Document:

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. 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

 

REEDS,
INC.

 

	Warrant
    Shares: 72,703	Initial
    Exercise Date: June 2, 2016

 

THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Maxim Group 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 June 2, 2016 (the “Initial Exercise Date”) and on or prior to
the close of business on the fifth year anniversary of the Initial Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Reeds, Inc., a Delaware corporation (the “Company”), up
to 72,703 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).

 

Section
1.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 May 26, 2016, among the Company and
the purchasers signatory thereto.

 

Section
2.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 and completed facsimile copy (or e-mail attachment) of the Notice of Exercise
in the form annexed hereto and, within three (3) Trading Days of the date of said Notice of Exercise is delivered to the Company,
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 is specified in the
applicable Notice of Exercise. 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) Business Days 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 $3.74, subject to adjustment hereunder
(the “Exercise Price”).

 

c)Cashless
Exercise. If at any time after the six-month anniversary of the Closing Date, there is no effective Resale 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
    last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless
    exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last
    VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading
    Market is open, the prior Trading Day’s VWAP shall be used in this calculation);
	 	 	 	 
	 	(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.

 

If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any
position contrary to this Section 2(c).

 

    	 	 	 

    	 	 	 

    

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.

 

 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 or its designee’s balance account 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 Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale
limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share
register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant
to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after
the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). For purposes
of Rule 200 under Regulation SHO of the Securities Act, the Warrant Shares shall be deemed to have been issued, and Holder shall
be deemed for all such purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has
been exercised upon delivery of the Notice of Exercise, irrespective of the date of delivery of the Warrant Shares; provided payment
of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within three Trading Days of delivery
of the Notice of Exercise. 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 (subject to receipt of the aggregate Exercise
Price for the applicable exercise (other than in the case of a Cashless Exercise)) until such Warrant Shares are delivered or
Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long
as this Warrant remains outstanding and exercisable.

 

    	 	 	 

    	 	 	 

    

 

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 (subject to receipt of the aggregate exercise price for the applicable exercise (other
than in the case of a Cashless Exercise), then the Holder will have the right to rescind such exercise.

 

iv.Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder
(except as set forth below in this Section 2(d)(iv)), if the Company fails to cause the Transfer Agent to transmit to the Holder
the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant
Share Delivery Date (subject to receipt of the aggregate Exercise Price for the applicable exercise (other than in the case of
a Cashless Exercise)), 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 such 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.

 

    	 	 	 

    	 	 	 

    

 

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, and
any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), 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 and Attribution
Parties 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 or Attribution Parties and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates or Attribution Parties. 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 Exchange 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 Exchange 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 Attribution Parties) 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 Attribution Parties)
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 Exchange 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 or Attribution Parties 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 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 increase in the Beneficial Ownership Limitation 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.

 

    	 	 	 

    	 	 	 

    

 

Section
3.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]

 

c)[RESERVED]

 

d)[RESERVED]

 

    	 	 	 

    	 	 	 

    

 

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. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any
Successor Entity shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal
to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental
Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day
of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained
from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a
remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date. The Company shall cause 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

 

    	 	 	 

    	 	 	 

    

 

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 deliver to the Holder by facsimile or email 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 delivered by facsimile or email
to the Holder at its last facsimile number or email 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 deliver such
notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant 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.

 

    	 	 	 

    	 	 	 

    

 

Section
4.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 original
issuance 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.

 

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 Section 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
5.Miscellaneous.

 

a)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.

 

    	 	 	 

    	 	 	 

    

 

b)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.

 

c)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 Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

d)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 articles 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.

 

    	 	 	 

    	 	 	 

    

 

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.

 

e)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.

 

f)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.

 

g)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.

 

h)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.

 

i)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.

 

j)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.

 

    	 	 	 

    	 	 	 

    

 

k)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.

 

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

 

m)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.

 

n)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.

 

o)Acceptance.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained
herein.

