1934 Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

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Section 2.     Certain Adjustments.

 

(a)     Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b)     [Reserved]

 

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(c)     Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

(d)     Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

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(e)     Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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(f)     Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

(g)     Notice to Holder.

 

i.     Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.     Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 3.     Transfer of Warrant.

 

(a)     Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

(b)     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

(c)     Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

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(d)     Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Sections 4.1 and 5.7 of the Purchase Agreement.

 

(e)     Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 4.     Miscellaneous.

 

(a)     Call Option. If at any time after the date hereof, (i) the volume weighted average price of the Common Stock for twenty (20) consecutive Trading Days (the “Measurement Period”) is at least equal to one hundred fifty percent 150% of the Exercise Price (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the date hereof), (ii) the average daily volume of the Common Stock for such Measurement Period is at least 10,000 shares of Common Stock per Trading Day (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the date hereof), (iii) the Holder is not in possession of any information that constitutes, or might constitute, material non public information which was provided by the Company, and (iv) there is an effective Registration Statement pursuant to which the Holder is permitted to utilize the prospectus thereunder to resell all of the Warrant Shares, then the Company may, within one (1) Trading Day of the end of such Measurement Period, call for cancellation of all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered. To exercise this right, the Company must deliver to the Holder a written notice (the “Call Notice”), indicating therein the unexercised portion of this Warrant to which such notice applies. Any unexercised portion of this Warrant for which a Notice of Exercise shall not have been received, will be cancelled at 6:30 p.m. (New York City time) on the thirtieth (30th) calendar day after the date of the Call Notice.

 

(b)     No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

(c)     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

11

 

 

(d)     Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading Day.

 

(e)     Authorized Shares. 

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

12

 

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

(f)     Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

(g)     Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

(h)     Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

(i)     Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

(j)     Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

(k)     Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

(l)     Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

13

 

 

(m)     Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

(n)     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

(o)     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

(p)     Originals. A signed copy of this Warrant delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original copy of this Warrant.

 

********************

 

(Signature Page Follows)

 

14

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	
			 

				
			 HELIOS AND MATHESON ANALYTICS INC.

				
			 

			
	 	 	 	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			 

				
			 

			
	
			 

				
			 

				
			Name: Theodore Farnsworth

			Title:    Chief Executive Officer 

				
			 

			

 

 

 

 

NOTICE OF EXERCISE

 

TO: HELIOS AND MATHESON ANALYTICS INC.

 

(1)      The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)      Payment shall take the form of (check applicable box):

 

[ ] in lawful money of the United States; or [ ] [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)      Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

(4)     Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:                                                                                                                                             

 

Signature of Authorized Signatory of Investing Entity:                                                                                             

 

Name of Authorized Signatory:                                                                                                                                    

 

Title of Authorized Signatory:                                                                                                                                      

 

Date:                                                                                                                                                                                

 

 

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	Name: 	 
	 	
			(Please Print)

			
	Address:	 
	 	(Please Print)

 

 

 

Dated:                                                           ,      ,                            

 

Holder’s Signature:                                                                     

Holder’s Address:EMPLOYMENT
AGREEMENT

 

This
Employment Agreement (the “Agreement”) is made and effective as of this October 4, 2017 (the “Effective
Date”) by and between Reed’s, Inc., a Delaware corporation (“Reed’s” or the “Company”),
and Stefan Freeman (the “Executive”).

 

WHEREAS,
Reed’s and the Executive desire to enter into this Agreement to evidence the terms and conditions of the employment of the
Executive by Reed’s.

 

NOW,
THEREFORE, intending to be legally bound and in consideration of the mutual provisions set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

Section
1 Employment. Reed’s hereby employs the Executive and the Executive hereby accepts such employment, in accordance with
the terms and conditions set forth in this Agreement. By executing this Agreement, Executive represents and warrants to Reed’s
that (i) the Executive is entering into this Agreement voluntarily and that his employment hereunder and compliance with the terms
and conditions hereof will not conflict with or result in the breach by him of any agreement to which he is a party or by which
he may be bound; (ii) the Executive has not violated, and in connection with his employment with Reed’s will not violate,
any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer by which he is bound; and (iii)
in connection with his employment with Reed’s, the Executive will not use any confidential or proprietary information he
may have obtained in connection with employment with any prior employer.

 

Section
2 Term. The Executive’s employment (the “Term”) with Reed’s under this Agreement will commence
on the Effective Date and continue until terminated in accordance with Section 6 below. Executive’s employment with the
Company shall be on an “at-will” basis.

 

Section
3 Position. The Executive will be employed as the Chief Operating Officer (“COO”) of Reed’s and will
report to the Chief Executive Officer. The Executive will have the duties and responsibilities customarily attendant to the position
of COO. Executive will also have such other duties and responsibilities that are commensurate with his position as specifically
delegated to him from time to time by the Chief Executive Officer. Executive shall be subject to the Bylaws, policies, practices,
procedures and rules of the Company, currently existing and as may be modified from time to time, including those policies and
procedures set forth in the Company’s Code of Conduct and Ethics. Executive’s principal office, and principal place
of employment, shall be at the Company’s offices, currently in Los Angeles, California, provided that Executive may be required
under business circumstances to travel outside the location of his principal employment in connection with performing his or her
duties under this Agreement.

 

Section
4 Restrictive Covenants; Representations.

 

4.1
Loyal Performance. During the Executive’s employment with Reed’s, the Executive will devote his full business
time and attention to the performance of his duties as COO and will perform his duties and carry out his responsibilities as COO
in a diligent and businesslike manner. Nothing in this Section 4.1, however, will prevent the Executive from engaging in additional
activities in connection with personal investments or from serving in a non-management capacity with any for profit or not for
profit organization that does not conflict with his duties under this Agreement, provided that the Executive shall give the Board
prior notice of his service to any for profit or not for profit organization so that it may review the same for compliance with
the terms of this Agreement.

