How do I vote if I am a beneficial stockholder?If you are a beneficial stockholder, you have the right to direct your broker or nominee on how to vote your shares. You should complete a voting instruction card which your broker or nominee is obligated to provide to you. If you wish to vote in person at the meeting, you must first obtain from the record holder a proxy card issued in your name.

What items will be voted upon at the Annual Meeting?The following items will be voted upon at the Annual Meeting:

1. the election of John J. Bello, Valentin Stalowir,Norman E. Snyder, Jr., Lewis Jaffe, Charles F. Cargile, Christopher J. Reed, Scott R. GrossmanJames C. Bass, Louis Imbrogno, Jr. and James BassRhonda Kallman to serve a one-year term until their respective successors are duly elected and qualified or until their death, resignation, removal or disqualification;

2. the adoptionamendment of the e Reed’s, Inc. 20172020 Equity Incentive Compensation Plan;Plan to increase the number of the shares available under thereunder from 8,500,000 to 15,000,000;

3. the amendment of Reed’s certificate of incorporation to increase the authorized shares of common stock from 19,500,000120,000,000 to 40,000,000;180,000,000;

4. the amendment of Reed’s certificate of incorporation to increase the authorized shares of blank check preferred stock from 500,000 to 2,500,000;

5. the approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock, as required by and in accordance with NYSE American Company Guide Rule 713;

6. the approval of any change of control that could result from the potential issuance of securities in the non-public offerings following approved of Proposal 5, as required by and in accordance with NYSE American Company Guide Rule 713;

7. the approval of an amendment to the Reed’s bylaws to authorize the board of directors to set the maximum size of the board between five (5) and nine (9) seats, from time to time;

8. ratification of the appointment of Weinberg & Company, P.A. as our independent registered public accounting firm for the fiscal year ending December 31, 2018;2022;

5. the grant of authority to the board to effect a reverse stock split of our common stock within one year and within a range of 1-for-2 and 1-for-5, inclusive, 9should the board deem such a move to be in the company’s best interests;. stockholder proposal entitled “Shareholder Proxy Access”; and

10.6. such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

The board of directors does not currently know of any other matters that may be brought before the meeting for a vote. However, if any other matters are properly presented for action, it is the intention of the persons named on the proxy card to vote on them according to their best judgment.

What is the board of directors’board’s voting recommendation?For the reasons set forth in more detail later in the Proxy Statement, the board of directors unanimously recommends a voteFORthe election of all nominees for director proposed by our Boardboard (Proposal No. 1). The board unanimously recommends a vote FOR the increase of directors has adoptedthe number of the shares available under the Reed’s, Inc. 20172020 Equity Incentive Compensation Plan and unanimously recommends a voteFORits adoptionfrom 8,500,000 to 15,000,000 (Proposal No. 2). The board of directors unanimously recommends a voteFORthe amendment of Reed’s certificate of incorporation to increase the authorized shares of common stock from 19,500,000120,000,000 to 40,000,000180,000,000 (Proposal No. 3),FORthe amendment of Reed’s certificate of incorporation to increase the authorized shares of blank check preferred stock from 500,000 to 2,500,000 (Proposal No. 4),FORthe approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock, as required by and in accordance with NYSE American Company Guide Rule 713 (Proposal No. 5),FORthe approval of any change of control that could result from the potential issuance of securities in the non-public offerings following approved of Proposal No. 5, as required by and in accordance with NYSE American Company Guide Rule 713 (Proposal No. 6), andFORthe approval of the amendment to the Reed’s bylaws (Proposal No. 7). The Board hasboard unanimously ratified the selection of Weinberg & Company, P.A. as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal No. 8)4) which selection was made by the company’s audit committee.board’s Audit Committee. The Boardboard unanimously recommends a voteFOR Proposal No. 8. The Board unanimously recommends a voteAGAINSTthe stockholder proposal entitled “Shareholder Proxy Access”amendment to Reed’s certificate of incorporation to effect the Reverse Stock Split (Proposal No. 9)5).

Who will solicit proxies on behalf of the board?The Companycompany has retained Okapi Partners, a proxy solicitation firm, who may solicit proxies on the board’s behalf. The original solicitation of proxies by mail may be supplemented by telephone, telegram, facsimile, electronic mail, Internet and personal solicitation by our directors, director nominees and certain of our executive officers and other employees (who will receive no additional compensation for such solicitation activities), or by Okapi Partners. You may also be solicited by advertisements in periodicals, press releases issued by us and postings on our corporate website or other websites. Unless expressly indicated otherwise, information contained on our corporate website is not part of this Proxy Statement. In addition, none of the information on the other websites listed in this Proxy Statement is part of this Proxy Statement. These website addresses are intended to be inactive textual references only.only.

Who will pay for the costs involved in the solicitation of proxies?The entire cost of soliciting proxies on behalf of the board, including the costs of preparing, assembling, printing and mailing this Proxy Statement, the proxy card and any additional soliciting materials furnished to stockholders by, or on behalf of, the Company,company, will be borne by the Company.company. Copies of the Company’scompany’s solicitation material will be furnished to banks, brokerage houses, dealers, voting trustees, their respective nominees and other agents holding shares in their names, which are beneficially owned by others, so that they may forward such solicitation material, together with our 2016 Annual Report which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, to beneficial owners. In addition, if asked, the Companycompany will reimburse these persons for their reasonable expenses in forwarding these materials to the beneficial owners. We have engaged Okapi Partners to solicit proxies from stockholders in connection with the Annual Meeting. We will pay Okapi Partners a fee of up to $8,500$9,000 plus costs and expenses. In addition, we have agreed to indemnify Okapi Partners and certain related persons against certain liabilities arising out of or in connection with their engagement.

Who can answer my questions?Your vote at this year’s Annual Meeting is important, no matter how many or how few shares you own. Please sign and date the enclosed proxy card or voting instruction form and return it in the enclosed postage-paid envelope promptly or vote by Internet or telephone. If you have any questions or require assistance in submitting a proxy for your shares, please call Okapi Partners, the firm assisting us in the solicitation of proxies:

How can I obtain additional copies of these materials or copies of other documents?Complete copies of this Proxy Statement and 2015 Annual Report which includes our Annual Report on Form 10-K for the year ended December 31, 2016, are also available at:www.okapivote.com/REEDSREEDS.

You may also contact Okapi Partners for additional copies. You are encouraged to access and review all of the important information contained in the proxy materials before voting.

How can I provide my comments to the company?We urge you to let us know your comments about the company or to bring a particular matter to our attention by writing directly to us at Reed’s, Inc., 13000 South Spring Street, Los Angeles, California 90061,201 Merritt 7 Corporate Park, Norwalk, Connecticut 06851, attention: Judy Holloway Reed,Thomas J. Spisak, Chief Financial Officer and Secretary.

How many votes are needed to have the proposals pass?The affirmative vote of themajority of the votes presentshares represented at the meeting and entitled to vote on the matterat the Annual Meeting is required to elect the directors (Proposal No. 1) and to approve Proposal Nos. 2 5, 6, 7, 8 and 9.4. The affirmative vote of themajority of votes outstandingand entitled to vote at the Annual Meeting is required to approve Proposal Nos. 3 and 4,5, effecting amendments to the Company’s Certificatecompany’s certificate of Incorporation.incorporation.

How are the votes counted?You will have one vote for each share of our common stock that you owned on the record date. If the proxy card is properly executed and returned prior to the Annual Meeting, the shares of common stock it represents will be voted as you instruct on the proxy card. If a proxy card is unmarked, or if you indicate no vote, the shares of common stock it represents will be votedFORProposal No. 1, the election of directors recommended by the board, of directors,FORProposal No. 2, the adoption of the Reed’s, Inc. 20172020 Equity Incentive Compensation Plan,FORProposal No. 3 amendment of Reed’s certificate of incorporation to increase the authorized shares of common stock,FORProposal No. 4, the amendment of Reed’s certificate of incorporation to increase the authorized shares of blank check preferred stock,FORProposal No. 5, the approval of the issuance of securities in one or more non-public offerings where the maximum discount at which securities will be offered will be equivalent to a discount of up to 25% below the market price of our common stock, as required by and in accordance with NYSE American Company Guide Rule 713,FORProposal No. 6, the approval of any change of control that could result from the potential issuance of securities in the non-public offerings following approved of Proposal 5, as required by and in accordance with NYSE American Company Guide Rule 713,FORProposal No. 7, the amendment of our bylaws,FORProposal No. 8, ratification of the appointment of Weinberg & Company, P.A. as the Company’scompany’s independent registered public accounting firm andAGAINSTFORProposal No. 9,5, approval of the stockholder proposal entitled “Shareholder Proxy Access”.amendment to Reed’s certificate of incorporation to effect the Reverse Stock Split.

No Cumulative Voting.Holders of common stock shall not be entitled to cumulate their votes for the election of directors or any other matters.

Abstentions.In all matters abstentions have the same effect as votes “AGAINST” the matter. Abstentions will be counted as present and entitled to vote for purposes of determining whether a quorum is present at the annual meeting.

Broker Non-Votes. A brokerWhether a proposal is entitledconsidered a “routine” matter or a “non-routine” matter is subject to the interpretation of certain rules that are applicable to brokers. NASDAQ Rule 2251 currently governs when NASDAQ members may vote shares held for customers by adopting the FINRA Rules. The FINRA rule, in turn, currently prohibits members from voting any uninstructed shares, but also permits the member to follow the rules of another self-regulatory organization of which the broker is a member, such as NYSE, instead, provided that the records of the member clearly indicate the procedure it is following. Proposal Nos. 3, 4 and 5 are considered “routine” matters under NYSE guidelines and, as such, any NYSE member broker who has received no instructions from its clients and participates in discretionary voting will have discretion to vote its clients’ uninstructed shares on Proposals Nos. 3, 4 and 5. For that reason, if you are a beneficial ownerholder and you wish to vote “for,” “against” or “abstain” from Proposals Nos. 3, 4, and 5 and your broker is an NYSE member that participates in discretionary voting, you will have to provide your broker with such an instruction. Otherwise, your broker may vote in its discretion on routine matters, such as the ratification of the appointment of Weinberg & Company, P.A. as the Company’s independent registered public accounting firm, without instructions from the beneficial owner of those shares.these proposals. On the other hand, a broker is not entitled to vote shares held for a beneficial owner on non-routine items contained in the remaining proposals. Consequently, if you hold shares in street nameproposals, Proposals Nos. 1 and you do not submit any voting instructions to your2. A “broker non-vote” occurs when a broker your broker may exercise its discretion to vote your shares on the proposal to ratify the appointment of Weinberg & Company, P.A. If your shares are voted on this item as directed by your broker, your shares will constitute “broker non-votes” on each of the non-routine items. Broker non-votes will have the same effect as a vote “AGAINST” the proposals to amend the Company’s certificate of incorporation and bylaws but will not be counted in determining the outcome of thecannot vote on each ofa matter without instructions from the other non-routine items, although they will count for purposes of determining whether a quorum is present.beneficial holder and such instructions are not received.

Quorum. A majority of the shares of common stock outstanding on the record date, represented in person or by proxy, will constitute a quorum at the Annual Meeting. As of July 18, 2017November 10, 2021 we had [●]93,729,329.95 shares of common stock outstanding. The number of shares required to be represented in person or by proxy tat the Annual Meeting to constitute a quorum is [●].46,864,666.

How can I revoke my proxy?You may revoke your proxy at any time before it is voted at the meeting by taking one of the following three actions:

How would my proxy be voted on other matters?The persons named on the proxy card will have discretionary authority to vote on businessother thanProposals 1-71-5 as may properly come before the Annual Meeting.

Who will pay for the costs involved in the solicitation of proxies?This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors of Reed’s, Inc.Reed’s. Reed’s will pay all costs of preparing, assembling, printing and distributing the proxy materials. Copies of proxy materials will be furnished to brokerage houses, nominees, fiduciaries and custodians to forward to beneficial owners of common stock held in their names. Our employees, officers and directors may, for no additional compensation, solicit proxies on behalf of the board of directors through the mail, in person and by telecommunications. Upon request, we will reimburse brokerage firms and other record holders for their reasonable expenses incurred for forwarding solicitation material to beneficial owners of stock.

Do stockholders have any dissenters’ right with regards to the matters proposed to be acted upon?There are no rights of appraisal or other similar rights of dissenters under the laws of the State of Delaware with respect to any of the matters proposed to be acted upon herein.

Where can I find the voting results of the Annual Meeting?We expect to announce preliminary voting results at the Annual Meeting. The final voting results will be reported in a Current Report on Form 8-K that we expect to file with the Securities and Exchange Commission within four business days of the Annual Meeting, and that Form 8-K will be available on our website at http://reedsinc.com/investors/sec-filings/. We also expect to announce preliminary results at the Annual Meeting.

IMPORTANT

Please promptly vote and submit your proxy by signing, dating and returning the enclosed proxy card in the postage-prepaid return envelope so that your shares can be voted. This will not limit your rights to attend or vote at the 2017 Annual Meeting.

PROPOSAL 1:ELECTION OF JOHN BELLO, VALENTIN STALOWIR, LEWIS JAFFE, CHARLES F. CARGILE, CHRISTOPHER J. REED, SCOTT R. GROSSMAN AND JAMES BASS to serve a one-year term as Directors until their respective successors are duly elected and qualified or until their death, resignation, removal or disqualification

Our Bylawsbylaws provide that the number of directors on the Boardboard shall be not less than one or more than seven.nine. The Boardboard is empowered to fix the number of directors from time to time and it is currently set at seven.six. Proxies cannot be voted for a greater number of persons than the number of nominees named. The Board hasGovernance Committee of the board nominated, and the board approved the nominations of, sevensix persons to serve as directors until the 20172022 annual meeting, or until each director’s successor is elected and qualified. All of the nominees currently serve on our Board. Each of the nominees has agreed to continue to serve if elected. Management expects that each of the nominees will be available for election, but if any of them is not a candidate at the time the election occurs, it is intended that the proxies will be voted for the election of another nominee to be designated by the Boardboard to fill any vacancy. Additionally, the Boardboard may elect additional members of the Boardboard to fill any additional vacancies.

The nominees are as follows:

Business Experience of Nominees

Valentin Stalowirwas appointed Chief Executive Officer of Reed’s on June 28, 2017. Also on June 28, 2017, the board of directors of Reed’s expanded the board to six seats and appointed Mr. Stalowir to serve as a director, filling the newly created vacancy. Since November 2016, Mr. Stalowir has served as an independent food and beverage investment consultant working with varied consumer focused private equity groups. Prior, from April 2015 to November 2016, Mr. Stalowir served as Chief Executive Officer of privately held International Harvest, Inc., a leading supplier of certified organic, gluten free, non-GMO, vegan and raw superfoods. In 2011, Mr. Stalowir founded Global Restaurant Group, LLC (GRG) in Kyiv, Ukraine, a privately held, international quick serve restaurant operator and platform that is now YUM! Brands’ lead KFC franchisee in Ukraine. Mr. Stalowir served as Chief Executive Officer of GRG until September 2014, when, due to political and economic challenges in Ukraine, much of the investment activity in the country was suspended. GRG LLC continues to operate led by local management and recently announced the opening of an additional restaurant in the capital city of Kyiv. From 2010 to 2012, Mr. Stalowir served as Executive Partner of APTA Capital, LLC, a US private equity firm providing growth equity investments and operational leadership to consumer branded companies. From 2002 to 2010, Mr. Stalowir was Chief Executive Officer of Preferred Brand Holdings, LLC, a private equity fund backed by Emigrant Savings Bank, where he co-founded the consumer practice and led the investment and growth strategies for five portfolio companies in the food and beverage sector. From 1999 to 2001, he served as President, North American division of Tomra Systems, ASA, a publically traded Norwegian company and the global leader for beverage container return and processing systems and reverse vending machines. Prior, Mr. Stalowir served in marketing and general management positions with the Coca-Cola Company and the Quaker Oats Company.