 

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

 

(Signature
Page Follows)

 

    	 	 	 

    	 	 	 

    

 

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first
above indicated.

 

	 	REEDS,
    Inc.
	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	 	 	 

    	 	 	 

    

 

NOTICE
OF EXERCISE

 

To:REEDS,
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. If the undersigned exercises this Warrant other than by Cashless Exercise, the undersigned
hereby makes for the benefit of the Company the representations set forth in Section 3.2(b) of the Purchase Agreement.

 

[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)

 

	Phone Number:	 
	 	 
	Email Address:	 

 

	Dated:
    _______________ __, ______	 

 

	Holder’s
    Signature:	 	 
	 	 	 
	Holder’s
    Address:May
26, 2016

 

Christopher
J. Reed

Chief
Executive Officer

13000
South Spring Street

Los
Angeles, California 90061

 

Dear
Mr. Reed:

 

This
letter (the “Agreement”) constitutes the agreement between Maxim Group LLC (“Maxim” or the
“Placement Agent”) and Reeds, Inc., a Delaware corporation (the “Company”), that Maxim shall
serve as the placement agent for the Company, on a “reasonable best efforts” basis, in connection with the proposed
placement (the “Placement”) of an aggregate of 692,412 shares of (the “Shares”) of the Company’s
common stock, par value $0.001 per share (“Common Stock”) and warrants to purchase up to 346,206 of the shares
of Common Stock (each a “Warrant” and collectively, the “Warrants”). The Shares, the Warrants
and the shares of Common Stock underlying the Warrants (the “Warrant Shares”) are hereinafter referred to collectively
as the “Securities.” The terms of the Placement and the Securities shall be mutually agreed upon by the Company
and the purchasers (each, a “Purchaser” and collectively, the “Purchasers”) and nothing
herein constitutes that Maxim would have the power or authority to bind the Company or any Purchaser or an obligation for the
Company to issue any Securities or complete the Placement. This Agreement and the documents executed and delivered by the Company
and the Purchasers in connection with the Placement, including but not limited to the Purchase Agreement, the Registration Rights
Agreement, and the Warrants, shall be collectively referred to herein as the “Transaction Documents.” The date
of the closing of the Placement shall be referred to herein as the “Closing Date.” The Company expressly acknowledges
and agrees that Maxim’s obligations hereunder are on a reasonable best efforts basis only and that the execution of this
Agreement does not constitute a commitment by Maxim to purchase the Securities and does not ensure the successful placement of
the Securities or any portion thereof or the success of Maxim with respect to securing any other financing on behalf of the Company.
The Placement Agent may retain other brokers or dealers to act as sub-agents or selected-dealers on its behalf in connection with
the Placement. The sale of the Securities to any Purchaser will be evidenced by a securities purchase agreement (the “Purchase
Agreement”) between the Company and such Purchaser in a form reasonably acceptable to the Company and Maxim. Capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement. Prior to the signing
of any Purchase Agreement, officers of the Company will be available to answer inquiries from prospective Purchasers.

 

SECTION
1. REPRESENTATIONS AND WARRANTIES INCORPORATED BY REFERENCE. Each of the representations and warranties (together
with any related disclosure schedules thereto) made by the Company to the Purchasers in that certain Purchase Agreements
dated as of May 26, 2016, between the Company and each Purchaser, is hereby incorporated herein by reference (as though fully
restated herein) and is, as of the date of this Agreement, hereby made to, and in favor of, the Placement Agent.

 

SECTION
3. REPRESENTATIONS OF MAXIM. Maxim represents and warrants that it (i) is a member in good standing of FINRA, (ii)
is registered as a broker/dealer under the Exchange Act, (iii) is licensed as a broker/dealer under the laws of the States applicable
to the offers and sales of the Securities by Maxim, (iv) is and will be a body corporate validly existing under the laws of its
place of incorporation, and (v) has full power and authority to enter into and perform its obligations under this Agreement. Maxim
will immediately notify the Company in writing of any change in its status as such. Maxim covenants that it will use its reasonable
best efforts to conduct the Transaction hereunder in compliance with the provisions of this Agreement and the requirements of
applicable law.