 

    	 

    	 

    

 

4.2
Confidentiality; Return of Property.

 

(a)
Executive acknowledges that: (i) the Confidential Information (as hereinafter defined) is a valuable, special, and unique asset
of the Company, the unauthorized disclosure or use of which could cause substantial injury and loss of profits and goodwill to
the Company; (ii) Executive is in a position of trust and subject to a duty of loyalty to the Company, and (iii) by reason of
his employment and service to the Company, Executive will have access to the Confidential Information. Executive, therefore, acknowledges
that it is in the Company’s legitimate business interest to restrict Executive’s disclosure or use of Confidential
Information for any purpose other than in connection with Executive’s performance of Executive’s duties for the Company,
and to limit any potential misappropriation of such Confidential Information by Executive. Executive agrees to keep secret and
to treat confidentially all of the Confidential Information (as defined below), and not to, without the express prior written
consent of Reed’s or in connection with the good faith performance of his duties to Reed’s, directly or indirectly,
(i) divulge, disclose or intentionally make accessible any Confidential Information to any other Person (as defined below) or
assist any other Person or entity in improperly using any Confidential Information or (ii) use any Confidential Information for
his own purposes or for the benefit of any other Person (except when required to do so by a court of competent jurisdiction, by
any governmental agency having supervisory authority over the business of Reed’s, or by any administrative body or legislative
body (including a committee thereof) with jurisdiction to order the Executive to divulge, disclose or make accessible such Confidential
Information; provided, however, that, in the event that the Executive is so required to disclose Confidential Information,
the Executive shall, if legally permitted to do so, prior to making any such disclosure, provide Reed’s with prompt written
notice of such requirement so that Reed’s may seek an appropriate protective order); provided, further, that,
during the Employment Period, the Executive may utilize any Confidential Information in the course of performing his services
under this Agreement. All Confidential Information is and shall remain the property of Reed’s. For purposes of this Agreement,
“Person” shall mean an individual, a partnership, a corporation, a limited liability company, an association,
a joint stock company, an estate, a trust, a joint venture, an unincorporated organization or a governmental entity or any department,
agency or political subdivision thereof.

 

(b)
For purposes of this Agreement, “Confidential Information” shall mean any and all proprietary information,
trade secrets, know-how or other information of Reed’s or concerning the affairs of Reed’s (whether tangible or intangible
and whether or not such information is in writing or other physical form), including, but not limited to, data, plans, concepts,
programs, procedures, innovations, inventions, improvements, information regarding customers, financial information, costs, prices,
earnings, systems, sources of supply, marketing, prospective and executed contracts, budgets, business plans and other business
arrangements, information on the performance, identities, capabilities, performance strength and weaknesses, and compensation
arrangements of particular managerial or technical employees of Reed’s; provided, however, that Confidential
Information will not include any information that has been published in a form generally available to the public prior to the
date Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published
merely because individual portions of the information have been separately published, but only if all material features comprising
such information have been published in combination.

 

    	2 

    	 

    

 

(c)
Upon termination of the Executive’s employment, the Executive shall promptly return to Reed’s any car, cell phone,
mobile device, laptop or other property provided to the Executive by Reed’s, and any Confidential Information or proprietary
information of Reed’s that remains in the Executive’s possession (“Reed’s Property”); provided,
however, that nothing in this Agreement or elsewhere shall prevent the Executive from retaining and utilizing documents and
information relating to his personal benefits, entitlements and obligations, documents relating to his personal tax obligations.
If the Executive discovers Reed’s Property in his possession after the termination of his employment he shall notify Reed’s
and promptly either deliver the same to Reed’s or destroy it as directed by Reed’s.

 

4.3
Nonsolicitation. To the full extent permitted by law, the Executive will not directly or indirectly, individually or on
behalf of any person, company, enterprise or entity, or as a sole proprietor, partner, stockholder, director, officer, principal,
agent, executive, or in any other capacity or relationship, during his employment with Reed’s and for a period of six (6)
months thereafter:

 

(a)
encourage, solicit, induce, cause, or in any manner attempt to encourage, solicit, induce or cause any person, firm, corporation,
or other entity or organization which is a client, customer, account, vendor, supplier, distributor, licensee of, or has any business
relationship with, Reed’s or any of its subsidiaries to terminate such relationship with, reduce the amount of business
conducted with, or change in a manner adverse to Reed’s or its subsidiaries; or

 

(b)
encourage, solicit, induce, cause, or in any manner attempt to encourage, solicit, induce or cause, any person employed by or
providing services to Reed’s or its subsidiaries to leave, curtail, or change in a manner adverse to Reed’s, such
employment or service relationship.

 

4.4
Cooperation. The Executive agrees that, following any termination of the Executive’s employment, the Executive will
continue to provide reasonable cooperation to Reed’s and/or any of its subsidiaries and its or their respective counsel
in connection with any investigation, administrative proceeding, or litigation relating to any matter that occurred during the
Executive’s employment in which the Executive was involved or of which the Executive has knowledge. As a condition of such
cooperation, Reed’s shall reimburse the Executive for reasonable out-of-pocket expenses incurred at the request of Reed’s
and shall compensate Executive at a daily rate equal to his daily rate of compensation at the time of termination of his employment.
The Executive also agrees that, in the event that the Executive is subpoenaed by any person or entity (including, but not limited
to, any government agency) to give testimony or provide documents (in a deposition, court proceeding, or otherwise) that in any
way relates to the Executive’s employment by Reed’s, the Executive will, if legally permitted, give prompt notice
of such request to Reed’s and, unless legally required to do so, will make no disclosure until Reed’s subsidiaries
has had a reasonable opportunity to contest the right of the requesting person or entity to such disclosure.