Mr. Stalowir earned his MBA in Marketing and Finance with Distinction from the University of Michigan in 1990 and received dual BA degrees in Economics and Art History from the College of William and Mary in 1985.

John J. Belloand has served as Reed’s board Chairman since his election on November 29, 2016 and is currently Chairman of the Compensation Committee. Mr. Bello is ourReed’s sales and marketing expert. Mr. Bello also served as Reed’s Interim Chief Executive Officer of the company from September 30, 2019 through February 29, 2020. Since 2001, Mr. Bello has been the Managing Director of JoNa Ventures, a family venture fund. From 2004 to 2012 Mr. Bello also served as Principal and General Partner at Sherbrooke Capital, a venture capital group dedicated to investing in leading, early stage health and wellness companies. Mr. Bello is the founder and former CEO of South Beach Beverage Company, the maker of nutritionally enhanced teas and juices marketed under the brand name SoBe. The company was sold to PepsiCo in 2001 for $370 million. Inmillion and in the same year Ernst and Young named Mr. Bello National Entrepreneur of the Year in the consumer products category for his work with SoBe. Before founding SoBe, Mr. Bello spent 14fourteen years at National Football League Properties, the marketing arm of the NFL and served as its President from 1986 to 1993.

As the President, Mr. Bello has been credited for building NFL Properties into a sports marketing leader and creating the model by which every major sports league now operates. Prior to working for the NFL, Mr. Bello served in marketing and strategic planning capacities at the Pepsi Cola Division of PepsicoPepsiCo Inc. and in product management roles for General Foods Corporation inon the Sanka and Maxwell House brands. As a board chair, Mr. Bello has also worked with IZZE and Firefighter brands in brand building, marketing and strategic planning capacities. That brand was also sold to PepsiCo.

Mr. Bello earned his BA from Tufts University, cum laude, and received his MBA from the Tuck School of Businessbusiness at Dartmouth College as an Edward Tuck Scholar. Mr. Bello is extensively involved in non-profit work and currently serves as a Tufts University Trustee and advisory board member (athletics). Additionally, he serves on the boards of: the Gordon Entrepreneurial Center at Tufts, the Tuck Center for Private Equity, the YMCA in Rye, New York and the New York Council Boy Scouts of America.Veteran Heritage Project in Scottsdale, Arizona. Mr. Bello also serves on the board of Boathouse SportsRockford Fosgate, a seller of OEM audio equipment, and is executive director of Luminesce Eye Therapies.Therapies which has licensed its technology to Bausch and Lomb, who markets a redness reduction eye drop under the Lumify brand name.

Lewis Jaffeis our Board’sboard’s governance expert, has served as a director of Reed’s since his appointment on October 19, 2016, and is Chairman of the Governance Committee. Since August 2014, Mr. Jaffe has been teaching as an Executive-in-Residence and Clinical Faculty at the Fred Kiesner Center for Entrepreneurship, Loyola Marymount University. Since January 2010 Mr. Jaffe has served as Chairman of the Boardboard for FitLife Brands IncInc. (FTLF:OTCBB) and serves on its audit, compensation and governance committees. Since 2006 he has served on the Boardboard of Directorsdirectors of York Telecom, a private equity owned company, and serves on its compensation and governance committees. From 2006 to 2008 Mr. Jaffe was Interim Chief Executive Officer and President of Oxford Media, Inc. Mr. Jaffe has also served in executive management positions with Verso Technologies, Inc., Wireone Technologies, Inc., Picturetel Corporation, and he was also previously a Managing Director of Arthur Andersen. Mr. Jaffe was the co-founder of MovieMe Network. Mr. Jaffe also served on the Boardboard of Directorsdirectors of Benihana, Inc. as its lead independent director from 2004 to 2012.

Mr. Jaffe is a graduate of the Stanford Business School Executive Program, holds a Bachelor of Science from LaSalle University and holds a MastersMaster’s Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing program.

Charles F. CargileJames C. Bass was elected to the board by the company’s stockholders on September 29, 2017. He is ourthe company’s audit committee financial expert and has servedserves as director of Reed’s since his election on November 29, 2016. He is Chairman of the Audit Committee. Mr. Cargile has a distinguished career as an executive and board member in publicly traded companies. Mr. Cargile is currently the Chief Executive officer and member of the board of directors of Sunworks, a leading provider of solar power solutions. Prior to Sunworks, Mr. Cargile was Senior Vice President, Chief Financial Officer and Treasurer of Newport Corporation from 2000 to 2016. Mr. Cargile is also the lead independent director of Netlist and on the board of directors of Photon Control. Sunworks, Newport and Netlist are all listed on NASDAQ. Photon Control is listed on the TSX Venture Exchange in Canada.

Mr. Cargile holds a Bachelor of Science degree in Accounting from Oklahoma State University and a Master’s degree in Business Administration from the Marshall School of Business at the University of Southern California. Mr. Cargile has his Professional Director Certification from the American College of Corporate Directors.

Christopher J. Reedfounded our company in 1987 and has served as our Chairman, President and Chief Executive Officer since our incorporation in 1991 through April 19, 2017. Currently he serves as Chief Innovation Officer and director. Mr. Reed became interested in natural foods, yoga and meditation in 1977. He studied herbal systems of medicine from India and China and became enamored with ginger for its health properties. In 1987, Mr. Reed founded Reed’s Inc. and set out to bring ginger to the world through a natural ginger ale brewed directly from fresh ginger root. From the inception of the company, Mr. Reed has been responsible for developing the original product recipes, proprietary brewing processes, packaging designs and marketing concepts behind our Reed’s product lines. These include Reed’s Ginger Brews, Reed’s Culture Club Kombucha line, Reed’s Natural Energy Elixir and Reed’s Ginger Candies. In 2000 Reed’s acquired Virgil’s Root Beer, which Mr. Reed expanded by adding a Virgil’s Cream Soda line, Real Cola, Dr. Better and a line of Virgil’s stevia sweetened “Zero” beverages.

Prior to starting Reed’s Inc., Mr. Reed was a chemical engineer working in gas purification and liquefaction with a specialty in designing liquefied natural gas (LNG) plants. Mr. Reed received a B.S. in Chemical Engineering in 1980 from Rensselaer Polytechnic Institute in Troy, New York.

Scott R. Grossmanis Chief Executive Officer of Vindico Capital, a value-oriented investment firm focused on small-to-medium sized public companies undergoing change which he founded in April 2017. Prior to launching Vindico, Mr. Grossman spent over eleven years at Magnetar Capital, a multi-strategy alternative asset manager with approximately $14BN AUM, where he most recently served as Senior Portfolio Manager within equities from 2014-2017. Prior to this role, Mr. Grossman served as Portfolio Manager within Magnetar's Event Driven business (2009-2013); Portfolio Manager of Special Situations (2007-2009); and he first joined its Fundamental Credit business in 2006. Before Magnetar, Mr. Grossman was an associate at Soros Private Equity Partners, a $3.0 billion private equity business within Soros Fund Management focused on middle-market buyouts and late-stage growth investments across various industries. He started his career at Merrill Lynch in its Financials Sponsors Group within its investment banking division. Mr. Grossman is also a non-operating partner and current Board Member of Zeitguide, a privately-held research advisory business that educates leading executives and their teams on the transformational forces impacting culture and global businesses.

Mr. Grossman received an MBA from the Stanford Graduate School of Business and a BA from Columbia University where he graduated magna cum laude majoring in Economics.

James Bassis a seasoned Senior Level Financial Executive with diversified management experience in the consumer products, high technology and entertainment industries. From 1996 to July 2017 Mr. Bass served as Senior Vice President and Chief Financial Officer at Sony Interactive Entertainment America, LLC in San Mateo, CA. Over his years at Sony, Mr. Bass became responsible for all financial operations and business performance, including information technology and facility management. Mr. Bass possesses a strong understanding of the retail sales environment and regulatory processes and has focused productively at Sony on inventory control and receivables management. Prior to his current tenure at Sony in San Mateo, Mr. Bass was Vice President of Finance for Sony in New York, New York. There he focused on winding down non-profitable ventures, building in-roads for future growth and identifying “back office” requirements of the worldwide division. Mr. Bass worked as controller for Wang Laboratories from 1991-1993. From 1977-1990, Mr. Bass worked for Bristol-Myers Squibb Company holding positions in finance and management in New York as well as Lisbon, Portugal and Bangkok, Thailand.

Mr. Bass has hisholds a BBA in Accounting and Financial Management from Pace University and was awarded his CPA certification in New York in 1977.

Director IndependenceLouis Imbrogno, Jr. was appointed to the board on August 7, 2019. Mr. Imbrogno joins the board after a 40-year tenure with PepsiCo, from 1968-2009, bringing extensive expertise in beverage supply chain and management. At PepsiCo he served in a variety of field operating assignments and staff positions including the role of Senior Vice President of Worldwide Technical Operations. In this role he was responsible for Pepsi-Cola’s worldwide beverage quality, concentrate operations, research & development and contract manufacturing, reporting directly to the heads of Pepsi-Cola North America and PepsiCo Beverages International. Since Mr. Imbrogno’s retirement from PepsiCo, he has consulted for multiple companies, including PepsiCo. 

Mr. Imbrogno holds a BBA in accounting from Pace University and an MBA from Wharton.

Rhonda Kallman is the founder of Boston Harbor Distillery, LLC, makers of craft whiskey, gin, rum, liqueurs and other inventive spirits, and has served as its Chief Executive Officer since 2012. In 1984, she co-founded The board of directors has determined that five of our nominees, John Bello, Lewis Jaffe, Charles Cargile, Scott R. GrossmanBoston Beer Company (NYSE: SAM) and James Bass do not have relationships that would interfere withserved as EVP, overseeing sales & marketing as well as the exercise of independent judgmentcompany’s human capital. Kallman was instrumental in carrying outpaving the responsibilities of a directorway for craft beer acceptance by making it available throughout the US while educating consumers on American craft beer superiority. In addition, as the pioneering women in the beer industry, she was able to lead the way for other women to earn the respect and that each of these nominees is an “independent director” as defined under Section 803credibility they deserve.

Committee Membership

Subject to election of the director nominees at the Annual Meeting, composition of the NYSE American Company Guide.committees of the board will be as follows: [●]

Vote Required

Theaffirmative vote of the majority of the shares represented at the meeting and entitled to vote on the matter is required for the election of directors. Unless a stockholder indicates otherwise, each signed proxy will be votedFORthe election of these nominees.

The board of directors unanimously recommends a vote “FOR” the election of Valentin Stalowir, John J. Bello, Norman E. Snyder, Jr. Lewis Jaffe, Charles F. Cargile, Christopher J. Reed, Scott R. GrossmanJames C. Bass, Louis Imbrogno, Jr. and James BassRhonda Kallman as directors.

CORPORATE GOVERNANCE

We are committed to having sound corporate governance principles. We believe that such principles are essential to running our business efficiently and to maintaining our integrity in the marketplace. There have been no changes to the procedures by which stockholders may recommend nominees to our board.

BOARD AND COMMITTEE MEETINGSDirector Qualifications

DuringWe believe that our directors should have the 2016 fiscal year, membershighest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business or banking. They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties for us. Each director must represent the interests of all stockholders. When considering potential director candidates, the board also considers the candidate’s character, judgment, diversity, age and skills, including financial literacy and experience in the context of our needs and the needs of the board of directors met 20 times in various meetings. A majority of the directors and a majority of the independent directors attended all meetings. Each member of a committee of our board attended at least 75% of their respective committee meetings during the period of service.

The Company does not have a policy for board meeting or committee meeting attendance because, pursuant to our Bylaws, members constituting a majority of directors constitute a quorum for meetings of the Board and a majority of our directors, including a majority of the independent directors, regularly attend all meetings.board.

ATTENDANCE OF BOARD MEMBERS AT ANNUAL STOCKHOLDERS’ MEETINGBoard and Committee Independence

The Company does not have a policy for attendanceboard, upon recommendation from the Governance Committee, determined that each of Lewis Jaffe, James C. Bass, Louis Imbrogno, Jr. and Rhonda Kallman is an “independent director” as defined by Rule 5605(a)(2) of The NASDAQ Stock Market Rules (the “NASDAQ Rules”). Independence of board members is re-evaluated by the board annually. We intend to maintain at annual stockholder’s meetings.least a majority of independent directors on our board in the future.

The board determined, upon recommendation from the Governance Committee, that members of the Audit Committee are independent under the additional requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”). In addition, the board determined that (i) none of the Audit Committee members have participated in the preparation of the financial statements of the company at any time during the past three years and (2) Audit Committee members are able to read and understand fundamental financial statements. Additionally, we intend to continue to have at least one member of the Audit Committee whose experience or background results in the individual’s financial sophistication.

The board determined, upon recommendation from the Governance Committee, that members of the Governance Committee are independent under the additional independence requirements for members of the Governance Committee under Rule 10C-1 under the Exchange Act and meet the qualifications of “non-employee directors” for the purposes of Section 16 of the Exchange Act. When considering the sources of a director’s compensation for this purpose, the board considers whether the director receives compensation from any person or entity that would impair the director’s ability to make independent judgments about the company’s executive compensation. Similarly, when considering any affiliate relationship a director has with the company, in determining independence for purposes of Governance Committee service, the board considers whether the affiliate relationship places the director under the direct or indirect control of the company or its senior management, or creates a direct relationship between the director and members of senior management, in each case of a nature that would impair the director’s ability to make independent judgments about the company’s executive compensation.

BOARD STRUCTURE AND COMMITTEESCode of Ethics

Our Chief Executive Officer and all senior financial officers, including the Chief Financial Officer, are bound by a Code of Ethics that complies with Item 406 of Regulation S-B of the Exchange Act. The board also adopted a Code of Business Conduct and Ethics that applies to all of the company’s directors, officers and employees. Our Code of Business Conduct and Ethics is posted on our website at www.reedsinc.com.

Hedging, Pledging and Insider Trading Policies

We do not have practices or policies relating to employees (including officers) or directors engaging in hedging in our securities.