 

    	 	1	 

    	 	 	 

    

 

SECTION
4.COMPENSATION.

 

In
consideration of the services to be provided for hereunder, the Company shall pay to the Placement Agent or their respective designees
of the following compensation with respect to the Securities which they are placing:

 

(a)A
cash fee (the “Cash Fee”) equal to an aggregate of seven percent (7%) of the aggregate gross proceeds raised
in the Placement. An advance (the “Advance”) of $15,000 has been received by the Placement Agent, which amount
will be applied towards the Cash Fee at closing. The Cash Fee, minus Advance, shall be paid at the Closing of the Placement through
a third party escrow agent from the gross proceeds of Placement.

 

(b)Subject
to compliance with FINRA Rule 5110(f)(2)(D), the Company also agrees to reimburse Maxim for all travel and other out-of-pocket
expenses, including the reasonable fees of legal counsel, in an amount not to exceed $35,000 (inclusive of the Advance). The Company
will reimburse Maxim directly out of the Closing of the Placement. In the event this Agreement shall terminate prior to the consummation
of the Placement, Maxim shall be entitled to reimbursement for actual expenses; provided, however, such expenses shall not exceed
$35,000. Additionally, in accordance with FINRA Rule 5110(f)(2)(C), in the event this Agreement is terminated prior to consummation
of the Placement, any portion of the Advance will be returned to the extent such out-of-pocket accountable expenses are not actually
incurred.

 

(c)The
Company, at the Closing, will grant to the Placement Agent, non-redeemable warrants covering a number of the securities equal
to seven percent (7%) of the total number of Securities being sold and/or issued in the Placement (the “Placement Warrants”).
The Placement Warrants will be immediately exercisable and expire five (5) years after the Closing. The Placement Warrants will
be exercisable at a price per share equal to 110% of the price of the Securities paid by the Purchasers in connection with the
Placement. To the extent that the Purchasers are granted registration rights with respect to their Securities (or components thereof),
the Company will grant identical rights to the Placement Agent with respect to shares of Common Stock underlying the Placement
Warrants. The Placement Agent will be entitled to customary demand and “piggyback” rights pursuant to FINRA Rule 5110,
except that they be assigned, in whole or in part, to any successor, officer or member of the Placement Agent (or to officers
or partners of any such successor or member) pursuant to FINRA Rule 5110(g)(2). The Placement Warrants may be exercised in whole
or in part, and provide for “cashless exercise” and shall provide for customary anti-dilution and price protection.

 

(d)The
Placement Agent reserves the right to reduce any item of compensation or adjust the terms thereof as specified herein in the event
that a determination shall be made by FINRA to the effect that the Placement Agent’s aggregate compensation is in excess
of FINRA Rules or that the terms thereof require adjustment.

 

SECTION
5. INDEMNIFICATION. The Company agrees to the indemnification and other agreements set forth in the Indemnification
Provisions (the “Indemnification”) attached hereto as Addendum A, the provisions of which are incorporated
herein by reference and shall survive the termination or expiration of this Agreement.

 

    	 	2	 

    	 	 	 

    

 