 

    	3 

    	 

    

 

4.5
Property; Inventions and Patents.

 

(a)
Property. Executive agrees that all inventions, innovations, improvements, technical information, systems, software developments,
methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos, products, equipment, and all similar
or related information and materials (whether patentable or unpatentable) (collectively, “Inventions”) which relate
to Reed’s actual or planned business, research and development, or existing or future products or services and which are
conceived, developed, or made by Executive (whether or not during usual business hours and whether or not alone or in conjunction
with any other person) while employed by Reed’s (including those conceived, developed, or made prior to the date of this
Agreement) together with all patent applications, letters patent, trademark, brands, tradename and service mark applications or
registrations, copyrights, and reissues thereof that may be granted for or upon any of the foregoing (collectively referred to
herein as, the “Work Product”), belong in all instances to Reed’s. Executive will promptly disclose such Work
Product to Reed’s and perform all actions reasonably requested by Reed’s (whether during or after the Term) to establish
and confirm Reed’s ownership of such Work Product (including, without limitation, the execution and delivery of assignments,
consents, powers of attorney, and other instruments) and to provide reasonable assistance to Reed’s (whether during or after
the Term) in connection with the prosecution of any applications for patents, trademarks, brands, trade names, service marks,
or reissues thereof or in the prosecution or defense of interferences relating to any Work Product. Executive recognizes and agrees
that the Work Product, to the extent copyrightable, constitutes works for hire under the copyright laws of the United States and
that to the extent Work Product constitutes works for hire, the Work Product is the exclusive property of Reed’s, and all
right, title, and interest in the Work Product vests in Reed’s. To the extent any Work Product is not a work for hire, the
Work Product, and all of Executive’s right, title, and interest in Work Product, including without limitation every priority
right, is hereby assigned to the Company.

 

(b)
Cooperation. Executive shall, during the Term and at any time thereafter, at the expense of Reed’s and with no expense or
potential expense or liability to the Executive, assist and cooperate with the Company in obtaining for the Company the grant
of letters patent, copyrights, and any other intellectual property rights relating to the Work Product in the United States and/or
such other countries as the Company may designate. With respect to Work Product, Executive shall, during the Term and at any time
thereafter, at the expense of Reed’s and with no expense or potential expense or liability to the Executive, execute all
applications, statements, instruments of transfer, assignment, conveyance or confirmation, or other documents, furnish all such
information to the Company and take all such other appropriate lawful actions as the Company requests that are necessary to establish
Reed’s ownership of such Work Product. Executive will not assert or make a claim of ownership of any Work Product, and Executive
will not file any applications for patents or copyright or trademark registration relating to any Work Product, except on behalf
of or as directed by Reed’s.

 

    	4 

    	 

    

 

(c)
No Designation as Inventor; Waiver of Moral Rights. Executive agrees that the Company shall not be required to designate Executive
as the inventor or author of any Work Product. Executive hereby irrevocably and unconditionally waives and releases, to the extent
permitted by applicable law, all of Executive’s rights to such designation and any rights concerning future modifications
to any Work Product. To the extent permitted by applicable law, Executive hereby waives all claims to moral rights in and to any
Work Product.

 

(d)
Pre-Existing and Third Party Materials. Executive will not, in the course of employment with Reed’s, incorporate into or
in any way use in creating any Work Product any pre-existing invention, improvement, development, concept, discovery, works, or
other proprietary right or information owned by Executive or in which Executive has an interest without Reed’s prior written
permission. Executive hereby grants the Company a nonexclusive, royalty-free, fully-paid, perpetual, irrevocable, sublicensable,
worldwide license to make, have made, modify, use, sell, copy, and distribute, and to use or exploit in any way and in any medium,
whether or not now known or existing, such item as part of or in connection with such Work Product. Executive will not incorporate
any invention, improvement, development, concept, discovery, intellectual property, or other proprietary information owned by
any party other than Executive into any Work Product without the Company’s prior written permission.

 

(e)
Attorney-in-Fact. Executive hereby irrevocably designates and appoints Reed’s and its duly authorized officers and agents
as Executive’s agent and attorney-in-fact, to act for and on Executive’s behalf to execute and file any such applications
and to do all other lawfully permitted acts as contemplated by this Section 4 above to further the prosecution and issuance of
patents, copyright, trademark, and mask work registrations with the same legal force and effect as if executed by Executive, if
Reed’s is unable because of Executive’s unavailability, dissolution, mental or physical incapacity, or for any other
reason, to secure Executive’s signature for the purpose of applying for or pursuing any application for any United States
or foreign patents or mask work or copyright or trademark registrations covering the Work Product owned by Reed’s pursuant
to this Section.

 

Section
5 Compensation.

 

5.1
Base Salary. The Executive will be paid a base salary at the initial rate of $225,000.00 per year (the “Base Salary”).
Base Salary shall be subject to annual review for additional increase, but not decrease, in the sole discretion of the Board.
The Base Salary will be payable in equal periodic installments in accordance with Reed’s customary payroll practices.

 

5.2
Bonus. In addition to the Base Salary, the Executive will be eligible to receive an annual or other periodic bonus for
each partial or full calendar year (which may, to the extent not relating to achievement of a specific objective established by
the Board in consultation with the Executive as provided below, be pro-rated for partial calendar years) included in the Term
at a target amount equal to 30% of then current Base Salary payable and based upon performance criteria to be established by the
Board in consultation with the Executive which are anticipated to consist of specific objectives for which specified portions
of Bonus will be payable upon achievement and any remainder discretionary based on individual and Company performance as determined
by the Board ( “Bonus”). Except as otherwise provided herein, in order to be eligible to receive the Bonus,
the Executive must be employed at the time of achievement of the specific objective relating thereto. Any portion of Bonus relating
to achievement of a specific objective will be paid upon or as soon as practicable after achievement of that objective and all
Bonus payments will in any event be paid not later March 15 of the calendar year following the full or partial calendar year to
which they relate. The Board and the Executive will consult in good faith to establish the Bonus criteria for each full or partial
year included in the Term starting with the Effective Date and with the commencement of each calendar year included in the Term
commencing after the Effective Date.