Board Structure and Committee Composition

As of the date of this Proxy Statement, our board of directors has six directors and the following four standing committees: an Audit Committee, a Compensation Committee, a Governance Committee and an Operations Committee. The Audit Committee, Compensation Committee and Governance Committee were formed in January 2007. The Operations Committee was formed in May 2017. The Board has added one seat, increasing the number of directors to seven for the coming year.

Board Determination of Independence

Under applicable NYSE American rules, a director will only qualify as an “independent director” if, in the opinion of the Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Boardboard has determined that John Bello, Lewis Jaffe and Charles Cargile do not have relationships that would interfere with the exerciseeach member of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under the listing standards of the NYSE American and within the meaning of the Sarbanes Oxley Act of 2002, Section 301(3). We intend to maintain at least three independent directors on our Board at all times in the future. We intend to maintain independent directors constituting our Audit Committee, Compensation Committee and Governance Committee is and “independent director” as well.

Committees

defined by Rule 5605(a)(2) of The Board has established Audit, Compensation, Governance and Operations Committees.NASDAQ Stock Market Rules. The Boardboard has adopted a written charter for each of these four committeesthe Audit Committee, Compensation Committee and Governance Committee that address the make-up and functioning of the Board.board. The Board hasboard also adopted a Code of Business Conduct and Ethics that applies to all of the Company’scompany’s directors, officers and employees. The committee charters and Code of Business Conduct and Ethics are posted on our website atwww.reedsinc.com. www.reedsinc.com.

Audit CommitteeCommittee..Our Audit Committee oversees our accounting and financial reporting processes, internal systems of accounting and financial controls, relationships with independent auditors and audits of financial statements. Specific responsibilities include the following:

Our Audit Committee is comprised of Lewis Jaffe, Scott R. Grossman and Charles Cargile. Charles CargileJames C. Bass. James C. Bass serves as Chairman of the Audit Committee. We believe Charles Cargilehave determined James C. Bass meets SEC requirements of an “audit committee financial expert” within the meaning of the Sarbanes Oxley Act of 2002, Section 407(b).

Compensation CommitteeCommittee..Our Compensation Committee assists our Boardboard in determining and developing plans for the compensation of our officers, directors and employees. Our Compensation Committee is comprised of John Bello, Lewis Jaffe, James C. Bass and Charles Cargile.Scott R. Grossman. Scott R. Grossman serves as Chairman of our Compensation Committee. In affirmatively determining the independence of a director who will serve on the compensation committee, the Company’s BoardCompensation Committee, our Governance Committee and board considered all factors specifically relevant to whether the director has a relationship to the Companycompany which is material to the director’s ability to be independent from management in connection with the duties of a committee member, including, without limitation: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the Company;company; and (2) whether the director is affiliated with the Company,company, or an affiliate of the Company.

company. Specific responsibilities include the following:

The Compensation Committee’s compensation objectives are to attract and retain highly qualified individuals with a demonstrated record of achievement, reward past performance, provide incentives for future performance and align the interests of the Named Executive Officers with the interests of our stockholders.

Governance CommitteeCommittee..Our Governance Committee assists the Boardboard by identifying and recommending individuals qualified to become members of our Board,board, reviewing correspondence from our stockholders, and establishing, evaluating and overseeing our corporate governance guidelines. Our Governance Committee is currently comprised of John Bello, Lewis Jaffe and Charles Cargile.Scott R. Grossman. Lewis Jaffe serves as Chairman of the Governance Committee.

Specific responsibilities include the following:

The Governance Committee specifically reviews the qualifications of each candidate for election or re-election. For incumbent directors, this review includes the director’s participation in and contributions to the activities of the board, the director’s independence and past meeting attendance and whether the director’s skills and expertise continue to align with the company’s business strategy. After the Governance Committee evaluates all candidates for director, it presents its recommendation to the board.

Before they are nominated, each candidate for election and each incumbent director standing for re-election must consent to stand for election or re-election and provide certain representations required under our bylaws.

Operations Committee. Our Operations Committee assists the Boardboard in fulfilling its oversight responsibilities for matters relating to the Company’scompany’s operations, particularly those aspects which are most likely to affect stockholder value. Our Operations Committee is currently comprised of John J. Bello and Lewis Jaffe and Christopher Reed.Jaffe. In furtherance of this purpose, the Operations Committee has the following general oversight responsibilities:

Specific responsibilities include the following:

Board and Committee Meetings

During the 2020 fiscal year, members of the board met four times in routine meetings and 15 times in special meetings. A majority of the directors and a majority of the independent directors attended all meetings. Each member of a committee of our board attended at least 75% of their respective committee meetings during the period of service.

In 2020, all directors standing for re-election attended the annual meeting, which was conducted in a virtual-only format.

The company does not have a policy for board meeting or committee meeting attendance because, pursuant to our Bylaws, members constituting a majority of directors constitute a quorum for meetings of the board and a majority of our directors, including a majority of the independent directors, regularly attend all meetings.

Attendance of Board Members at Annual Stockholders’ Meeting

The company does not have a policy for attendance of board members at annual meetings of stockholders.

Leadership Structure

The business of our Companycompany is managed under the direction of the board, of directors, whose members are elected by the Company’scompany’s stockholders. The basic responsibility of the Boardboard is to lead the Companycompany by exercising its business judgment to act in what each director believes to be in the best interests of the Companycompany and its stockholders. Our Chairman and Chief Executive Officer positions are separate. Our Boardboard believes that having separateseparating Chairman and Chief Executive Officer positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Our board of directors believes that separating Chairman and Chief Executive Officer positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Our Board is led by an independent Chairman, John Bello. Our Chief Executive Officer, Valentin Stalwir, also serves as a member of the Board. We believe that this leadership structure enhances the accountability of the Chief Executive Officer to the Board,board, strengthens the Board’sboard’s independence from management and benefits independent risk oversight of the Company’scompany’s day-to-day risk management activities. In addition, separating these roles allows Mr. Stalowir to focus his efforts on running our business and managing the Company in the best interests of our stockholders, while we are able to benefit from Mr. Bello’s prior experience as a chairman of other public company boards.

Risk Oversight

The Boardboard is responsible for overseeing management and the business affairs of the Company,company, which includes the oversight of risk. In exercising its oversight, the Board hasboard allocated some areas of focus to its committees and has retained areas of focus for itself. Pursuant to its charter, the Audit Committee is responsible for assuring that the Boardboard is provided the information and resources to assess management’s handling of the Company’scompany’s approach to risk management. The Audit Committee also has oversight responsibility for the Company’scompany’s financial risk (such as accounting, finance, internal control and tax strategy), and the Audit Committee or the full Boardboard receives and reviews, as appropriate, the reports of the Company’scompany’s internal auditors regarding the results of their annual Company-widecompany-wide risk assessment and internal audit plan. Reports of all internal audits are provided to the Audit Committee. The Compensation Committee oversees compliance with the Company’scompany’s executive compensation plans and related laws and policies. The Governance Committee oversees compliance with governance-related laws and policies. Our Operations Committee assists the board in fulfilling its oversight responsibilities for matters relating to the company’s operations, particularly those aspects which are most likely to affect stockholder value. The Boardboard as a whole has responsibility for overseeing management’s handling of the Company’scompany’s strategic and operational risks. Throughout the year, senior management reports to the Boardboard the risks that may be material to the Company,company, including those disclosed in the Company’scompany’s quarterly and annual reports filed with the SEC. The goal of these processes is to achieve serious and thoughtful Board-levelboard-level attention to the nature of the material risks faced by the Companycompany and the adequacy of the Company’scompany’s risk management process and system. While the Boardboard recognizes that the risks which the Companycompany faces are not static, and that it is not possible to mitigate all risk and uncertainty all of the time, the Boardboard believes that the Company’scompany’s approach to managing its risks provides the Boardboard with the proper foundation and oversight perspective with respect to management of the material risks facing the Company.company.

Executive Sessions of Non-Management and Independent Directors

Executive sessions of the board in which management directors and other members of management do not participate are required to meet at least twice annually to review and evaluate the performance of the board and to evaluate the performance and approve the compensation of the Chief Executive Officer. In practice, our board typically meets in executive session during each routine board meeting. Non-management directors must preside at executive sessions, although the same director is not required to preside at all executive sessions. Presiding directors are chosen at the time of the meeting.

During 2017,2020, the Company’scompany’s non-management directors, all of whom are considered to be “independent” as defined under the listing standardsby Rule 5605(a)(2) of the NYSE AmericanThe NASDAQ Stock Market Rules and within the meaning of the Sarbanes Oxley Act of 2002, Section 301(3), were provided with the opportunity to meetmet in executive sessions of the Boardboard in which management directors and other members of management did not participate. participate four times.

At each audit committee meeting, the independent Boardboard members are afforded time to ask questions of the auditors and/or hold private discussions without the Companycompany management present.

Stockholder Communications with Our Board of Directors

Our Board hasboard established a process for stockholders to communicate with the board of directors or with individual directors. Stockholders who wish to communicate with our Boardboard or with individual directors should direct written correspondence to our principal executive offices located at 13000 South Spring Street, Los Angeles, California 90061,201 Merritt 7 Corporate Park, Norwalk, Connecticut 06851, attention: Judy Holloway Reed,Thomas J. Spisak, Chief Financial Officer and Secretary. Any such communication must contain:

Our SecretaryChief Financial Officer will forward such communications to our board of directors or the specified individual director to whom the communication is directed unless such communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the SecretaryChief Financial Officer has the authority to discard the communication or to take appropriate legal action regarding such communication.

Nomination Ofof Directors

Our Governance Committee determines the required selection criteria and qualifications of director nominees based upon our needs at the time nominees are considered. In general, directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of our stockholders. Moreover,In addition, our Governance Committee will strivestrives to ensure that at least one director meets the criteria for an “audit committee financial expert” as defined by SEC rules and that at least 50% of the directors comprising the Boardboard meet the definition of “independent director” under NYSE American rules.as defined by Rule 5605(a)(2) of The NASDAQ Stock Market Rules. Further our Governance Committee is committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which board nominees are chosen.

In addition to the above considerations, the Governance Committee will considerconsiders criteria such as strength of character and leadership skills; general business acumen and experience; broad knowledge of the industry; age; number of other board seats; and willingness to commit the necessary time to ensure an active board whose members work well together and possess the collective knowledge and expertise required by the board of directors.board. The Governance Committee will considerconsiders these same criteria for candidates regardless of whether the candidate was identified by the Governance Committee, by stockholders, or any other source.

The Governance Committee will :

			review candidates’ qualifications for membership and continuation on the board or a committee of the board (including a determination as to the independence of the candidate) based on the criteria established by the board;
			periodically review the composition of the board and its committees in light of the current challenges and needs of the board and each committee, and determine whether it may be appropriate to add or remove individuals after considering issues of judgment, diversity, age, skills, background and experience;
			consider rotation of committee members and committee Chairmen; and
			consider any other factors that are set forth in company’s Corporate Governance Guidelines or are deemed appropriate by the committee.

The Governance Committee considers qualified candidates for possible nomination that are submitted by our stockholders. Stockholders wishing to make such a submission may do so by sending the requisite information to the Governance Committee at the address indicated herein under the heading “Stockholder Communications with Our Boardboard of Directors.” Any recommendations submitted to the Chairman should be in writing and should include whatever supporting material the stockholder considers appropriate in support of that recommendation butand must include the information that would be required under the rules of the SEC in a proxy statement soliciting proxies for the election of such candidate and a signed consent of the candidate to serve as a director of Reed’s, if elected.

The Governance Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the resume and biographical information provided, an indication of the candidate’s willingness to serve and other background information, business experience, and leadership skills, all to the extent available and deemed relevant by the Governance Committee. This information is evaluated against the criteria set forth above and our specific needs at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet our needs may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information learned during this process, the Governance Committee determines which candidate(s) to recommend to the Boardboard to submit for election at the next stockholder meeting. The Governance Committee uses the same process for evaluating all candidates, regardless of the original source of the nomination.

Our goal is to seek to achieve a balance of knowledge and experience on our Board.board. To this end, we seek nominees with the highest professional and personal ethics and values, an understanding of our business and industry, diversity of business experience and expertise, a high level of education, broad-based business acumen, and the ability to think strategically. Although we use the criteria listed above as well as other criteria to evaluate potential nominees, we do not have a stated minimum criteriacriterion for nominees. The Board does not use different standards to evaluate nominees depending on whether they are proposed by our directors and management or by our stockholders. To date, we have not paid any third parties to assist us in finding director nominees.

AUDIT COMMITTEE REPORTAudit Committee Report

Our Audit Committee Charter is available on our website at: www.reedsinc.com. The Audit Committee is comprised of independent directors.

Notwithstanding anything to the contrary set forth in any of the company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that might incorporate future filings, including this Proxy Statement, in whole or in part, the following audit committee reportAudit Committee Report shall not be deemed to be “soliciting material,” is not deemed “filed” with the SEC and shall not be incorporated by reference into any filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in such filing except to the extent that the company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.

The primary purpose of the audit committeeAudit Committee is to assist the board of directors in fulfilling its oversight responsibilities with respect to matters involving the accounting, financial reporting and internal control functions of the company. The audit committeeAudit Committee has sole authority to select the company’s independent registered public accounting firm.

The audit committee’sAudit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm and other financial professional services providers. These services may include audit services, audit-related services, tax services and other services. Pre-approval generally is provided for up to one year and any pre-approval is detailed as to the particular service or category of services and generally is subject to a specific budget. The company’s independent registered public accounting firm and management report annually to the audit committeeAudit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed.

Management is responsible for preparing the company’s financial statements so that they comply with generally accepted accounting principles and fairly presentspresent the company’s financial condition, results of operations and cash flows; issuing financial reports that comply with the requirements of the SEC; and establishing and maintaining adequate internal control structures and procedures for financial reporting. The audit committee’sAudit Committee’s responsibility is to monitor and oversee these processes.

In furtherance of its role, the audit committeeAudit Committee has an annual agenda, which includes periodic reviews of the company’s internal controlscontrol and of areas of potential exposure for the company such as litigation matters. The Audit Committee meets at least quarterly and reviews the company’s interim financial results and earnings releases prior to their publication.

In this context, the audit committeeAudit Committee has reviewed and discussed with management (i) the audited financial statements of the company for the fiscal year ended December 31, 2016,2020, (ii) the company’s evaluation of the effectiveness of our internal control over financial reporting as of December 31, 20162020 and (iii) the related opinions by the company’s independent registered public accounting firm. The audit committeeAudit Committee also has discussed with Weinberg & Company, P.A. (“Weinberg”) the matters required to be discussed by Statementthe statement on Auditing Standards No. 61, (Communication with audit committees)as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, as currently in effect. The audit committee also has received written disclosures and a letter from Weinberg & Company, P.A. regarding its independence from the company as required by Independence Standardsapplicable requirements of the Public Company Accounting Oversight Board Standard No. 1 (Independence Discussionsregarding Weinberg’s communications with audit committees)the Audit Committee concerning independence and has discussed Weinberg’s independence with Weinberg & Company, P.A. the independence of that firm.Weinberg. Based uponon review and these materials and discussions, the audit committee has recommended to the board of directors that the company’s audited consolidated financial statements be included in our Annual Reportthe company’s annual report on Form 10-K10–K for the fiscal year ended December 31, 2016.2020 for filing with the Securities Exchange Commission.