SECTION
6.ENGAGEMENT TERM. Maxim’s engagement hereunder will be until the earlier of (i) June 15, 2016 and (ii) the
completion of the Placement. The engagement may be terminated by either the Company or Maxim at any time upon 15 days’ written
notice after June 15, 2016. The date of termination of this Agreement is referred to herein as the “Termination Date”
and the period of time during which this Agreement remains in effect is referred to herein as the “Term.” In
the event, however, in the course of the Placement Agent’s performance of due diligence it deems it necessary to terminate
the engagement, the Placement Agent may do so prior to the Termination Date. If within eighteen (18) months after the Termination
Date, the Company completes any private financing of equity, equity-linked or debt or other capital raising activity (other than
the exercise by any person or entity of any options, warrants or other convertible securities, including the Warrants and Placement
Warrants) with any of the investors contacted by Maxim during the term of its engagement, then the Company will pay to Maxim upon
the closing of such financing the compensation set forth in Section 4(a) hereof. Upon such termination, Maxim shall deliver to
the Company a list of all investors contacted by Maxim during the term of its engagement. Notwithstanding anything to the contrary
contained herein, the provisions concerning the Company’s obligation to pay any fees actually earned pursuant to Section
4 hereof and which are permitted to be reimbursed under FINRA Rule 5110(f)(2)(D), and the confidentiality, indemnification and
contribution provisions contained herein and the Company’s obligations contained in the Indemnification Provisions will
survive any expiration or termination of this Agreement. Notwithstanding anything to the contrary contained herein, the provisions
concerning the Company’s obligation to pay any fees actually earned pursuant to Section 4 hereof which are permitted to
be reimbursed under FINRA Rule 5110(f)(2)(D), and the confidentiality, indemnification and contribution provisions contained herein
and the Company’s obligations contained in the Indemnification Provisions will survive any expiration or termination of
this Agreement.

 

SECTION
7. MAXIM INFORMATION. The Company agrees that any information or advice rendered by Maxim in connection with this engagement
is for the confidential use of the Company only in their evaluation of the Placement and, except as otherwise required by law,
the Company will not disclose or otherwise refer to the advice or information in any manner without Maxim’s prior written
consent.

 

SECTION
8. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall not be construed as creating rights enforceable
by any person or entity not a party hereto, except those entitled hereto by virtue of the Indemnification Provisions hereof. The
Company acknowledges and agrees that Maxim is not and shall not be construed as a fiduciary of the Company and shall have no duties
or liabilities to the equity holders or the creditors of the Company or any other person by virtue of this Agreement or the retention
of Maxim hereunder, all of which are hereby expressly waived.

 

SECTION
9. CLOSING. The obligations of the Placement Agent, and the closing of the sale of the Securities hereunder are subject
to the accuracy, when made and on the Closing Date, of the representations and warranties on the part of the Company and its Subsidiaries
contained herein and in the Purchase Agreement, to the accuracy of the statements of the Company and its Subsidiaries made in
any certificates pursuant to the provisions hereof, to the performance by the Company and its Subsidiaries of their obligations
hereunder, and to each of the following additional terms and conditions:

 

A.
All corporate proceedings and other legal matters incident to the authorization, form, execution, delivery and validity of each
of this Agreement, the Shares, the Warrants, and the shares of Common Stock underlying the Warrants, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects
to counsel for the Placement Agent, and the Company shall have furnished to such counsel all documents and information that they
may reasonably request to enable them to pass upon such matters.

 

B.
The Placement Agent shall have received as of the Closing Date the favorable opinions of legal counsel to the Company identified
in the Purchase Agreement, dated as of such Closing Date, including, without limitation, a negative assurance letter from Company
Counsel, addressed to the Placement Agent in form and substance satisfactory to the Placement Agent.

 

    	 	3	 

    	 	 	 

    

 

C.
(i) Neither the Company nor any of its Subsidiaries shall have sustained since the date of the latest audited or unaudited financial
statements included in its SEC Reports, any material loss or interference with its business from fire, explosion, flood, terrorist
act or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in or contemplated by the Purchase Agreement and (ii) since such date there shall not have
been any change in the capital stock or long-term debt of the Company or any of its Subsidiaries or any change, or any development
involving a prospective change, in or affecting the business, general affairs, management, financial position, stockholders’
equity, results of operations or prospects of the Company and its Subsidiaries, otherwise than as set forth in or contemplated
by the Purchase Agreement, the effect of which, in any such case described in clause (i) or (ii), is, in the judgment of the Placement
Agent, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Securities
on the terms and in the manner contemplated by the Purchase Agreement.