 

    	5 

    	 

    

 

5.3
Benefits. The Executive will be entitled to four weeks of paid vacation per calendar year in accordance with the Company’s
vacation and paid time off policy, inclusive of vacation days and sick days and excluding standard paid Company holidays, in the
same manner as paid time off days for employees of the Company generally accrue. The Executive and his dependents will be entitled
to participate in all medical insurance and other benefit programs in effect from time to time and available to senior executives
of Reed’s at levels commensurate with Executive’s position as COO. Executive shall be entitled to reimbursement for
expenses incurred in connection with performance of services to Reed’s, including, without limitation, mobile phone and
other communications equipment and travel expenses, in accordance with Reed’s expense reimbursement policies as in effect
from time to time. Reed’s will also provide Executive with a car allowance initially at $600 per month and subject to increase
in the discretion of the Company.

 

5.6
Equity. The Executive will be entitled to participate in any equity incentive plan that may be adopted by Reed’s
at levels commensurate with his position as COO. Reed’s will amend its existing equity incentive plan or adopt a new equity
incentive plan as soon as practicable following the Effective Date and in any event during 2017 (“2017 Plan”). Once
the plan is adopted and as soon as practicable following the Effective Date, the Executive shall receive initial equity grants
at levels commensurate with his position as COO of Reed’s (the “Initial Equity Award”). It is anticipated that
the Initial Equity Award will consist of restricted stock (the “Restricted Stock”) and/ or stock options (the
“Options” and together with the Restricted Stock and any additional equity or other equity based awards to
the Executive, the “Incentive Equity”). Reed’s and the Executive will consult in good faith on the structure
and terms of the Incentive Equity. The Initial Equity Award, whether in the form of Restricted Stock and/ or Options (or in any
other form) shall vest in two equal installments on each of the first two anniversaries of the Effective Date and to the extent
awarded as Options will be granted with an exercise price equal to the fair market value of the shares subject to the Options
as of the date of grant and become exercisable in two equal installments on the first two anniversaries of the Effective Date.
The Executive will make an election under Section 83(b) of the Code with respect to any Restricted Stock. Vesting of all Incentive
Equity (and related payment rights) shall accelerate upon any Change in Control. “Change in Control” for this
purpose means any (i) any individual, entity or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1933) (a “Person”) acquires beneficial ownership, directly or indirectly (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) (a “Beneficial Owner”), of more than fifty percent of the combined voting power of the then
issued and outstanding shares of the voting common stock of the Company (the “Voting Stock”), (ii) the occurrence
of a merger, consolidation, reorganization, share exchange or similar corporate transaction, whether or not the Company is the
surviving corporation, other than a transaction which would result in the Voting Stock outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty
percent of the voting stock of the Company or such surviving entity immediately after such transaction, or (iii) the sale, transfer
or disposition of all or substantially all of the business and assets of the Company to any Person. The Executive may also make
equity investments in Reed’s on terms that may be agreed upon by the Executive and Reed’s.

 

    	6 

    	 

    

 

Section
6 Termination of Employment.

 

6.1
Termination by Reed’s. Reed’s may terminate the Executive’s employment with Reed’s for Cause or
without Cause, effective immediately on the day Reed’s gives notice of such termination to the Executive. For purposes of
this Agreement, “Cause” means (i) a breach by Executive of his or her fiduciary duties to the Company; (ii)
Executive’s breach of this Agreement, which, if curable, remains uncured or continues after ten days’ notice by the
Company thereof; (iii) the commission of (A) any crime constituting a felony in the jurisdiction in which committed, (B) any crime
involving moral turpitude (whether or not a felony), or (C) any other criminal act involving embezzlement, misappropriation of
money, fraud, theft, or bribery (whether or not a felony); (iv) illegal or controlled substance abuse or insobriety by Executive;
(v) Executive’s material negligence or dereliction in the performance of, or failure to perform Executive’s duties
of employment with the Company, which remains uncured or continues after ten days’ notice by the Company thereof; (vi) any
conduct, action or behavior by Executive that is, or is reasonably expected to be, materially damaging to the Company, whether
to the business interests, finance or reputation; or (vii) disqualifying event causing Company “bad actor” disqualification
under Rule 506(d) of the Securities Act of 1933, as amended.

 

6.2
Termination by the Executive. The Executive may terminate the Executive’s employment with Reed’s for Good Reason
or without Good Reason, by written notice to Reed’s effective no earlier than 30 days after the date of such notice if termination
is other than for Good Reason (provided that Reed’s shall have the right to waive such 30-day notice period and accelerate
termination to any date on or after the date of such notice) and effective upon the expiration of the cure period described below
in this Section 6.2 if termination is for Good Reason. During any period between receipt of notice of termination from the Executive,
Reed’s may suspend, reduce, or otherwise modify any or all of Executive’s authority, duties, and responsibilities,
and may require the Executive’s absence from Reed’s offices without any such suspension, reduction, modification,
or requirement constituting grounds for Good Reason. “Good Reason” means any any material breach (whether or
not specified above) of this Agreement by Reed’s. An event described in this Section 6.2 will not constitute Good Reason
unless the Executive provides written notice to Reed’s of the Executive’s intention to resign for Good Reason and
specifying the event or circumstance giving rise to Good Reason within 90 days of its initial existence and Reed’s does
not cure such breach or action within 30 days after the date of the Executive’s notice.