The Audit Committee of the Board of Directors

Charles F. Cargile, Chairman

	The Audit Committee of the Board of Directors
	Chairman and Audit Committee Financial Expert, James C. Bass
	Lewis Jaffe
	Scott R. Grossman

Certain Relationships and Related Transactions

There are no transactions, since the beginning of fiscal 2016, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to or better than terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship between Reed’s and one of our executive officers, directors, director nominees or 5% or greater stockholders (or their immediate family members), each of whom we refer to as a “related person,” in which such related person has a direct or indirect material interest. If a related person proposes to enter into such a transaction, arrangement or relationship, defined as a “related party transaction,” the related party must report the proposed related party transaction to our Chief Financial Officer. The policy calls for the proposed related party transaction to be reviewed and, if deemed appropriate, approved by the Governance Committee. Our Governance Committee is comprised of Lewis Jaffe and Scott R. Grossman. Mr. Jaffe serves as Chairman. The board of directors has determined all of the members of the Governance Committee are independent under the rules of the Nasdaq Stock Market, LLC. If practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the Governance Committee will review, and, in its discretion, may ratify the related party transaction. Any related party transactions that are ongoing in nature will be reviewed annually at a minimum. The related party transactions listed below were reviewed by the full board of directors. The Governance Committee will review future related party transactions.

The following includes a summary of transactions since the beginning of fiscal 2020 or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to or better than terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

Transactions with California Custom Beverage, LLC (“CCB”)

On December 31, 2018, after completion of bidding process, Reed’s sold its beverage manufacturing equipment and private label beverage business for a purchase price of $1.25 million pursuant to an asset purchase agreement of the same date with California Custom Beverage, LLC (“CCB”), an entity owned by Christopher J. Reed, founder, Chief Innovation Officer and director of Reed’s. Mr. Reed obtained debt financing from a commercial bank, PMC Financial Services, LLC, in the amount of $1,050,000. In addition, in support of the transaction, a group of current Reed’s stockholders, including Chairman John J. Bello and certain institutional investors, purchased 350,000 shares of common stock of REED from Christopher J. Reed at $2.00 per share, in a private transaction exempt from the registration requirements of the Securities Act of 1933. The pricing was based on the higher of $2.00 per share or a 10% discount to the 5-day volume weighted average price ending December 28, 2018.

As part of the transaction, CCB assumed the monthly payments on our lease obligation for the Los Angeles manufacturing plant. Our release from the obligation by the lessor, however, is dependent upon CCB’s deposit of $1.2 million of security with the lessor. The deposit is secured by Mr. Reed’s pledge of common stock to the lessor and guaranteed personally by Mr. Reed and his wife. As of December 31, 2020, $800 has been deposited with the lessor and Mr. Reed has placed approximately 363,000 pledged shares valued at $338 that remain pledged in in escrow in favor of lessor.

The plant equipment was sold to CCB on an “as-is, where is” basis. In addition, the parties entered into a 3-year co-packing contract for the production of Reed’s beverages in glass bottles at prevailing West Coast market rates. Certain transitional services were provided by Reed’s to CCB for 30 days. The transaction documents also contain customary protections for intellectual property, indemnification and non-competition provisions.

Beginning in 2019, we began receiving a 5% royalty on CCB’s private label sales to existing customers for three years and a 5% referral fee on CCB’s private label sales to referred customers for three years. During the year ended December 31, 2020, the Company recorded royalty revenue from CCB of $98. During the year ended December 31, 2019, the Company recorded royalty revenue from CCB of $128.

At December 31, 2019, the Company had royalty revenue receivable from CCB of $128. In addition, at December 31, 2019, the Company has outstanding receivable from CCB of $228 consisting of inventory advances to CCB. The aggregate receivable from CCB at December 31, 2019 was $356. During the year ended December 31, 2020, the Company recorded royalty revenue receivable of $98, advanced inventory and equipment of $381, and reduced CCB receivable by $153 and reducing CCB payable of $153, leaving an aggregate receivable balance of $682 at December 31, 2020.

At December 31, 2020 and December 31, 2019, the Company had accounts payable due to CCB of $557 and $182, respectively.

Settlement of Secured Convertible Subordinated Non-redeemable Note with Raptor/ Harbor Reeds SPV, LLC

On December 11, 2020, we entered into a Satisfaction, Settlement and Release Agreement (“Satisfaction Agreement”) with Raptor/ Harbor Reeds SPV, LLC (“Raptor”) satisfying all of our obligations to Raptor as our junior secured lender. Raptor is a related party. Daniel J. Doherty III, a former director of Reed’s, is a principal and member of Raptor. The transaction was completed on December 15, 2020.

Prior to this transaction, our obligation under that certain Senior Secured Amended and Restated Subordinated Convertible Non-Redeemable Secured Note (“Subordinated Note”) dated October 4, 2018 in favor of Raptor, including accrued and unpaid interest through maturity on April 21, 2021, was approximately $5.5 million.

In full satisfaction of the Subordinated Note, including release of collateral, and termination of related junior lender documentation, we (a) paid Raptor $4,250,000 in cash, (b) issued to Raptor a 5-year warrant to purchase 1,000,000 shares of common stock, $0.0001 par value, of Reed’s with an exercise price of $0.644 (“Satisfaction Warrant”), and (c) issued to Raptor 1,339,286 shares of common stock upon conversion of $750,000.00 of the Subordinated Note at the reduced per share conversion price of $0.56.

The Satisfaction Agreement includes a mutual release of liability. The Satisfaction Warrant contains customary protection for stock splits, dividends and reclassifications and provides certain rights in the event of a “Fundamental Transaction” as therein defined. Pursuant to a Registration Rights Agreement (“RRA”) dated December 11, 2020, the company also agreed to file a registration statement registering shares of common stock underlying the warrant for resale, provided however, sales under the registration statement may not commence until the 6th trading day after Reed’s files its Annual Report on Form 10-K for the period ending December 31, 2020 with the Securities Exchange Commission.

Reed’s senior lender, Rosenthal & Rosenthal Inc. (“Rosenthal”), a New York corporation consented to the settlement transaction subject to pay-down by Reed’s of senior credit line obligation to zero, in compliance with terms of existing financing documents, release of collateral securing the Subordinated Note and other customary requirements.

Amendment to Financing Agreement

On March 11, 2021, we entered into an amendment (“Amendment”) to that certain Financing Agreement dated October 4, 2018, as amended or supplemented with our senior secured lender, Rosenthal & Rosenthal, Inc. (“Rosenthal”) releasing that irrevocable standby letter of credit by Daniel J. Doherty, III and Daniel J. Doherty, III 2002 Family Trust in the amount of $1.5 million (“LC”), which served as financial collateral for certain obligations of Reed’s under the Rosenthal credit facility, with a two million dollar ($2,000,000) pledge of securities to Rosenthal by John J. Bello and Nancy E. Bello, as Co-Trustees of THE JOHN AND NANCY BELLO REVOCABLE LIVING TRUST, under trust agreement dated December 3, 2012, evidenced by that certain Pledge Agreement to Rosenthal, and as to which Rosenthal has a first and only perfected security interest by the Securities Account Control Agreement held by securities broker (“Bello Pledge”).

John J. Bello, current Chairman and former Interim Chief Executive Officer of Reed’s, is a related party. He is also a greater than 5% beneficial owner of Reed’s common stock. As consideration for the collateral support, Mr. Bello received 400,000 shares of Reed’s restricted stock.

Other

Lindsay Martin, daughter of a director of the Company, was employed as Vice President of Marketing during the years ended December 31, 2020 and 2019. Ms. Martin was paid approximately $215 and $161, respectively, for her services during the years ended December 31, 2020 and 2019, respectively.

EXECUTIVE OFFICERS AND DIRECTORS

General

The following section sets forth the names, ages, and current positions with the company held by the executive officers, directors and significant employees. There is no immediate family relationship between or among any of the executive officers or significant employees, and the company is not aware of any arrangement or understanding between any executive officer and any other person pursuant to which he was elected to his or her current position.

Reed’s current directors have terms which will end at the next annual meeting of the stockholders or until their successors are elected and qualify, subject to their death, resignation or removal.

Business Experience of Directors and Executive Officers

Valentin StalowirNorman E. Snyder, Jr.was appointed Chief Executive Officer of Reed’s on June 28, 2017. Also on June 28, 2017, the board of directors of Reed’s also expanded the board to six seats and appointed Mr. Stalowir to serve as a director, filling the newly created vacancy. Since November 2016, Mr. Stalowir has served as an independent food and beverage investment consultant working with varied consumer focused private equity groups. Prior, from April 2015 to November 2016, Mr. Stalowir served as Chief Executive Officer and director of privately held International Harvest, Inc., a leading supplier of certified organic, gluten free, non-GMO, vegan and raw superfoods. In 2011, Mr. Stalowir founded Global Restaurant Group, LLC (GRG) in Kyiv, Ukraine, a privately held, international quick serve restaurant operator and platform that is now YUM! Brands’ lead KFC franchisee in Ukraine. Mr. Stalowir served as Chief Executive Officer of GRG until September 2014, when, due to political and economic challenges in Ukraine, much of the investment activity in the country was suspended. GRG LLC continues to operate led by local management and recently announced the opening of an additional restaurant in the capital city of Kyiv. From 2010 to 2012, Mr. Stalowir served as Executive Partner of APTA Capital, LLC, a US private equity firm providing growth equity investments and operational leadership to consumer branded companies. From 2002 to 2010, Mr. Stalowir was Chief Executive Officer of Preferred Brand Holdings, LLC, a private equity fund backed by Emigrant Savings Bank, where he co-founded the consumer practice and led the investment and growth strategies for five portfolio companies in the food and beverage sector. From 1999 to 2001, he served as President, North American division of Tomra Systems, ASA, a publically traded Norwegian company and the global leader for beverage container return and processing systems and reverse vending machines. Prior, Mr. Stalowir served in marketing and general management positions with the Coca-Cola Company and the Quaker Oats Company.

Mr. Stalowir earned his MBA in Marketing and Finance with Distinction from the University of Michigan in 1990 and received dual BA degrees in Economics and Art History from the College of William and Mary in 1985.

Christopher J. Reedfounded our company in 1987 and has served as our Chairman, President and Chief Executive Officer since our incorporation in 1991 through April 19, 2017. Currently he serves as Chief Innovation Officer and director. Mr. Reed became interested in natural foods, yoga and meditation in 1977. He studied herbal systems of medicine from India and China and became enamored with ginger for its health properties. In 1987, Mr. Reed founded Reed’s Inc. and set out to bring ginger to the world through a natural ginger ale brewed directly from fresh ginger root. From the inception of the company, Mr. Reed has been responsible for developing the original product recipes, proprietary brewing processes, packaging designs and marketing concepts behind our Reed’s product lines. These include Reed’s Ginger Brews, Reed’s Culture Club Kombucha line, Reed’s Natural Energy Elixir and Reed’s Ginger Candies. In 2000 Reed’s acquired Virgil’s Root Beer, which Mr. Reed expanded by adding a Virgil’s Cream Soda line, Real Cola, Dr. Better and a line of Virgil’s stevia sweetened “Zero” beverages.

effective March 1, 2020. Prior to starting Reed’s Inc.,his promotion, Mr. Reed was a chemical engineer working in gas purification and liquefaction with a specialty in designing liquefied natural gas (LNG) plants. Mr. Reed received a B.S. in Chemical Engineering in 1980 from Rensselaer Polytechnic Institute in Troy, New York.

Daniel V. Mileswas appointed Chief Financial Officer of Reed’s on May 12, 2015. He is a licensed CPA in the State of California. His career began with Ernst & Young and progressed through financial managerial roles within the beverage industry and other local business enterprises. Mr. Miles managed the financial sector for Coors’ largest distributor that grew 250% in 8 years via acquisitions of companies, brands and organic growth. Mr. Miles worked at the Pepsi Bottling Group in corporate finance and field operations in various capacities. Recently Mr. Miles held the position of interim Chief Financial Officer for the Port of Long Beach and the Central Basin Municipal Water District where he led the production of both the annual budget and the reporting of the results of those enterprises. Mr. Miles earned his Bachelor of Science degrees at the University of San Francisco in Biology, California State University Long Beach in Accounting and a Master’s Degree from University of Southern California in taxation.

Stefan Freemanis our Operations expert and hasSnyder served as Chief Operating Officer of Reed’s since June 28, 2017. Hefrom September 2019 through February 29, 2020. Prior to joining Reed’s, Mr. Snyder served as InterimPresident and Chief Executive Office for Avitae USA, LLC, an emerging premium new age beverage company that markets and sells a line of ready-to-drink caffeinated waters. Prior to Avitae, he served as the President and Chief Operating Officer for Adina For Life, Inc., President and Chief Executive Officer of Reed’sHigh Falls Brewing Company, and Chief Financial Officer, and later Chief Operating Officer of South Beach Beverage Company, known as SoBe. In prior experience, Mr. Snyder served as Controller for National Football League Properties, Inc., and in various roles at PriceWaterhouseCoopers during an eight-year tenure. Mr. Snyder earned a B.S. in Accounting from April 19, 2017 through June 28, 2017. Hethe State University of New York at Albany.

Thomas J. Spisak has served as directorChief Financial Officer of Reed’s since December 2019. Prior to joining Reed’s, Mr. Spisak provided financial leadership, including extensive expertise over a broad range of finance functions during his election on November 29, 2016 Mr. Freeman is a strategic and performance focused executive with more than 25 years in sales operations, manufacturing and supply chain operations in beverages and consumer products. Mr. Freeman has worked for the three largest soda companies26 year tenure in the world and was promoted within each company. From 2011 through 2014,North America region of Diageo, a multinational alcoholic beverage company with net sales over UK £12.9 billion (U.S. $16 billion). Mr. Freeman was the RegionalSpisak held numerous positions in multiple divisions of Diageo, most recently serving as Vice President of Manufacturing for Coca-Cola Refreshments, managing eight manufacturing plants located throughout Southern California, ArizonaFinance and Hawaii. These plants produced 231 million cases with revenues in excessController of $500 million annually. In 2014 Mr. Freeman was promoted from within Coca-Cola Refreshments toNorth America. Previously, he held positions of Vice President of Fleet OperationsCommercial Finance, Director of Business Performance and Senior Finance Director of Marketing and Innovation Decision Support, as well as other roles in Atlanta, Georgia where he managed one of the five largest fleet operations in North America through April 2016.finance. Prior to working for Coca-Cola,Diageo, Mr. Freeman was Director of Supply Chain for Dean Foods’ Pacific Coast Group, managing nine production facilitiesSpisak served at International Masters Publishers, Inc., a private company with responsibility forpublishing activities in 35 countries. Mr. Spisak holds an MBA in International Business from Fairfield University and a $155 million annual operating budget. Other prior positions include Director of Sales Operations for Dr. Pepper Snapple Group and Supply Chain Manager and Plant Manager for Pepsi-Cola Bottling Group.