 

D.
The Securities are not registered under the Exchange Act. For so long as the Warrants remain outstanding, the Company covenants
to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Section 13 or 15(d) the Exchange Act with the Commission even if the Company is not then subject to
the reporting requirements of Section 13 or 15(d) the Exchange Act. If at any time, Rule 144 (as defined below) is not available
to cover such shares of Common Stock due to the failure of the Company to be currently reporting under the Securities Exchange
Act of 1934 (“Public Information Failure”), then the Company shall pay in cash by wire transfer of immediately
available funds an amount per month equal to two percent (2.0%) of the Subscription Amount of such holder of Securities on the
date of such Public Information failure and on every thirtieth (30th) day (pro rated for periods totaling less than thirty days)
thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information
is no longer required for the holder of Securities to transfer the Securities pursuant to Rule 144. The payments to which a holder
of Securities shall be entitled pursuant to this section are referred to herein as “Public Information Failure Payments.”
Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the
Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a
timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial
months) until paid in full.

 

E.
Subsequent to the execution and delivery of this Agreement and up to the Closing Date, there shall not have occurred any of the
following: (i) trading in securities generally on the NYSE MKT shall have been suspended or minimum or maximum prices or maximum
ranges for prices shall have been established on any such exchange or such market by the Commission or by such exchange or by
any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by
federal or state authorities or a material disruption has occurred in commercial banking or securities settlement or clearance
services in the United States, (iii) the United States shall have become engaged in hostilities in which it is not currently engaged,
the subject of an act of terrorism, there shall have been an escalation in hostilities involving the United States, or there shall
have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred any other calamity
or crisis or any change in general economic, political or financial conditions in the United States or elsewhere, if the effect
of any such event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable or inadvisable
to proceed with the sale or delivery of the Securities on the terms and in the manner contemplated by the Purchase Agreement.

 

    	 	4	 

    	 	 	 

    

 

F.
No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental
agency or body which would, as of the Closing Date, prevent the issuance or sale of the Securities or materially and adversely
affect or potentially and adversely affect the business or operations of the Company; and no injunction, restraining order or
order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance or sale of the Securities or materially and adversely affect the business or operations of the
Company.

 

G.
The Company shall have entered into a Purchase Agreement and Registration Rights Agreement with each of the Purchasers and such
agreements shall be in full force and effect and shall contain representations, warranties and covenants of the Company as agreed
between the Company and the Purchasers.

 

H.
FINRA shall have raised no objection to the fairness and reasonableness of the terms and arrangements of this Agreement. In addition,
the Company shall, if requested by the Placement Agent, make or authorize Placement Agent’s counsel to make on the Company’s
behalf, any Issuer Filing with FINRA as may be required with respect to the Placement and pay all filing fees required in connection
therewith.

 

I.
On or prior to the Closing Date, the Company shall have furnished to the Placement Agent such further information, certificates
and documents as the Placement Agent may reasonably request.

 

J.
The Company and the Placement Agent shall have entered into an escrow agreement with a commercial bank or trust company reasonably
satisfactory to both parties pursuant to which the Purchasers shall deposit their subscription funds in an escrow account and
the Company and the Placement Agent shall jointly authorize the disbursement of the funds from the escrow account. The Company
shall pay the reasonable fees of the escrow agent.

 

K.
The Company shall engage and, for a period of three (3) years after the Closing Date, shall maintain, at its expense, a transfer
agent and, if necessary under the jurisdiction of its incorporation or the rules of any national securities exchange on which
the Common Stock will be listed, a registrar (which, if permitted by applicable laws and rules may be the same entity as the transfer
agent) for the Common Stock, which transfer agent and/or registrar is reasonably acceptable to the Placement Agent.