 

    	7 

    	 

    

 

6.3
Death and Disability. The Executive’s employment under this Agreement will terminate upon the Executive’s death.
In addition, Reed’s may terminate the Executive’s employment with Reed’s by written notice to the Executive
due to Disability. For purposes of this Agreement, “Disability” means that the Executive has been unable, with
or without reasonable accommodation and due to physical or mental incapacity, to substantially perform the essential functions
of his duties for 90 days, whether consecutive or non-consecutive, within any calendar year.

 

6.4
Termination of Agreement. This Agreement will terminate when all obligations of the parties under this Agreement have been
satisfied.

 

6.5
Resignations. Upon any termination of the Executive’s employment hereunder for any reason, except as may otherwise
be requested by Reed’s in writing, the Executive agrees that he will resign from any and all directorships, committee memberships
and any officer positions that he holds with Reed’s or any of its subsidiaries.

 

Section
7 Remuneration upon Termination of Employment.

 

7.1
Termination Prior to January 1, 2018. If the Executive’s employment with Reed’s is terminated for any reason
prior to January 1, 2018, the Executive shall be entitled to accrued and unpaid compensation and benefits (including, without
limitation, accrued vacation or paid time off, and then unreimbursed expenses) through the date of date of termination of Employment
(the “Accrued Benefits”). No termination of employment prior to January 1, 2018 shall be considered for any
purpose for Cause, without Cause, or for Good Reason.

 

7.2
Termination by Reed’s without Cause or by the Executive for Good Reason. If the Executive’s employment with
Reed’s is terminated after December 31, 2017 pursuant to Section 6.1 by Reed’s without Cause or pursuant to Section
6.2 by the Executive for Good Reason, the Executive will be entitled to the following:

 

(a)
the Accrued Benefits;

 

(b)
payment in lump sum within 30 days after the date of termination of employment of an amount equal to 6 months of the Executive’s
Base Salary in effect immediately prior to the Executive’s termination of employment with Reed’s plus any Bonus earned
and unpaid as well as a prorated Bonus for the year of termination, vested Incentive Equity and six months acceleration of unvested
Incentive Equity, calculated on a pro-rata, monthly basis and based on full calendar months (the “Severance Amount”).
By way of example, if Executive is terminated without cause or resigns for Good Reason on February 15, 2018, Executive’s
accelerated pro-rata portion of unvested Incentive Equity will be equal to one-quarter of Incentive Equity. In addition, to the
extent permitted by applicable law, subject to the Executive’s election of COBRA continuation coverage under Reed’s
group health plan, on the first regularly scheduled payroll date of each month during the six month period following the date
of termination of employment (the “Severance Period”), Reed’s will pay the Executive an amount equal
to the difference between the monthly COBRA premium cost and the premium cost to the Executive as if the Executive were an employee
of Reed’s; provided, that such payments shall cease earlier than the expiration of the Severance Period in the event that
the Executive becomes eligible to receive any comparable health benefits, including through a spouse’s employer, during
the Severance Period (the “COBRA Payments”). Executive will notify Reed’s of Executive’s eligibility
for health benefits during the Severance Period within 15 days of such eligibility; and

 

    	8 

    	 

    

 

(c)
any and all rights he may have as a holder of equity interests in Reed’s or under any applicable plan, program, or arrangement
of Reed’s, including the vested Equity Incentive and related payments.

 

7.3
Termination by Reed’s for Cause, by the Executive without Good Reason. If the Executive’s employment with Reed’s
is terminated for Cause, or by the Executive without Good Reason, the Executive will be entitled to the Accrued Benefits and any
and all rights he may have as a holder of equity interests in Reed’s (including, without limitation, the vested Incentive
Equity) or under any applicable plan, program, or arrangement of Reed’s.

 

7.4
Termination as a Result of Death or Disability. In the event of the termination of the Executive’s employment with
Reed’s pursuant to Section 6.3 as a result of death or Disability, the Executive or the Executive’s heirs will be
entitled to the Accrued Benefits.

 

7.5
Release. The payment of the Severance Amount and the COBRA Payment shall be conditioned upon the Executive’s (or,
if applicable the Executive’s estate’s or legal representative’s) execution, delivery to Reed’s, and non-revocation
of a release of claims (the “Release of Claims”) in substantially the form attached to this Agreement as Exhibit
A within 30 days following the date of the Executive’s termination of employment hereunder. Further, to the extent that
any portion of the Severance Amount or COBRA Payment constitutes “nonqualified deferred compensation” for purposes
of Section 409A of the Code (as defined below), any payment of any amount otherwise scheduled to occur prior to the thirtieth
(30th) day following the date of the Executive’s termination of employment hereunder, but for the condition on executing
the Release of Claims as set forth herein, shall not be made until the first regularly scheduled payroll date following such thirtieth
(30th) day, after which any remaining installment of the Severance Amount or the COBRA Payment, as applicable, shall thereafter
be provided to Employee according to the applicable schedule set forth herein. With respect to any portion of the Severance Amount
or COBRA Payment that does not constitute “nonqualified deferred compensation” for purposes of Section 409A of the
Code (as defined below), any payment of any amount otherwise scheduled to occur following the date of the Executive’s termination
of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until
the first regularly scheduled payroll date following the date such Release of Claims is timely executed and the applicable revocation
period has ended, after which the entire Severance Amount and any unpaid installments of the COBRA Payment, as applicable, shall
thereafter be provided to Employee according to the applicable schedule set forth herein. Each payment of the Severance Amount
or COBRA Payment shall be deemed to be a separate payment for purposes of Section 409A of the Code.

 

    	9 

    	 

    

 

7.6
Obligations Absolute. The payment and other obligations of Reed’s under this Agreement or in connection with the
Incentive Equity are absolute and unconditional and not subject to offset or any other defense.

 

Section
8 General Provisions.