Mr. Freeman hold a BachelorsBachelor of Science in mechanical engineeringFinance from Tuskegeethe University and is an active member of the Cisco Systems Global Manufacturing Advisory Board.Rhode Island.

Neal CohaneSenior Vice President of Sales and Marketing has served as Reed’s Senior Vice President ofChief Sales and MarketingOfficer since March of 2008 and previously as Vice President of Sales since August 2007. From March 2001 until August 2007, Mr. Cohane served in various senior-level sales and executive positions for PepsiCo, most recently as Senior National Accounts Manager, Eastern Division. In this capacity, Mr. Cohane was responsible for all business development and sales activities within the Eastern Division. From March 2001 until November 2002, Mr. Cohane served as Business Development Manager, Non-Carbonated Division within PepsiCo where he was responsible for leading the non-carbonated category build-out across the Northeast Territory. From 1998 to March 2001, Mr. Cohane spent three years at South Beach Beverage Company, most recently as Vice President of Sales, Eastern Region. From 1986 to 1998, Mr. Cohane spent approximately twelve years at Coca-Cola of New York where he held various senior-level sales and managerial positions, most recently as General Manager New York. Mr. Cohane holds a B.S. degree in Business Administration from Merrimack College in North Andover, Massachusetts.

Christopher J. Reed founded our company in 1987. Since inception, Mr. Reed has served in the roles of Chairman, President, and Chief Executive Officer, and is currently the company’s Chief Innovation Officer. Mr. Reed has been a non-independent Director since our incorporation in 1991. Mr. Reed also served as Chief Financial Officer during fiscal year 2007 until October 1, 2007 and again from April 17, 2008 to January 19, 2010. Mr. Reed remains a Director of the company with the election of John Bello as Chairman of the Board by fellow Board members. Mr. Reed has been responsible for our design and products, including the original product recipes, the proprietary brewing process and the packaging and marketing strategies. Mr. Reed received a B.S. in Chemical Engineering in 1980 from Rensselaer Polytechnic Institute in Troy, New York.

John J. Belloand has served as Reed’s Boardboard Chairman since his election on November 29, 2016. He2016 and is aReed’s sales and marketing expert. Mr. Bello also served as Reed’s Interim Chief Executive Officer of the company from September 30, 2019 through February 29, 2020. Since 2001, Mr. Bello has been the Managing Director of JoNa Ventures, a family venture fund. From 2004 to 2012 Mr. Bello also served as Principal and General Partner at Sherbrooke Capital, a venture capital group dedicated to investing in leading, early stage health and wellness companies. Mr. Bello is the founder and former CEO of South Beach Beverage Company, the maker of nutritionally enhanced teas and juices marketed under the brand name SoBe. The company was sold to PepsiCo in 2001 for $370 million. Inmillion and in the same year Ernst and Young named Mr. Bello National Entrepreneur of the Year in the consumer products category for his work with SoBe. Before founding SoBe, Mr. Bello spent 14fourteen years at National Football League Properties, the marketing arm of the NFL and served as its President from 1986 to 1993.

As the President, Mr. Bello has been credited for building NFL Properties into a sports marketing leader and creating the model by which every major sports league now operates. Prior to working for the NFL, Mr. Bello served in marketing and strategic planning capacities at the Pepsi Cola Division of PepsicoPepsiCo Inc. and in product management roles for General Foods Corporation inon the Sanka and Maxwell House brands. As a board chair, Mr. Bello has also worked with IZZE and Firefighter brands in brand building, marketing and strategic planning capacities. That brand was also sold to PepsiCo.

Mr. Bello earned his BA from Tufts University, cum laude, and received his MBA from the Tuck School of Businessbusiness at Dartmouth College as an Edward Tuck Scholar. Mr. Bello is extensively involved in non-profit work and currently serves as a Tufts University Trustee and advisory board member (athletics). Additionally, he serves on the boards of: the Gordon Entrepreneurial Center at Tufts, the Tuck Center for Private Equity, the YMCA in Rye, New York and the New York Council Boy Scouts of America.Veteran Heritage Project in Scottsdale, Arizona. Mr. Bello also serves on the board of Boathouse SportsRockford Fosgate, a seller of OEM audio equipment, and is executive director of Luminesce Eye Therapies.Therapies which has licensed its technology to Bausch and Lomb, who markets a redness reduction eye drop under the Lumify brand name.

Lewis JaffeJames C. Bassis our Board’s governance expert and has served as a director since September 29, 2017, is Chairman of Reed’sthe Audit Committee and member of the Compensation Committee. Mr. Bass is retired from the position of Chief Financial Officer and Senior Vice President of Sony Interactive Entertainment America LLC, commonly referred to as the PlayStation business of Sony where he joined in 1995 as Vice President of Finance. Mr. Bass has more than thirty-five years of financial and international management experience and was responsible for all of Sony’s financial operations and controls including general accounting and financial reporting, planning, analysis and systems, treasury and risk management, internal audit, and federal, state and local income taxes. Prior experience includes holding several senior management positions encompassing fourteen years with Bristol-Myers Squibb Company, gaining international experience running operations in parts of Asia and Europe.

Mr. Bass also spent two years at Wang Laboratories as a Divisional Controller. He started his career in New York at the public accounting firm, Haskins and Sells, now Deloitte & Touche. Mr. Bass received a Bachelor of Business Administration degree in accounting and finance from Pace University, New York City. He is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.

Lewis Jaffe has served as a director since his appointment on October 19, 2016.2016, is Chairman of the Governance Committee and a member of the Audit and Compensation Committees. Since August 2014, Mr. Jaffe has been teaching asis an Executive-in-Residence and Clinical Faculty at the Fred Kiesner Center for Entrepreneurship, Loyola Marymount University. He is also a technology futurist, Executive Coach and Public Speaker. Since January 2010 Mr. Jaffe has served as Chairmanon the board of the Board for FitLife Brands IncInc. (FTLF:OTCBB) and serves on its audit, compensation and governance committees. Since 2006 he has served on the Boardboard of Directorsdirectors of York Telecom, a private equity owned company, and serves on its compensation and governance committees. From 2006 to 2008 Mr. Jaffe was Interim Chief Executive Officer and President of Oxford Media, Inc. Mr. Jaffe has also served in executive management positions with Verso Technologies, Inc., Wireone Technologies, Inc., Picturetel Corporation, and he was also previously a Managing Director of Arthur Andersen. Mr. Jaffe was the co-founder of MovieMe Network. Mr. Jaffe also served on the Board of Directors of Benihana, Inc. as its lead independent director from 2004 to 2012.

Mr. JaffeJaffe is a graduate of the Stanford Business School Executive Program, holds a Bachelor of Science from LaSalle University and holds a MastersMaster’s Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing program.

Scott R. Grossman has served as a director since September 29, 2017, serves as Chairman of the Compensation Committee and is also a member of the Audit and Governance Committees. Mr. Grossman has nearly two decades of investing and advisory experience in both public and private companies undergoing significant change. Mr. Grossman is the founder and CEO of Vindico Capital LLC, a value-oriented investment firm that invests in public company transformations in partnership with management. Prior to Vindico, Mr. Grossman was a Senior Portfolio Manager at Magnetar Capital, a $13 billion multi-strategy alternative asset manager, which he first joined in 2006. Prior to Magnetar, Mr. Grossman worked at Soros Fund Management in its Private Equity division and Merrill Lynch in its investment banking group. In addition, Mr. Grossman is a non-operating partner and current Board Member at Zeitguide. Mr. Grossman received an MBA from the Stanford Graduate School of Business and a BA from Columbia University where he majored in economics.

Charles F. Cargile Charles F. CargileMr. Grossman is our financial expert and has served as director of Reed’s since his election on November 29, 2016. Mr. Cargile has a distinguished career as an executive and board member in publicly traded companies. Mr. Cargile is currently the Chief Executive officer and member ofresigning from the board of directors of Sunworks,Reed’s and is not standing for re-election at the Annual Meeting.

Louis Imbrogno, Jr. has served as a leading providerdirector since August 2019. He served a 40-year tenure at PepsiCo, bringing extensive expertise in beverage supply chain and management. At PepsiCo he served in a variety of solar power solutions. Prior to Sunworks, Mr. Cargile wasfield operating assignments and staff positions including the role of Senior Vice President Chief Financial Officerof Worldwide Technical Operations. In this role he was responsible for Pepsi-Cola’s worldwide beverage quality, concentrate operations, research & development and Treasurercontract manufacturing, reporting directly to the heads of Newport CorporationPepsi-Cola North America and PepsiCo Beverages International. Since Imbrogno’s retirement from 2000 to 2016. Mr. Cargile is also the lead independent director of Netlist and on the board of directors of Photon Control. Sunworks, Newport and Netlist are all listed on NASDAQ. Photon Control is listed on the TSX Venture Exchange in Canada.PepsiCo, he has consulted for multiple companies including PepsiCo.

Mr. Cargile holds a Bachelor of Science degree in Accounting from Oklahoma State University and a Master’s degree in Business Administration from the Marshall School of Business at the University of Southern California. Mr. Cargile has his Professional Director Certification from the American College of Corporate Directors.

Legal Proceedings

ToIn 2014, Louis Imbrogno, Jr. served as Chief Executive Officer of Constar International, Inc. for a six-month period during a bankruptcy proceeding and subsequent sale in a court administered public auction. He was not an executive officer of the company prior to the initiation of the bankruptcy proceedings.

Except as described above, to the best of our knowledge, none of our executive officers or directors are parties to any material proceedings adverse to Reed’s, have any material interest adverse to Reed’s or have, during the past ten years been subject to legal or regulatory proceedings required to be disclosed hereunder.

Employment Agreements

Code of Ethics

Our Chief Executive Officer and all senior financial officers, including the Chief Financial Officer, are bound by a Code of Ethics that complies with Item 406 of Regulation S-B of the Exchange Act. Our Code of Ethics is posted on our website at www.reedsinc.com.

EXECUTIVE COMPENSATION

Overview

The following table summarizes all compensation for fiscal years 20162020 and 2015 received2019 earned by our principal executive officer, current and former principal financial officers, current and former chief operating officers, and our current Senior Vice principal of Sales who were are our “Named Executive Officers” during the reported periods:

Name and Principal Position		Year		Salary				Bonus				Stock Awards				Option Awards ($)(1)				Non- Equity Incentive				Non- Qualified Deferred Compensation Earnings				All Other Compensation (2)				Total
Christopher J. Reed		2015			226,583				4,000																								230,583
Former Chief Executive Officer (3)		2016			227,000				40,000																				4,320				271,320
Daniel V. Miles		2015			113,414				4,000				-				-				-				-				1,800				119,214
Chief Financial Officer (Principal Financial Officer)		2016			175,000				40,000				-				-				-				-				4,320				219,320
Lawrence W. Tomsic		2015			84,706																								22,500				107,206
Former Chief Financial Officer(3)		2016																															0
Mark Beaton		2015			109,252				40,000				-				-				-				-				1,800				151,052
Former Chief Operating Officer		2016			158,328												-												4,320				162,648
Neal Cohane		2015			210,000				25,000				-				-				-				-				21,067				256,067
SVP sales		2016			210,000				40,000																				12,000				262,000

Name and Principal Position		Year		Salary				Bonus				Stock Awards (1)				All Other Compensation (2)				Total
Norman E. Snyder, Jr.		2019		$	59,776				-				-			$	62,610			$	122,386
Chief Executive Officer (Former Chief Operating Officer)		2020		$	308,782			$	157,500			$	121,500			$	14,353			$	602,135
John J. Bello		2019										$	127,200			$	104,167			$	231,367
(Former Interim Chief Executive Officer, Chairman) (3)		2020										$	177,758			$	104,167			$	281,925
Thomas J. Spisak		2019		$	20,833			$	-				-			$	-			$	20,833
Chief Financial Officer		2020		$	253,847			$	67,500				-			$	3,488			$	324,835
Neal Cohane		2019		$	210,000											$	3,000			$	213,000
Chief Sales Officer		2020		$	213,231			$	66,150							$	11,656			$	291,037

 

(1) The amounts represent the fair value for share-based payment awards issued during the year. The award is calculated on the date of grant in accordance with Financial Accounting Standards, excluding any impact of assumed forfeiture rates.

Standards.

(2) Other compensation includes both cash payments and the estimated value of the use of company assets.

(3) Christopher J. Reed resignedMr. Bello served as Interim Chief Executive Officer from positionSeptember 30, 2019 through February 29, 2020. His director compensation was suspended during the period as his service as Interim Chief Executive Officer. Director compensation of $37,500 and consulting fees of $66,667. Mr. Bello was issued 200,000 RSAs as compensation for his services as Interim Chief Executive Officer on April 19, 2017February 25, 2020 for his service from September 30, 2019 through February 29, 2020. Pro-rata portion of this award earned during 2019 is included in this table. Mr. Bello’s 2020 Director fees and concurrently transitionedcompensation are also reported under the Director Compensation Table.

Employment Agreements

Norman E. Snyder, Jr.

The board appointed Mr. Snyder to positionthe office of Chief InnovationOperating Officer, effective March 1, 2020. Mr. Snyder succeeded John J. Bello who served as Interim Chief Executive Officer from September 30, 2019 through February 29, 2020. The board granted Mr. Snyder a one-time bonus of 150,000 RSAs vesting March 1, 2020, subject to the conditions and limitations of Reed’s Second Amended and Restated 2017 Incentive Compensation Plan, in conjunction with his promotion. Pursuant his employment agreement, on February 25, 2020, he received an equity award of 446,000 stock options, one-half scheduled to vest in equal increments on an annual basis for four years and remainder to vest based on performance criteria to be determined by the board of directors (or Compensation Committee). Mr. Snyder’s performance-based cash bonus was set at a target amount of 30% of base salary for the term of his service as Chief Operating Officer. The agreement provided for acceleration of equity grants triggered by a “change of control”, as defined in the agreement and contains confidentiality, invention assignment and non-solicitation covenants. Mr. Snyder is also eligible to participate in the company’s benefit plans available to its executive officers.

 

(3)

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On June 24, 2020, we entered into an amended and restated employment agreement with Norman E. Snyder, Jr. reflecting his promotion to Chief Executive Officer on March 1, 2020. The term of the agreement continues through March 1, 2023 and will automatically renew for an additional one-year term, unless earlier terminated or unless notice of non-renewal is submitted by either party 90 days in advance. Pursuant to the agreement, Mr. Snyder’s base salary of $300,000 per year increased to $350,000 on September 30, 2020 based on satisfaction of certain objectives and to $360,500 on March 1, 2021. Mr. Snyder is also eligible to receive a performance-based cash bonus at a target amount of 50% of his base salary in effect. He is also eligible to participate in Reed’s other benefit plans available to its executive officers. The agreement provides for acceleration of equity grants triggered by a “change of control”, as defined in the agreement and Lawrence W. Tomsic agreedcontains customary, non-competition, confidentiality, invention assignment and non-solicitation covenants. Mr. Snyder is also entitled to six months’ severance benefits in the event of termination without cause by Reed’s or for good reason by Mr. Snyder, subject to execution of a mutual separation on May 29, 2015 Compensation reported and includes severance payment of $22,500.release.