 

If
any of the conditions specified in this Section 9 shall not have been fulfilled when and as required by this Agreement, or if
any of the certificates, opinions, written statements or letters furnished to the Placement Agent or to Placement Agent’s
counsel pursuant to this Section 9 shall not be reasonably satisfactory in form and substance to the Placement Agent and to Placement
Agent’s counsel, all obligations of the Placement Agent hereunder may be cancelled by the Placement Agent at, or at any
time prior to, the consummation of the Closing. Notice of such cancellation shall be given to the Company in writing or orally.
Any such oral notice shall be confirmed promptly thereafter in writing.

 

SECTION
10.[RESERVED]

 

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SECTION
11. GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be performed entirely in such State. This Agreement may not be assigned by either party
without the prior written consent of the other party. This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns. Any right to trial by jury with respect to any dispute arising
under this Agreement or any transaction or conduct in connection herewith is waived. Each of the Placement Agent and the Company:
(i) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement and/or the transactions contemplated
hereby shall be instituted exclusively in New York Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection which it may have or hereafter to the venue of any such suit, action
or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United
States District Court for the Southern District of New York in any such suit, action or proceeding. Each of the Placement Agent
and the Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York Supreme Court, County of New York, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address
shall be deemed in every respect effective service of process upon the Company, in any such suit, action or proceeding, and service
of process upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed in every respect
effective service process upon the Placement Agent, in any such suit, action or proceeding. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. If either party shall commence an action
or proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its attorneys fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

SECTION
12. ENTIRE AGREEMENT/MISC. This Agreement (including the attached Indemnification Provisions) embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior agreements and understandings, relating to the subject
matter hereof. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination
will not affect such provision in any other respect or any other provision of this Agreement, which will remain in full force
and effect. This Agreement may not be amended or otherwise modified or waived except by an instrument in writing signed by both
Maxim and the Company. The representations, warranties, agreements and covenants contained herein shall survive the closing of
the Placement and delivery and/or exercise of Securities. This Agreement may be executed in two or more counterparts, all of which
when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed
by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or a .pdf format file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if
such facsimile or .pdf signature page were an original thereof. The Company agrees that the Placement Agent may rely upon, and
is a third party beneficiary of, the representations and warranties, and applicable covenants set forth in any such purchase,
subscription or other agreement with the Purchasers in the Placement. All amounts stated in this Agreement are in US dollars unless
expressly stated.

 

SECTION
13. NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or
communication is sent to the email address specified on the signature pages attached hereto prior to 6:30 p.m. (New York City
time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is sent to
the email address on the signature pages attached hereto on a day that is not a business day or later than 6:30 p.m. (New York
City time) on any business day, (c) the third business day following the date of mailing, if sent by U.S. internationally recognized
air courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages hereto.

 

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ADDENDUM
A

 

INDEMNIFICATION
PROVISIONS

 

In
connection with the engagement of Maxim Group LLC (“Maxim”) by Reeds, Inc. (the “Company”) pursuant
to a letter agreement dated April 28, 2016 between the Company and Maxim, as it may be amended from time to time in writing (the
“Agreement”), the Company hereby agrees as follows:

 

1.The
Company hereby agrees to indemnify and hold Maxim, its officers, directors, principals, employees, affiliates, and stockholders,
and their successors and assigns, harmless from and against any and all loss, claim, damage, liability, deficiencies, actions,
suits, proceedings, costs and legal expenses or expense whatsoever (including, but not limited to, reasonable legal fees and other
expenses and reasonable disbursements incurred in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or threatened, or any claim whatsoever, or in appearing
or preparing for appearance as witness in any proceeding, including any pretrial proceeding such as a deposition) (collectively
the “Losses”) arising out of, based upon, or in any way related or attributed to, (i) any breach of a representation,
warranty or covenant by the Company contained in this Agreement; or (ii) any activities or services performed hereunder by Maxim,
unless it is finally judicially determined in a court of competent jurisdiction that such Losses were the primary and direct result
of the willful misconduct, gross negligence or bad faith of Maxim in performing the services hereunder.