 

8.1
Notices. All notices and other communications under this Agreement must be in writing and are deemed duly delivered when
(a) delivered if delivered personally or by recognized overnight courier service (costs prepaid), (b) sent by facsimile with confirmation
of transmission by the transmitting equipment (or, the first business day following such transmission if the date of transmission
is not a business day) (c) sent by electronic mail with receipt acknowledged by the recipient via email reply, or (d) received
or rejected by the addressee, if sent by certified or registered mail, return receipt requested; in each case to the following
addresses or facsimile numbers and marked to the attention of the individual (by name or title) designated below (or to such other
address, facsimile number or individual as a party may designate by notice to the other parties in writing):

 

If
to the Executive:

 

______________________

 

______________________

 

______________________

 

If
to Reed’s:

 

Attention:
Valentin Stalowir, Chief Executive Officer

13000
South Spring Street

Los
Angeles, California 90061

 

8.2
Amendment. This Agreement may not be amended, supplemented or otherwise modified except in a writing signed by the Executive
and a director or authorized officer of Reed’s (other than the Executive).

 

8.3
Waiver and Remedies. The Executive and Reed’s may (a) extend the time for performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations and warranties of the other party contained in
this Agreement or in any certificate, instrument or document delivered pursuant to this Agreement or (c) waive compliance with
any of the covenants, agreements or conditions for the benefit of such party contained in this Agreement. Any such extension or
waiver will be valid only if set forth in a written document signed on behalf of the party against whom the waiver or extension
is to be effective. No extension or waiver will apply to any time for performance, inaccuracy in any representation or warranty,
or noncompliance with any covenant, agreement or condition, as the case may be, other than that which is specified in the written
extension or waiver. No failure or delay by a party in exercising any right or remedy under this Agreement or any of the documents
delivered pursuant to this Agreement, and no course of dealing between the parties, operates as a waiver of such right or remedy,
and no single or partial exercise of any such right or remedy precludes any other or further exercise of such right or remedy
or the exercise of any other right or remedy. Any enumeration of a party’s rights and remedies in this Agreement is not
intended to be exclusive, and a party’s rights and remedies are intended to be cumulative to the extent permitted by law
and include any rights and remedies authorized in law or in equity. Because Executive’s services are special, unique, and
extraordinary and because Executive has access to Confidential Information and Work Product, the parties hereto agree that money
damages may be an inadequate remedy for any breach of Section 4 of this Agreement. Therefore, in the event of a breach or threatened
breach of Section 4 of this Agreement, the Company, or any of its successors or assigns may, in addition to other rights and remedies
existing in their favor at law or in equity, apply to any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).

 

    	10 

    	 

    

 

8.4
Entire Agreement. This Agreement constitutes the entire agreement between the Executive and Reed’s with respect to
its subject matter and supersedes any prior understandings, agreements or representations between the parties, written or oral,
with respect to the subject matter of this Agreement.

 

8.5
Assignment and Successors. This Agreement binds and benefits the parties and their respective heirs, executors, administrators,
successors and assigns, except that the Executive may not assign any rights under this Agreement without the prior written consent
of Reed’s and Reed’s may not assign this Agreement or any of its rights or obligations hereunder without the prior
written consent of the Executive except in the case of an assignment of this Agreement to a successor to all or substantially
all of the business and assets of Reed’s and its subsidiaries or any business division thereof or a restructuring of Reed’s.
The Executive’s obligations under this Agreement are personal to the Executive and may not be delegated.

 

8.6
Severability. If any provision of this Agreement is held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement are not affected or impaired in any way and the parties agree to
negotiate in good faith to replace such invalid, illegal and unenforceable provision with a valid, legal and enforceable provision
that achieves, to the greatest lawful extent under this Agreement, the economic, business and other purposes of such invalid,
illegal or unenforceable provision. A court of competent jurisdiction, if it determines any provision of this Agreement to be
unreasonable in scope, time or geography, is hereby authorized by the Executive and Reed’s to enforce the same in such narrower
scope, shorter time or lesser geography as such court determines to be reasonable and proper under all the circumstances.

 

8.8
Governing Law; Arbitration. The validity, interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the California without giving effect to any choice of law rules or other conflicting provision or rule that would
cause the laws of any jurisdiction to be applied. Reed’s and the Executive agree that any and all disputes arising out of
the terms of this Agreement, the Executive’s employment by Reed’s, the Executive’s service as an employee or
officer of Reed’s or any of its subsidiaries, or the Executive’s compensation and benefits, will be subject to binding
arbitration in Los Angeles, California before the Judicial Arbitration and Mediation Services, Inc. under the Employment Arbitration
Rules of the American Arbitration Association then in effect, and consent to the jurisdiction to the federal or state courts in
Los Angeles, California to enforce any arbitration award rendered with respect thereto. The arbitration shall be conducted by
a single arbitrator as agreed upon between Reed’s and the Executive. If Reed’s and the Executive cannot agree on a
single arbitrator, the arbitration shall be conducted before a panel of three arbitrators, one selected by each party hereto and
the third arbitrator selected by the parties’ two arbitrators from a panel provided by the American Arbitration Association.
The costs of the arbitrator along with other arbitration-specific fees shall be borne equally by the parties. Each party shall
bear its own attorneys’ fees and expenses; provided that the arbitrator may assess the prevailing party’s fees and
costs against the non-prevailing party as part of the arbitrator’s award. The parties agree to abide by all decisions and
awards rendered in such proceedings. Such decisions and awards rendered by the arbitrators shall be final and conclusive. All
such disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in
this subsection shall be construed as precluding the bringing an action for injunctive relief or specific performance as provided
in this Agreement.

 

    	11 

    	 

    

 

8.11
Survival. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement
to the extent necessary to the intended preservation of such rights and obligations and to the extent that any performance is
required following termination or expiration of this Agreement.