 

John J. Bello

On February 19, 2020 the board of directors granted John Bello 200,000 RSAs, vesting March 1, 2020, as compensation for his services as Interim Chief Executive from September 30, 2019 through February 29, 2020.

Thomas J. Spisak

We entered into an at-will employment agreement with Thomas J. Spisak to serve as the Chief Financial Officer of Reed’s, effective December 2, 2019. The agreement may be terminated by the Company or Mr. Spisak, with or without notice and with or without cause, pursuant to the terms of the agreement. Mr. Spisak’s base annual base salary was increased to $257,500 from $250,000 effective March 1, 2020. Mr. Spisak is also eligible to receive performance-based cash bonus at a target amount of 30% of his base salary. Pursuant to his employment agreement, Mr. Spisak received an initial equity award of 150,000 incentive stock options and 150,000 restricted stock awards on March 3, 2020, one-half of the award (75,000 options and 75,000 restricted stock awards) vesting in equal increments on an annual basis for four years and the remainder (75,000 options and 75,000 restricted stock awards) vesting based on performance criteria to be determined by the board of directors or Compensation Committee. Mr. Spisak is also eligible to participate in Reed’s other benefit plans available to its executive officers. The agreement contains customary confidentiality, non-competition and invention assignment covenants.

Current Salary Arrangements of Other Executive Officers

Neal Cohane receives an annual salary which increased from $210,000 to $250,000 on March 1, 2021 with a 30% bonus target, and he is eligible to participate in benefits offered by the company to its executive officers.

Christopher J. Reed receives an annual salary of $113,500.

Change-in-Control Provisions

It is our general policy that awards that vest over a term greater one-year include provisions for acceleration upon a change-in-control.

Our 2017 Plan provides the consequences of a change-in-control provisions may be set forth in individual award agreements. For purposes of the 2020 Plan, a “change in control” generally includes (a) the acquisition of more than 50% of the company’s common stock, (b) the acquisition within a twelve-month period of 30% or more of the Company’s common stock, (c) the replacement of a majority of the board of directors, within a twelve-month period, by directors whose election was not endorsed by the incumbent board, or (d) the acquisition of all or substantially all of the Company’s assets.

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Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth information regarding unexercised options and equity incentive plan awards for each Named Executive Officer outstanding as of December 31, 2016:2020:

 

Name and Position		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable						Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options				Option Exercise Price				Option Expiration Date
Christopher J. Reed, Former Chief Executive Officer			25,000							-1						$	4.00			3/3/2018
			30,000				10,000			-2			-			$	4.60			4/9/2019
			40,000				30,000			-4						$	5.01			1/15/2020
Daniel Miles, Chief Financial Officer			66,667				33,333			-3			-			$	5.01			5/8/2020
Neal Cohane, SVP Sales			30,000							-2			-			$	4.00			3/3/2018
			30,000				10,000			-2			-			$	4.60			4/9/2019
			40,000				30,000			-4			-			$	5.01			1/15/2020
Mark Beaton, Former Chief Operating Officer			66,667				33,333			-3			-			$	5.01			3/16/2020

Name and Position		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Exercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options				Option Exercise Price				Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Norman E. Snyder, Jr.
(Chief Executive Officer, Former Chief Operating Officer)			110,324				167,250				162,362			$	0.88			2/25/2030
			25,000				-				-			$	0.50			3/25/2030
			55,291				93,750				98,288			$	0.70			5/20/2030
			90,675				403,000				302,250			$	0.95			9/16/2030
John Bello
Former Interim Chief Executive Officer, Chairman			50,000				-				-			$	3.74			9/30/2021			24,590			$	14,508
			50,000				-				-			$	0.50			3/25/2030
Thomas J. Spisak (Chief Financial Officer)			36,827				56,250				54,914			$	0.89			3/2/2030			56,250			$	33,188				54,914			$	32,399
			10,000				-				-			$	0.50			3/25/2030
			84,263				374,500				280,875			$	0.95			9/16/2030
Neal Cohane
(Chief Sales Officer)			175,781				46,875				46,875			$	1.60			3/28/2028
			44,233				75,000				78,630			$	0.70			5/20/2030
			46,294				205,752				154,314			$	0.95			9/16/2030

	(A)	These options will vest in 2021.
	(B)	These options vest 25% per year beginning in 2021.
	(C)	These options vest in accordance with performance criteria established by the board of directors.

 

(1) Options vest 25% immediately and 25% per year.

(2) These options vest 33% per year.

(3) These options vest 50% per year.

(4) These options vest 25% per year.

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DIRECTOR COMPENSATIONDirector Compensation

 

The following table summarizes the compensation paid to our non-employee directors for the fiscal year ended December 31, 2016:2020:

 

Name		Fees Earned or Paid in Cash				Stock Awards				Option Awards				Non-Equity Incentive Plan Compensation				All Other Compensation				Total
Judy Holloway Reed (1)		$	4,062																			$	4,062
Mark Harris (2)			-			$	900															$	900
Daniel S.J. Muffoletto (1)		$	11,230																			$	11,230
Michael Fischman		$	3,000																			$	3,000
Stefan Freeman		$	1,667																			$	1,667
Lewis Jaffe		$	2,117																			$	2,117
Charles Cargile		$	1,667																			$	1,667
John Bello		$	16,666																			$	16,666

Name		Fees Earned or Paid in Cash				Stock Awards (1)				Option Awards				Non-Equity Incentive Plan Compensation				All Other Compensation				Total
John J. Bello(2)		$	104,167			$	177,758				-				-				-			$	281,925
Lewis Jaffe		$	37,500			$	15,158				-				-				-			$	52,658
Daniel J. Doherty, III (3)		$	37,500			$	15,158				-				-				-			$	52,658
James C. Bass		$	37,500			$	15,158				-				-				-			$	52,658
Scott R. Grossman		$	37,500			$	15,158				-				-				-			$	52,658
Louis Imbrogno, Jr.		$	37,500			$	15,158				-				-				-			$	52,658

 

	(1)	Former directors, terms ended November 29, 2016The amounts represent the fair value of restricted stock awards granted during the year. The award is calculated on the date of grant in accordance with Financial Accounting Standards, excluding any impact of assumed forfeiture rates.
	(2)	Mr. Bello’s 2020 director fees and awards are also reported under the Executive Compensation Table.
(2)	Former(3)	Daniel J. Doherty, III resigned from his position as director resigned June 1, 2016effective December 31, 2020.

 

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EQUITY COMPENSATION PLAN INFORMATIONEquity Compensation Plan Information

On September 29, 2017, the 2017 Incentive Compensation Plan for 3,000,000 shares was approved by our shareholders. On December 13, 2018 the Amended and Restated 2017 Incentive Compensation Plan was approved by our shareholders increasing the number of shares issuable by 3,500,000 to 6,500,000. On December 16, 2019, the Second Amended and Restated 2017 Incentive Compensation Plan (“2017 Plan”) was approved by our shareholders, increasing the number of shares issuable by 1,000,000 to 7,500,000. On December 21, 2020, the 2020 Equity Incentive Plan (“2020 Plan”) for 8,500,000 shares was approved by our shareholders. The 2020 Plan replaced the 2017 Plan, which will expire by its terms on September 30, 2027. We have discontinued the 2017 Plan and all plans that preceded the 2017 Plan and will not issue any new awards under these prior plans, although awards granted under these plans will remain in effect.

 

The following table provides information, as of December 31, 20162020, with respect to equity securities authorized for issuance under our equity compensation plans:

 

														Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights				Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights				Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in
Plan Category		Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)				Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)				Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column (a))				(a)				(b)				Column (a)
Equity compensation plans approved by security holders			1,048,500			$	4.68				87,500				9,417,898			$	1.19				3,874,048
Equity compensation plans not approved by security holders			803,909			$	4.50				-				-			$	-				-
TOTAL			1,852,409			$	4.60				87,500				9,417,898			$	1.19				3,874,048

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information regarding our shares of common stock beneficially owned as of August 17, 2017November 25, 2021 for (i) each Named Executive Officer and director, and (ii) all Named Executive officers and directors as a group and (iii) each shareholderstockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock. A person is considered to beneficially own any shares:shares (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

 

For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of August 17, 2017.November 25, 2021. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days of August 17, 2017November 25, 2021 is deemed to be outstanding but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Except as otherwise indicated below, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by them. Unless otherwise indicated, the principal address of each listed executive officer and director is 13000 South Spring Street, Los Angeles, California 90061.201 Merritt 7 Corporate Park, Norwalk, Connecticut 06851.

Named Beneficial Owner		Number of Shares				Percentage of Shares
Directors and Named Executive Officers			Beneficially Owned				Beneficially Owned (1)
Valentin Stalowir			0				0
Christopher J. Reed (2)			2,515,890				16.6	%
John Bello			59,683				*
Chuck Cargile			39,683				*
Lewis Jaffe			39,683				*
Daniel V. Miles			138,000				1.0	%
Stefan Freeman			30,000				*
Neal Cohane			285,677				1.9	%
Directors and Named Executive Officers as a group (8 persons)			3,108,616				19.1	%
5% or greater stockholders
Judy Holloway Reed (2)			2,515,890				16.6	%
Robert T. Reed, Jr. (3)			910,000				6.0	%
Raptor Harbor Reed’s SPV LLC (4)			826,667				5.5	%
* Less than 1%.

Named Beneficial Owner		Number of Shares				Percentage of Shares
Directors and Named Executive Officers		Beneficially Owned				Beneficially Owned
John J. Bello, Chairman			[●]				[●]	%
Norman E. Snyder, Jr., Chief Executive Officer			[●]				[●]	%
Christopher J. Reed, Chief Innovation Officer			[●]				[●]	%
Neal Cohane, Chief Sales Officer			[●]				[●]	%
Thomas J. Spisak, Chief Financial Officer			[●]				[●]	%
Lewis Jaffe, Director			[●]				[●]	%
James C. Bass, Director			[●]				[●]	%
Scott R. Grossman, Director			[●]				[●]	%
Louis Imbrogno, Jr. Director			[●]				[●]	%
Directors and Named Executive Officers (9 persons)			[●]				[●]	%
5% of greater stockholders			[●]				[●]
			[●]				[●]	%
			[●]				[●]	%
			[●]				[●]	%
			[●]				[●]	%

 

(1) Based on 15,135,754 shares outstanding as of August 17, 2017.

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(2) Christopher J. Reed, director and Chief Innovation Officer, and Judy Holloway Reed, Secretary of the Company, our husband and wife and share beneficial own these shares. Christopher is Named Executive Officer; Judy Holloway Reed is not a Named Executive Officer,

(3) Principal address is 39950 De Portola Road, Temecula, CA 92592. Mr. Robert Reed, as Trustee of the Reed Family Irrevocable Trusts 1 and 2, exercises voting and dispositive control over 800,000 shares held by the trusts and is deemed to beneficially own the shares held by the trusts. Mr. Robert Reed also owns, individually, 110,000 shares of common stock.

(4) Principal address is 280 Congress Street, 12^th Floor, Boston, Massachusetts 02210. James Pallotta and Daniel Doherty have discretionary authority to vote and dispose of the shares of common stock held by Raptor/ Harbor Reeds SPV LLC and may be deemed to be the beneficial owners of these shares. Includes 60,000 shares of Common Stock issuable upon exercise of a currently exercisable warrant.

 

DELiNQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities.

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires our directors and executive officers and beneficial holders of more than 10% of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities.

 

To our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to Reed’s under 17 CFR 240.16a-3(e) during our most recent fiscal year and Forms 5 and amendments thereto furnished to Reed’s with respect to our most recent fiscal year or written representations from the reporting persons, we believe that during the year ended December 31, 2016 our directors, executive officers and persons who own more than 10%2020 the following individuals each filed one late Form 4 representing one transaction (unless otherwise noted): Thomas J. Spisak, Norman E. Snyder, Jr., John Bello, Neal Cohane. None of our common stock complied with all Section 16(a) filing requirements.officers or directors filed Form 5.

PROPOSAL No. 2

Approval of Amendment of the Reed’s Inc. 2020 Equity Incentive Plan

Why We Are Requesting Stockholder Approval to Amend the 2020 Equity Incentive Plan

 

PROPOSAL 2:APPROVAL OF THE REED’S, INC. 2017 INCENTIVE COMPENSATION PLAN

Overview

InWe are asking stockholders to approve the opinionamendment of the Reed’s, Inc. 2020 Equity Incentive Plan (the “2020 Plan”). We are recommending that shareholders approve the amendment of the 2020 Plan to increase the number of shares available under the Plan from 8,500,000 to 15,000,000 because we believe that the expansion of the 2020 Plan will be essential to our continued success by allowing the company to provide incentives to attract and retain key employees, non-employee directors, and consultants and align their interests with those of our Board, the futureshareholders. Our board believes that our success of Reed’s depends, in large part, on our ability to maintain a competitive position inby attracting, retaining and motivating key employees with experience and ability. We believe that our stock-based compensation programs are central to this objective.

Stockholders are being asked to approve the amendment to the Plan to authorize the issuance of an additional 6,500,000 shares of our common stock pursuant to awards under the 2020 Plan and to authorize the grant of stock options that qualify for treatment as incentive stock options for purposes of Section 422 of the Internal Revenue Code. On August 3, 2017, our Board adopted,November [●], 2021, upon the recommendation of the Compensation Committee, and subject to shareholder approval, the Reed’s Inc. 2017 Incentive Compensation Plan (the “Plan”).board adopted the amended 2020 Plan.

 

TheIf stockholders approve this Proposal No. 2, subject to adjustment in the event of stock splits and other events, awards may be made under the 2020 Plan would allow for the issuance of up to 3,000,000the sum of 15,000,000 shares of common stock. As such, the maximum number of shares of common stock that may be covered by options that are designated as “incentive stock options” within the meaning of section 422 of the Code will be increased from 8,000,000 to 14,500,0000 shares of common stock.

 

SummaryWe believe that our stock-based compensation programs have been integral to our success in the past and will be important to our ability to succeed in the future. If Proposal No. 2 approving the amendment of the 2017 Incentive Compensation2020 Plan is not approved by our stockholders, we will be limited to making long-term equity incentive awards out of the 1,320,114 shares currently available under the 2020 Plan. Therefore, we consider approval of the amendment to the 2020 Plan vital to our future success. Accordingly, our board of directors believes approval of the amendment to the 2020 Plan is in the best interests of the company and its stockholders and unanimously recommends a vote “FOR” the approval of the amendment to the 2020 Plan.

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Eligible Participants

 

Persons eligible to receive awards under the 2020 Plan include officers or employees of the company, directors of the company, and certain consultants and advisors to the company. Currently, approximately 28 non-executive officers and employees of the company, 3 executive officers, no consultants and each of the 5 members of the board who are not employed by the company are considered eligible under the 2020 Plan.