 

2.If
Maxim receives written notice of the commencement of any legal action, suit or proceeding with respect to which the Company is
or may be obligated to provide indemnification pursuant to this Section 2, Maxim shall, within twenty (20) days of the receipt
of such written notice, give the Company written notice thereof (a “Claim Notice”). Failure to give such Claim Notice
within such twenty (20) day period shall not constitute a waiver by Maxim of its right to indemnity hereunder with respect to
such action, suit or proceeding; provided, however, the indemnification hereunder may be limited by any such failure to provide
a Claim Notice to the Company that materially prejudices the Company. Upon receipt by the Company of a Claim Notice from Maxim
with respect to any claim for indemnification which is based upon a claim made by a third party (“Third Party Claim”),
the Company may assume the defense of the Third Party Claim with counsel of its own choosing, as described below. Maxim shall
cooperate in the defense of the Third Party Claim and shall furnish such records, information and testimony and attend all such
conferences, discovery proceedings, hearings, trial and appeals as may be reasonably required in connection therewith. Maxim shall
have the right to employ its own counsel in any such action which shall be at the Company’s expense if (i) the Company and
Maxim shall have mutually agreed in writing to the retention of such counsel, (ii) the Company shall have failed in a timely manner
to assume the defense and employ counsel or experts reasonably satisfactory to Maxim in such litigation or proceeding or (iii)
the named parties to any such litigation or proceeding (including any impleaded parties) include the Company and Maxim and representation
of the Company and Maxim by the same counsel or experts would, in the reasonable opinion of Maxim, be inappropriate due to actual
or potential differing interests between the Company and Maxim. The Company shall not satisfy or settle any Third Party Claim
for which indemnification has been sought and is available hereunder, without the prior written consent of Maxim, which consent
shall not be delayed and which shall not be required if Maxim is granted a release in connection therewith. The indemnification
provisions hereunder shall survive the termination or expiration of this Agreement.

 

    	 	 	 

    	 	 	 

    

 

3.
The Company further agrees, upon demand by Maxim, to prompt l y reimburse Maxim for, or pay. any loss, claim, damage, liability
or expense as to which Maxim has been indemnified herein with such reimbursement to be made currently as any loss, damage, li
ability or expense is incurred by Maxim. Notwithstanding the provisions of the aforementioned Indemnification, any such reimbursement
or payment by the Company of fees, expenses, or disbursements incurred by Maxim shall be repaid by Maxim in the event of any
proceeding in which a final judgment (after all appeals or the expiration of time to appeal) is entered in a court of competent
jurisdiction against Maxim based solely upon its gross negligence, bad faith or willful misconduct in the performance of its duties
hereunder, and provided further, that the Company shall not be required to make reimbursement or payment for any settlement effected
without the Company·s prior written consent (which consent shall not be unreasonably withheld or delayed).

 

4.
If for auy reason the foregoing indemnification is unavailable or is insufficient to hold such indemnified party hannless,
the Company agrees to contribute t he amount paid or payable by such indemnified party in such proportion as to reflect not only
the relative benefits received by the Company, as the case may be. on the one hand, and Maxim, on the other hand , but a lso the
relative fault of the Company and Maxim as well as any relevant equitable considerations. ln no event shall Maxim contribute
in excess of the fees actually received by it pursuant to the terms of this Agreement.

 

5.
For purposes of this Agreement, each officer, director, stockholder, and employee or affiliate of Maxim and each person,
if any, who controls Maxim (or any affi liate) within the meaning of either Section 15 of the Securities Act of 1933, as amended,
or Section 20 of the Securities Exchange Act of 1934. as amended. shall have the same rights as Maxim with respect to matters
of indemnification by the Company hereunder.

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