 

8.12
Withholding. All amounts paid pursuant to this Agreement shall be subject to withholding for taxes (federal, state, local,
non-U.S. or otherwise) to the extent required by applicable law.

 

8.13
Counterparts. The parties may execute this Agreement in multiple counterparts, each of which constitutes an original as
against the party that signed it, and all of which together constitute one agreement. This Agreement is effective upon delivery
of one executed counterpart from each party to the other party. The signatures of all parties need not appear on the same counterpart.
The delivery of signed counterparts by facsimile or email transmission that includes a copy of the sending party’s signature
is as effective as signing and delivering the counterpart in person.

 

8.14
Code Section 409A Compliance; Parachute Payments.

 

(a)
Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payment
of the benefits set forth herein shall either be exempt from, or in the alternative, comply with, the requirements of Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the published guidance thereunder (“Section
409A”). A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “nonqualified
deferred compensation” under Section 409A unless such termination is also a “separation from service” within
the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,”
“Termination Date,” or like terms shall mean “separation from service.” Notwithstanding any provision
of this Agreement to the contrary, if Executive is a “specified employee” within the meaning of Section 409A, any
payments or arrangements due upon a termination of Executive’s employment under any arrangement that constitutes a “nonqualified
deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under
Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption or the permitted payments under
Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided on the earlier of (a) the date which is six
months after Executive’s “separation from service” for any reason other than death, or (b) the date of Executive’s
death. This Agreement may be amended without requiring Executive’s consent to the extent necessary (including retroactively)
by the Company in order to preserve compliance with Section 409A. The preceding shall not be construed as a guarantee of any particular
tax effect for Executive’s compensation and benefits and the Company does not guarantee that any compensation or benefits
provided under this Agreement will satisfy the provisions of Section 409A. After any Termination Date, Executive shall have no
duties or responsibilities that are inconsistent with having a “separation from service” within the meaning of Section
409A as of the Termination Date and, notwithstanding anything in the Agreement to the contrary, distributions upon termination
of employment of nonqualified deferred compensation may only be made upon a “separation from service” as determined
under Section 409A and such date shall be the Termination Date for purposes of this Agreement. Each payment under this Agreement
or otherwise shall be treated as a separate payment for purposes of Section 409A. In no event may Executive, directly or indirectly,
designate the calendar year of any payment to be made under this Agreement which constitutes a “nonqualified deferral of
compensation” within the meaning of Section 409A and to the extent an amount is payable within a time period, the time during
which such amount is paid shall be in the discretion of the Company.

 

    	12 

    	 

    

 

(b)
All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements
of Section 409A. To the extent that any reimbursements are taxable to Executive, such reimbursements shall be paid to Executive
on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred.
Reimbursements shall not be subject to liquidation or exchange for another benefit and the amount of such reimbursements that
Executive receives in one taxable year shall not affect the amount of such reimbursements that Executive receives in any other
taxable year.

 

(c)
If any payment, benefit, or distribution of any type to or for the benefit of Executive, whether paid or payable, provided or
to be provided, or distributed or distributable pursuant to the terms of this Agreement or otherwise (collectively, the “Parachute
Payments”) would (as determined by the Company) subject Executive to the excise tax imposed under Section 4999 of the Code
(the “Excise Tax”), the Parachute Payments shall be reduced so that the maximum amount of the Parachute Payments (after
reduction) shall be one dollar less than the amount which would cause the Parachute Payments to be subject to the Excise Tax.
The Company shall reduce or eliminate the Parachute Payments by first reducing or eliminating any cash Parachute Payments that
do not constitute deferred compensation within the meaning of Section 409A, then by reducing or eliminating any other Parachute
Payments that do not constitute deferred compensation within the meaning of Section 409A, then by reducing or eliminating all
other Parachute Payments that do constitute deferred compensation within the meaning of Section 409A, beginning with those payments
last to be paid, subject to and in accordance with all applicable requirements of Section 409A.

 

    	13 

    	 

    

 

8.15
Voluntary Execution; Representations. Executive acknowledges that (a) he or she has consulted with or has had the opportunity
to consult with independent counsel of his or her own choosing concerning this Agreement and has been advised to do so by the
Company, and (b) he or she has read and understands this Agreement, is competent and of sound mind to execute this Agreement,
is fully aware of the legal effect of this Agreement, and has entered into it freely based on his or her own judgment and without
duress.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

 

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

 

[Signature
page to Employment Agreement]

 

    	14 

    	 

    

 

Exhibit
A

 

RELEASE

 