Plan Highlights

The 2020 Plan, as amended, contains provisions that are intended to protect the interests of our shareholders in a manner consistent with our compensation philosophy, including the following (share amounts impacted by the amendment are underlined):

		Stock Subject to the 2020 Plan: The maximum number of shares of common stock that may be covered by awards granted under the 2020 Plan shall not exceed 15,000,000 shares of common stock in the aggregate.*
		No Evergreen Provision: Shares authorized for issuance under the 2020 Plan are not automatically replenished.
		No “Liberal” Change-in-Control Definition: The 2020 Plan does not provide a “liberal” change in control definition, which means that a change in control must actually occur in order for the change-in-control provisions in the 2020 Plan to be triggered.
		No Liberal Share Recycling: The 2020 Plan prohibits “liberal share recycling”, which means that shares used to pay the exercise price of a stock option, shares used to satisfy a tax withholding obligation with respect to any award and shares subject to cash-settled awards will not be added back to the 2020 Plan.
		No Discounted Stock Options: The 2020 Plan does not permit the use of “discounted” stock options.
		No Repricing of Stock Options: The 2020 Plan does not permit the “repricing” of stock options without stockholder approval. This includes a prohibition on cash buyouts of underwater options.
		Administered by Independent Committee: The 2020 Plan is administered by the Compensation Committee of the board comprised of independent directors.
		Limitation on Incentive Stock Option Grants: Out of such aggregate, the maximum number of shares of common stock that may be covered by options that are designated as “incentive stock options” within the meaning of section 422 of the Code shall not exceed 14,500,0000 shares of common stock.*
		Individual Award Limits: The maximum number of shares of common stock that may be covered by stock incentive awards granted under the 2020 Plan to any participant in any calendar year shall not exceed 2,000,000 shares.*
		Non-Employee Director Limits: The maximum number of shares of common stock that may be covered by stock incentive awards granted under the 2020 Plan to any non-employee director in any calendar year shall not exceed 500,000 shares.*
		No Pledging: Pledging of stock incentive awards is prohibited under the 2020 Plan.

*Subject to adjustments in capital structure as provided in the 2020 Plan.

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A summary of the material terms of the 2020 Plan, as amended, is provided below, and the complete text of the 2020 Plan, as amended, is attached as Appendix A to this proxy statement. The following summary of the 2020 Plan does not purport to be complete and is qualified in its entirety by reference to the 2017 Incentive Compensationterms of the 2020 Plan a copy of which is attached as Appendix A to this Proxy Statement.document.

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Highlights of the 2017 Incentive Compensation Plan

No “Evergreen” Provision		Shares authorized for issuance under the Plan are not automatically replenished.
No repricing of stock options or stock appreciation rights		The Plan prohibits the repricing of stock options without shareholder approval.
No discounted stock options		All stock options must have an exercise price greater than the fair market value of the underlying common stock on the date of grant.
Administered by an independent committee		The Plan is administered by a committee of the board of directors comprised of independent directors.

Summary of the 2017 Incentive Compensation Plan

 

The following summaryAwards and Term of the Plan is qualified in its entirety by reference to the 2017 Incentive Compensation Plan, a copy of which is attached asAppendix A to this Proxy Statement.

 

Purpose

TheAwards granted under the 2020 Plan is intended to promote the interests of the Company and its shareholders by providing employees, non-employee directors, consultants, and other selected service providers of the Company, who are largely responsible for the management, growth, and protection of the business of the Company, with incentives and rewards to encourage them to continuemay be in the serviceform of stock options (which may be incentive stock options or nonqualified stock options) or other stock-based awards, such as stock appreciation rights (or “SARs”), restricted stock, restricted stock units and performance shares. No awards may be made under the Company.2020 Plan after September 16, 2030, or such earlier date as the Board of Directors may terminate the 2020 Plan.

 

Eligibility

The Persons who shall be eligible to receive awards pursuant to the Plan shall be those employees, non-employee directors, consultants, and other selected service providers of the Company whom the committee shall select from time to time, including officers of the Company, whether or not they are directors. Each award granted under the Plan shall be evidenced by an award agreement.

Administration

 

The Plan will be administered by athe Compensation Committee of our board of directors, or by such other committee consistingor subcommittee as may be appointed by our board, and which consists entirely of two or more persons, each of whom qualifies as a “non-employee director” (withinindividuals who are “nonemployee directors” within the meaning of Rule 16b-3 promulgated under section 16the Securities Exchange Act of the Exchange Act), an “outside director”1934 and “independent directors” within the meaning of Treasury Regulation section 1.162-27(e)(3) and as “independent” as required by NYSE or any securityapplicable stock exchange on which the Company’s common stock is listed, in each case if and to the extent required by applicable law or necessary to meet the requirements of such rule, section or listing requirement at the time of determination.rules. The committee shall, consistent with the terms of the Plan, from time to time designate those individuals who shall be granted awards under the Plan and the amount, type, and other terms and conditions of such awards. All of the powers and responsibilities of the committee under the Plan may be delegated by the committee, in writing, to any subcommittee thereof, in which case the acts of such subcommittee shall be deemed to be acts of the committee hereunder. The committee may also from time to time authorize a subcommittee consisting of one or more members of the board of directors (including members who are employees of the Company) or employees of the Company to grant awards to persons who are not “executive officers” of the Company (within the meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and limitations as the committee may specify and to the requirements of section 157 of the Delaware General Corporation Law.

The committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and any award agreement thereunder, and to adopt, amend, and rescind from time to time suchCompensation Committee can make rules and regulations and establish such procedures for the administration of the 2020 Plan including rulesas it deems appropriate and regulations relatedmay delegate any of its authority to sub-plans established forone or more directors or employees, to the purpose of satisfyingextent permitted by applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws, as the committee may deem necessary or appropriate. Decisions of the Committee shall be final, binding, and conclusive on all parties. For the avoidance of doubt, the committee may exercise all discretion granted to it under the Plan in a non-uniform manner among participants.laws.

 

Types of Awards;

Incentive and Nonstatutory Stock OptionsEligibility

 

The 2020 Plan allowsprovides for awards to our officers and employees, non-employee directors and consultants of the issuance ofcompany and our subsidiaries who are selected by the Compensation Committee, except that incentive stock options intendedmay only be granted to qualify under Section 422employees. It is currently anticipated that approximately 24 non-executive officers and employees of the Code, nonstatutory stock options,.company, 4 executive officers, no consultants and each of the 6 members of the board who are not employed by the company will be eligible to receive awards under the 2020 Plan, at the discretion of the Compensation Committee.

 

Optionees receiveShares Available

The maximum number of shares of our common stock that may be issued or transferred pursuant to awards under the right2020 Plan is 15,000,000 shares. The 2020 Plan’s share reserve is subject to purchaseadjustment in certain circumstances as described below. Shares issued under the 2020 Plan may include authorized but unissued shares, treasury shares, shares purchased in the open market, or a specifiedcombination of the foregoing. Out of such aggregate, the maximum number of shares of common stock that may be covered by options that are designated as “incentive stock options” within the meaning of section 422 of the Code shall not exceed 14,500,0000 shares of common stock. The maximum number of shares of common stock that may be covered by stock incentive awards granted under the 2020 Plan to any participant in any calendar year shall not exceed 2,000,000 shares. The maximum number of shares of common stock that may be covered by stock incentive awards granted under the 2020 Plan to any non-employee director in any calendar year shall not exceed 500,000 shares. Share limits are subject to adjustment in certain circumstances as described below.

Shares underlying awards that terminate or are forfeited, cancelled or surrendered without the issuance of shares generally will not be counted against the number of shares available for issuance under the 2020 Plan. However, shares subject to awards that are settled in cash, shares used to pay the exercise price of stock options and shares used to pay withholding taxes upon exercise, vesting or payment of an award, will not be added back to the share reserve under the 2020 Plan.

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Stock Options

Subject to the terms and provisions of the 2020 Plan, options to purchase shares may be granted to eligible individuals at any time and from time to time as determined by the Compensation Committee. Options may be granted as incentive stock options or as nonqualified stock options. Of the shares available for issuance under the Plan, 14,500,000 may be issued pursuant to incentive stock options. The Compensation Committee will determine the number of options granted to each recipient. Each option grant will be evidenced by an award agreement that specifies whether the options are intended to be incentive stock options or nonqualified stock options and such additional limitations, terms and conditions as the Compensation Committee may determine.

The exercise price for each stock option may not be less than 100% of the fair market value of a share on the date of grant, and each stock option shall have a term no longer than 10 years. As of November 25, 2021, the closing price of our common stock as reported on The Nasdaq Capital Market was $[●] per share. Stock options granted under the 2020 Plan may be exercised by such methods and procedures as determined by the Compensation Committee from time to time.

The grant of a stock option does not accord the recipient any of the rights of a shareholder, and such rights accrue only after the exercise of the stock option and the registration of shares in the recipient’s name.

Stock Appreciation Rights

The Compensation Committee in its discretion may grant SARs under the Plan. A SAR entitles the holder to receive from us upon exercise an amount equal to the excess, if any, of the aggregate fair market value of a specified optionnumber of shares that are the subject of such SAR over the aggregate exercise price for the underlying shares. The exercise price for each SAR may not be less than 100% of the fair market value of a share on the date of grant, and each SAR shall have a term no longer than 10 years.

We may make payment in settlement of the exercise of a SAR by delivering shares, cash or a combination of stock and cash as set forth in the applicable award agreement. Each SAR will be evidenced by an award agreement that specifies the date and terms of the award and such additional limitations, terms and conditions as the Compensation Committee may determine.

Restricted Stock

Under the Plan, the Compensation Committee may grant or sell restricted stock to plan participants (i.e., shares that are subject to a substantial risk of forfeiture based on continued service and/or the achievement of performance objectives and that are subject to restrictions on transferability). Except for these restrictions and any others imposed by the Compensation Committee, upon the grant of restricted stock, the recipient will have rights of a shareholder with respect to the restricted stock, including the right to vote the restricted stock and to receive dividends and other distributions paid or made with respect to the restricted stock, except that any dividends with respect to unvested restricted stock will be accumulated or reinvested in additional restricted stock until the vesting of the award. During the applicable restriction period, the recipient may not sell, transfer, pledge, exchange or otherwise encumber the restricted stock. Each award of restricted stock will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions, which may include restrictions based upon the achievement of performance objectives, as the Compensation Committee may determine.

Restricted Stock Units

Under the Plan, the Compensation Committee may grant or sell restricted share units to participants. Restricted stock units constitute an agreement to deliver shares of our common stock (or an equivalent value in cash) to the participant at the end of a specified restriction period and subject to such other terms and conditions as the Compensation Committee may specify. Restricted stock units are not shares of common stock and do not entitle the recipients to any of the rights of a shareholder. Restricted stock units will be settled, in cash or shares, in an amount based on the fair market value of a share on the settlement date. Each restricted stock unit award will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions as the Compensation Committee may determine, which may include restrictions based upon the achievement of performance objectives.

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Performance Shares

Other stock-based awards granted under the plan may include performance shares, which are restricted stock units that vest based on the achievement of performance goals specified in the applicable award agreement. Performance shares may be settled in shares or cash, as specified in the award agreement which may additional such limitations, terms and conditions, as the Compensation Committee may determine.

Performance Objectives

The 2020 Plan provides that performance objectives may be established by the Compensation Committee in connection with any award granted under the option grant. Only our employees2020 Plan. Performance objectives may receive “incentive stock options” as defined in Section 422relate to the performance of the Code. An option that is not intendedcompany or one or more divisions, departments, units, functions, product lines or products, or the performance of an individual participant.

Change in Control

The Compensation Committee retains discretion under the Plan to be an “incentivedetermine the treatment of outstanding awards in connection with a change in control of the company. For example, the Compensation Committee may cause awards granted under the Plan to vest upon a change in control, may cancel awards in exchange for a payment of cash (or without a payment, in the case of stock option” is a “nonstatutory stock option.” Options may not be granted atoptions or SARs with an exercise price that exceeds fair market value), or may cause awards to be continued or substituted in connection with a change in control.

For purposes of the Plan, a “change in control” generally includes (a) the acquisition of more than 50% of the company’s common stock, (b) the acquisition within a twelve-month period of 30% or more of the company’s common stock, (c) the replacement of a majority of the Board of Directors, within a twelve-month period, by directors whose election was not endorsed by the incumbent Board of Directors, or (d) the acquisition of all or substantially all of the company’s assets. The full definition of “change in control” is lessset out in the Plan.

Forfeiture and Recoupment of Awards

Awards granted under the 2020 Plan may be subject to forfeiture or recoupment as provided pursuant to any compensation recovery (or “clawback”) policy that the company may adopt or maintain from time to time.

Adjustments

In the event of any equity restructuring, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, the Compensation Committee will adjust the number and kind of shares that may be delivered under the Plan, the number and kind of shares subject to the limits on awards to individual participants under the 2020 Plan, the number and kind of shares subject to outstanding awards and the exercise price or other price of shares subject to outstanding awards, to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Compensation Committee may, in its discretion, make such an equitable, to prevent dilution or enlargement of rights. However, unless otherwise determined by the Compensation Committee, we will always round down to a whole number of shares subject to any award. Moreover, in the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all outstanding awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced.

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Transferability

Except as the Compensation Committee otherwise determines, awards granted under the Plan will not be transferable by a participant other than 100%by will or the laws of descent and distribution. Except as otherwise determined by the Compensation Committee, stock options and SARs will be exercisable during a participant’s lifetime only by him or her or, in the event of the participant’s incapacity, by his or her guardian or legal representative. Any award made under the Plan may provide that any shares issued pursuant to the award will be subject to further restrictions on transfer.

Amendment; Prohibition on Repricing

The board may amend, alter or discontinue the Plan at any time, with stockholder approval to the extent required by applicable laws. No such amendment or termination, however, may adversely affect in any material way any holder of outstanding awards without his or her consent, except for amendments made to cause the 2020 Plan to comply with applicable law, stock exchange rules or accounting rules.

Except in connection with a corporate transaction, no award may be amended or otherwise subject to any action that would be treated as a “repricing” of such award, unless such action is approved by our stockholders.

Certain U.S. Federal Income Tax Consequences

The following is a summary of certain U.S. federal income tax consequences of awards made under the 2020 Plan, based upon the laws in effect on the date hereof. The discussion is general in nature and does not address all of the tax considerations that may apply in light of the circumstances of a particular participant under the 2020 Plan. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.

Nonqualified Stock Options. A participant will not recognize taxable income at the time of grant of a non-qualified stock option. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a nonqualified stock option equal to the excess of the fair market value of the common stock on the effective date of grant. Under present law, incentive stock options may not be granted at anshares purchased over their exercise price less than 110% of the fair market value in the case of stock options granted to optionees holding more than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries. Subject to the provisions of the Plan, stock options may not be granted for a term in excess of 10 years (and, under present law, five years in the case of incentive stock options granted to optionees holding greater than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries).

Other Stock-Based Awardsprice.