KNOW
ALL MEN BY THESE PRESENTS: That the undersigned, Stefan Freeman (“Executive”), on behalf of himself and his
heirs, legal representatives, administrators, executors, successors and assigns, and each of them, for good and valuable consideration
received as set forth in the Employment Agreement dated as of July __, 2017 (the “Employment Agreement”) between
Reed’s, Inc., a Delaware corporation (the “Company”), does hereby unconditionally, knowingly, and voluntarily
release and forever discharge the Company, and its present and former related companies, subsidiaries and affiliates, and all
of their present and former executives, officers, managers, directors, owners, members, shareholders, partners, employees, agents,
and attorneys, including in their individual capacity, and each of its and their successors and assigns (hereinafter collectively
the “Released Parties”), from any and all known or unknown claims, demands, actions or causes of action that
now exist or may arise in the future, based upon events occurring or omissions on or before the date of the execution of this
Release, including, but not limited to any and all claims whatsoever pertaining in any way to Executive’s employment at
the Company or with any of the Released Parties or the termination of Executive’s employment, including, but not limited
to, any claims under: (1) the Americans with Disabilities Act; the Family and Medical Leave Act; Title VII of the Civil Rights
Act; 42 U.S.C. Section 1981; the Older Workers Benefit Protection Act; the Age Discrimination in Employment Act of 1967, as amended
(the “ADEA”); the Employee Retirement Income Security Act of 1974; the Civil Rights Act of 1866, 1871, 1964, and 1991;
the Rehabilitation Act of 1973; the Equal Pay Act of 1963; the Vietnam Veteran’s Readjustment Assistance Act of 1974; the
Occupational Safety and Health Act; and the Immigration Reform and Control Act of 1986; and any and all other federal, state,
local or foreign laws, statutes, ordinances, or regulations pertaining to employment, discrimination or pay; (2) any state tort
law theories under which an action could have been brought, including, but not limited to, claims of negligence, negligent supervision,
training and retention or defamation; (3) any claims of alleged fraud and/or inducement, or alleged inducement to enter into this
Release; (4) any and all other tort claims; (5) all claims for attorneys’ fees and costs; (6) all claims for physical, mental,
emotional, and/or pecuniary injuries, losses and damages of every kind, including but not limited to earnings, punitive, liquidated
and compensatory damages, and employee benefits; (7) any and all claims whatsoever arising under any of the Released Parties’
express or implied contract or under any federal, state, local, or foreign law, ordinance, or regulation, or the Constitution
of any State or the United States; (8) any and all claims whatsoever against any of the Released Parties for wages, bonuses, benefits,
fringe benefits, vacation pay, or other compensation or for any damages, fees, costs, or benefits, in each case, except to the
extent Executive has vested rights in any of the same; and (9) any and all claims whatsoever to reinstatement (collectively, the
“Released Claims”); provided, however, that, notwithstanding anything to the contrary contained herein, this
Release shall not cover and the Released Claims shall extend to any rights or claims, if any, of Executive (A) as a holder of
equity interests in the Company, (B) to indemnification or advancement of expenses, (C) under Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, (D) under any profit-sharing and/or retirement plans or benefits in which Executive has vested rights,
or (E) under Section 7 of the Employment Agreement. Executive also intends that this Release operate as a general release of any
and all claims to the fullest extent permitted by law and a waiver of all unknown claims of the type being released hereunder.

 

    	15 

    	 

    

 

Section
1542 of the Civil Code of the State of California states:

 

“A
general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time
of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

 

Notwithstanding
the provisions of Section 1542, and for the purpose of implementing a full and complete release and discharge of all Releasees
with respect to claims in California and all other jurisdictions, Executive expressly acknowledges that this is intended to include
not only claims that are known, anticipated, or disclosed, but also claims that are unknown, unanticipated, and undisclosed.

 

Executive
acknowledges that the Severance Amount and the COBRA Payment are in addition to anything of value to which Employee already is
entitled from the Company and constitutes good and valuable consideration for this Release.

 

Executive
represents and warrants that he has not previously filed, and to the maximum extent permitted by law agrees that he will not file,
a complaint, charge, or lawsuit against any member of the Released Parties regarding any of the claims released herein. If, notwithstanding
this representation and warranty, the Executive has filed or files such a complaint, charge, or lawsuit, he agrees that he shall
cause such complaint, charge, or lawsuit to be dismissed with prejudice and shall pay any and all costs required in obtaining
dismissal of such complaint, charge, or lawsuit, including without limitation the attorneys’ fees of any member of the Released
Parties against whom he has filed such a complaint, charge, or lawsuit. This paragraph shall not apply, however, to a claim of
age discrimination under the ADEA or to any non-waivable right to file a charge with the United States Equal Employment Opportunity
Commission (the “EEOC”); provided, however, that if the EEOC were to pursue any claims relating to the
Executive’s employment with Company, the Executive agrees that he shall not be entitled to recover any monetary damages
or any other remedies or benefits as a result and that this Release and Section 7 of the Employment Agreement will control as
the exclusive remedy and full settlement of all such claims by the Executive.

 

Executive
agrees not to make disparaging, critical or otherwise detrimental comments to any person or entity concerning the Released Parties;
the products, services or programs provided or to be provided by the Released Parties; the business affairs or the financial condition
of the Released Parties; or the circumstances surrounding Executive’s employment and/or termination of employment from Company.
Company agrees to cause its executive and senior management teams not to take any action, or encourage others to take any action,
to disparage or criticize Executive.

 

Executive
acknowledges that he has been given the opportunity to review and consider this Release for twenty-one (21) days from the date
he received a copy. If he elects to sign before the expiration of the twenty-one (21) days, Executive acknowledges that he will
have chosen, of his own free will without any duress, to waive his right to the full twenty-one (21) day period.

 

    	16 

    	 

    

 

Executive
may revoke this Release after signing it by giving written notice to the Company’s Board of Directors, within seven (7)
days after signing it (the “Revocation Period”). This Release, provided it is not revoked, will be effective on the
eighth (8th) day after execution. The Executive acknowledges and agrees that if he revokes this Release during the Revocation
Period, this Release will be null and void and of no effect, and neither the Company nor any other Released Party will have any
obligations to pay the Executive the amounts under Section 7 of the Employment Agreement.

 

Executive
acknowledges that he has consulted with an attorney prior to signing this Release and that he has no knowledge of any facts or
circumstances that give rise or could give rise to any claims under any of the laws listed in this Release.

 

Executive
is signing this Release knowingly, voluntarily and with full understanding of its terms and effects. Executive is signing this
Release of his own free will without any duress, being fully informed and after due deliberation. Executive voluntarily accepts
the consideration provided to him for the purpose of making full and final settlement of all claims referred to above. This Release
shall be governed by and construed in accordance with the laws of the State of California.

 

IN
WITNESS WHEREOF, Executive has duly executed this Release effective as of , 20__.

 

		 
	Stefan
    Freeman	 

 

    	17

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