The Committee may from time to time grant equity-based or equity-related awards not otherwise described herein in such amounts and on such terms as it shall determine, subject to the terms and conditions set forth in the Plan. Without limiting the generality of the preceding sentence, each such “Other Stock-Based Award” may (i) involve the transfer of actual shares of common stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares of common stock, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, or share-denominated performance units, (iv) be designed to comply with applicable laws of jurisdictions other than the United States, and (v) be designed to qualify as performance based compensation;provided, that each Other Stock-Based Award shall be denominated in, or shall have a value determined by reference to, a number of shares of common stock that is specified at the time of the grant of such award.

Effective Date and Term of Plan

The Plan shall become effective on September 30, 2017, subject to approval by our shareholders. No Awards shall be granted under the Plan after the expiration of 10 years from the effective date.

Federal Income Tax Consequences

The following generally summarizes the United States federal income tax consequences that generally will arise with respect to Awards granted under the Plan. This summary is based on the federal tax laws in effect as of the date of this Proxy Statement. In addition, this summary assumes that all Awards are exempt from, or comply with, the rules under Section 409A of the Code regarding nonqualified deferred compensation. Changes to these laws or assumptions could alter the tax consequences described below.

 

Incentive Stock OptionsOptions.. A participant will not haverecognize taxable income uponat the time of grant of an incentive stock option. Also, except as described below, aA participant will not haverecognize taxable income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option if the participant has been employed by us or our corporate parent or 50% or more-owned corporate subsidiary at all times beginning with the option grant date and ending three months before the date the participant exercises the option. If the participant has not been so employed during that time, then the participant will be taxed as described below under “Nonstatutory Stock Options.” Theshares acquired by exercise of an incentive stock option may subjectare held for the participant to the alternative minimum tax.

A participant will have income upon the salelonger of the stock acquired under an incentive stock option, which we refer to as ISO stock, at a profit (if sales proceeds exceed the exercise price). The type of income will depend on when the participant sells the ISO stock. If a participant sells the ISO stock more than two years afterfrom the date the option was granted and more than one year afterfrom the option was exercised, then alldate the shares were transferred, any gain or loss arising from a subsequent disposition of the profitsuch shares will be taxed as long-term capital gain.gain or loss. If, a participant sellshowever, such shares are disposed of within either of such two- or one-year periods, then in the ISO stock prior to satisfying these waiting periods, thenyear of such disposition the participant will have engaged in a disqualifyingrecognize compensation taxable as ordinary income equal to the excess of the lesser of the amount realized upon such disposition and a portionthe fair market value of such shares on the profit will be ordinary income and a portion may be capital gain. This capital gain will be long-term if the participant has held the ISO stock for more than one year and otherwise will be short-term. If a participant sells the ISO stock at a loss (sales proceeds are less thandate of exercise over the exercise price), then the loss will be a capital loss. This capital loss will be long-term if the participant held the ISO stock for more than one year and otherwise will be short-term.price.

 

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Nonstatutory Stock OptionsAppreciation Rights.. A participant will not haverecognize taxable income uponat the time of grant of a nonstatutory stock option. ASAR. Upon exercise, a participant will haverecognize compensation taxable as ordinary income upon the exercise(and subject to income tax withholding in respect of a nonstatutory stock optionan employee) equal to the fair market value of any shares delivered and the amount of cash paid by us.

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Restricted Stock. A participant will not recognize taxable income at the time of grant of restricted stock, on the dayunless the participant exercised the option less the exercise price. Upon salemakes an election under Section 83(b) of the stock, which we referInternal Revenue Code to as NSO stock,be taxed at such time. If such election is made, the participant will have capital gain or lossrecognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant equal to the difference betweenexcess of the sales proceedsfair market value of the shares at such time over the amount, if any, paid for the restricted stock. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for the restricted stock.

Restricted Stock Units. A participant will not recognize taxable income at the time of grant of a restricted stock unit award. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any shares delivered and the amount of cash paid by us.

Performance Shares. Generally, participants will recognize taxable income at the time of at the time of settlement of performance share awards (with the amount of income recognized generally being equal to the amount of cash and the fair market value of any shares delivered under the NSO stock on the day the option was exercised. This capital gain or loss will be long-term if the participant has held the NSO stock for more than one year and otherwise will be short-term.award).

 

Other Stock-Based AwardsTax Deductibility of Compensation Provided under the Plan.. The When a participant recognizes ordinary compensation income as a result of an award granted under the Plan, the company may be permitted to claim a federal income tax consequences associated with any Other Stock-Based Awarddeduction for such compensation, subject to various limitations that may apply under applicable law.

For example, Section 162(m) of the Internal Revenue Code disallows the deduction of certain compensation in excess of $1 million per year payable to certain covered employees of a public company, and the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, expanded the scope of Section 162(m) in several respects, including by repealing an exemption from the $1 million deduction limit for “qualified performance-based compensation,” generally effective for taxable years beginning after December 31, 2017. As a result, except as otherwise permitted pursuant to applicable transition rules, compensation paid in 2018 or a later fiscal year to one of our covered employees generally will not be deductible by the company to the extent that it exceeds $1 million.

Further, to the extent that compensation provided under the Plan may be deemed to be contingent upon a change in control, a portion of such compensation may be non-deductible by the company under Section 280G of the Internal Revenue Code and may be subject to a 20% excise tax imposed on the recipient of the compensation.

Section 409A. Section 409A of the Internal Revenue Code imposes certain restrictions upon the payment of nonqualified deferred compensation. We intend that awards granted under the Plan will vary depending onbe designed and administered in such a manner that they are either exempt from the specific termsapplication of, or comply with, the requirements of Section 409A of the Award. AmongInternal Revenue Code. However, the relevant factors are whethercompany does not warrant the tax treatment of any award under Section 409A or not the Award has a readily ascertainable fair market value, whether or not the Award is subject to forfeiture provisions or restrictions on transfer, the nature of the property to be received by the participant under the Award and the participant’s holding period and tax basis for the Award or underlying common stock.otherwise.

 

Tax ConsequencesRegistration with the SEC

The company filed a Registration Statement on Form S-8 relating to Reed’s. Therethe issuance of 8,500,000 shares under the 2020 Plan with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, after approval of the 2020 Plan by the company’s stockholders at the Company’s 2020 Annual Meeting of Stockholders. The company intends to amend such Registration Statement on Form S-8 to cover the additional 6,500,000 shares that will become issuable under the 2020 Plan after stockholder approval is obtained.

New Plan Benefits

It is within the discretion of the Compensation Committee to determine which employees, non-employee directors and consultants will receive awards and the amount and type of such awards. It is not presently possible to determine the total number of individuals to whom awards will be no tax consequences to us except that we will be entitled to a deduction when a participant has compensation income. Anymade in the future under the Plan or the amount of such deduction will be subject toawards.

In the limitations of Section 162(m) offiscal year ending December 31, 2020, our Named Executive Officers did not exercise any option awards and they received the Code.following stock awards: [●]

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Vote Required

 

The affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the matter is required for approval of the Reed’s, Inc. 2017amendment to the 2020 Equity Incentive Compensation Plan.

 

The board unanimously recommends a vote “FOR” approval of this Proposal No. 2.

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PROPOSAL No. 3 –

Approval of amendment of Reed’s Inc. certificate of incorporation to increase the number of authorized shares of common stock from 120,000,000 to 180,000,000 shares

 

PROPOSAL 3 – AMENDMENT OF REED’S CERTIFICATE
OF INCORPORATION TO INCREASE THE AMOUNT OF AUTHORIZED SHARES OF
COMMON STOCK FROM 19,500,000 TO 40,000,000 SHARES

Increase of Authorized Common Stock in General

 

As of the record date of November [●], 2021, we had a total of 19,500,000120,000,000 authorized shares of common stock, [●] issued and outstanding shares of common stock, [●] outstanding shares of common stock, on a fully diluted basis, taking into account shares issuable upon vesting of outstanding stock awards, exercise of outstanding options and warrants and conversion of outstanding notes and preferred stock and [●]shares available under the Company’scompany’s available incentive compensation plans.

 

	The ability to issue equity is fundamental to our growth strategy:
	●	In order to implement our growth strategy, we intend to raise additional financing through the issuance of equity securities prior to the end of fiscal 2017.
	●	We are not currently in compliance with NYSE American market’s continued listing standards. We previously qualified by exception to the listing rules based on meeting the trading standards of public float, number of shareholders and market capitalization. We have until December 22, 2017 to regain compliance. We have determined increase in shareholder’s equity through the sale of equity securities in one of more financing transactions may help to bring us back into compliance.
	●	The availability of equity incentive compensation is necessary for the Company to attract and retain attract, retain and motivate the most high-performing executives and key employees who ultimately drive Company performance. We currently do not an adequate number of shares available for reservation or issuance for equity compensation grants.
	●	As a post closing covenant to the Warrant Exercise Agreement dated April 21, 2017 with Raptor/ Harbor Reeds SPV, LLC, we agreed to amend to Reed’s Charter to effect at minimum of a 5,000,000 share increase in the Reed’s authorized common stock.

The ability to issue equity is fundamental to our growth strategy in order to implement our growth strategy, we may raise additional financing through the issuance of equity securities.

 

Our Board hasboard adopted a resolution seeking authorization of our stockholders to amend our certificate of incorporation (the “Charter”) to increase our number of authorized shares of Common Stockcommon stock from 19,500,000120,000,000 to 40,000,000180,000,000 shares (the “Increase”). It is proposed that Article IV of the Company’s Charterour certificate of incorporation be amended to read in its entirety as follows (assuming approval of both Proposals Nos. 3 and 4):follows:

 

“Section 1. The total number of shares of capital stock which the Corporation is authorized to issue is FortyOne Hundred Eighty Million Five Hundred Thousand (40,000,500)(180,000,500), of which FortyOne Hundred Eighty Million (40,000,000)(180,000,000) shall be shares of Common Stock having a par value of $.0001 per share and Five Hundred Thousand (500,000) shall be shares of Preferred Stock having a par value of $10.00 per share, and Two Million (2.000.000) shall be shares of Preferred Stock having a par value of $0.01 per share.” The Preferred Stock may be issued from time to time in one or more series. The Boardboard of Directorsdirectors is hereby authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences, and rights and the qualifications, limitations, or restrictions thereof, of each such series of Preferred Stock, including without limitation, authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting such series and the designation thereof, or any of the foregoing. The Boardboard of Directorsdirectors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the powers, preferences, and rights and the qualifications, limitations, and restrictions thereof stated in the resolution of the Boardboard of Directorsdirectors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.”

 

To effect the Increase as proposed, we will file an amendment to our Charter,certificate of incorporation, with the Secretary of State of Delaware, substantially in the form as set forth above, providing that our authorized common stock will be 40,000,000180,000,000 shares.

 

Three million

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The board believes it is in the best interest of the additionalcommon stock to increase the number of authorized shares will be reservedof our capital stock in order to give the company greater flexibility in considering and planning for issuance underfuture general corporate needs, including, but not limited to, the Company’s 2017 Reed’s Inc. Incentive Compensation Plan, as further described Proposal No. 2. The Company intends to issue an aggregate of [●] shares underlying options and/or restricted stock to Valentin Stalowir, the Company’s Chief Executive Officer. The remainder will be available for issuance from time to time to enable us to respond to future business opportunities requiring the issuance of shares, including common stock-based financings, acquisition or strategic joint venture transactions involving the issuanceoffer and sale of common stock for forin one or more public offerings or private placements, the grant of common stock or warrants, options or other convertible securities in one or more strategic transactions, stock dividends, grants under equity compensation plans, stock splits and other general purposes thatcorporate transactions. The additional authorized but unissued shares will only be issued at the Board may deem advisable.direction of the board, and if required by applicable law or regulation of NASDAQ, upon separate stockholder approval. We are seeking approval for the amendment at this time because we are currently seeking opportunities that may require prompt action, and the Boardboard believes the delay and expense in seeking approval for additional authorized common stock at a special meeting of shareholdersstockholders could deprive us of the ability to take advantage of potential opportunities. Without an increase in the number of authorized shares of common stock, the Companycompany may be constrained in its ability to raise capital and may lose important business opportunities, which could adversely affect our financial performance and growth.

 

The Boardboard does not intend to issue any common stock except on terms that the Boardboard deems to be in the best interests of the Companycompany and its then existing stockholders.

 

If the stockholders do not approve this Proposal, then the Company will not have needed additional shares available.

Certain Disadvantages of the Increase

 

If the authorized number of shares of common stock increases from 19,500,000120,000,000 to 40,000,000180,000,000 shares as proposed by this Proposal No. 3, the Companycompany will be able to issue more shares of common stock which could result in additional dilution to current stockholders and which could have a negative effect on the market price of our common stock.

 

28Rights of Additional Authorized Shares 

 

Any newly authorized shares of common stock will be identical to the shares of common stock now authorized and outstanding. The certificate of amendment will not affect the rights of current holders of common stock, none of whom have preemptive or similar rights to acquire the newly authorized shares.

 

Principal Effects of the Increase

 

The Increase will affect all of our holders of common stock uniformly and will not affect any stockholder’s percentage ownership interests in our Company.company. We will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended.

 

Anti-Takeover Effects

 

Release No. 34-15230 of the staff of the Securities Exchange Commission requires disclosure and discussion of the effects of any proposal that may be used as an anti-takeover device. Although not a factor in the decision by our Boardboard to effect the increase of our authorized shares of common stock,Increase, one of the effects of having increased additional shares of our authorized common stock available for issuance may be to enable the Boardboard to render more difficult or to discourage an attempt to obtain control of the Companycompany by means of a merger, tender offer, proxy contest, or otherwise, and thereby protect the continuity of then present management. Unless prohibited by the regulations of applicable law or other agreements or restrictions, a sale of shares of common stock by us or other transactions in which the number of our outstanding shares of common stock would be increased could dilute the interest of a party attempting to obtain control of us. The increase in available authorized common stockIncrease may make it more difficult for, prevent or deter a third-party from acquiring control of the Companycompany or changing our Boardboard and management, as well as inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts.

 

The Increase is not being proposed in response to any effort of which we are aware to accumulate shares of common stock or obtain control of the Company.company. While it is possible that our management could use the Increase to resist or frustrate a third-party transaction providing an above-market premium that is favored by a majority of stockholders, we do not intend to construct or enable any anti-takeover defense or mechanism on its behalf. We have no intent or plans to employ the Increase as an anti-takeover device and do not have any plans or proposals to adopt any other provisions or enter into other arrangements that may have material anti-takeover consequences.

 

In addition to the Increase, provisions of our governing documents and applicable provisions of Delaware law may also have anti-takeover effects, making it more difficult for or preventing a third-party from acquiring control of the Companycompany or changing our Boardboard and management. These provisions may also have the effect of deterring hostile takeovers or delaying changes in the Company’scompany’s control or in our management.

 

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The Charter

Our certificate of incorporation and bylaws do not provide for cumulative voting in the election of directors. The combination of the present ownership by a relative few stockholders of a significant portion of the Company’s voting capital stock and lack of cumulative voting makes it more difficult for other stockholders to replace the members of the Boardboard or for another party to obtain control of the Companycompany by replacing our Board.board.

 

Potential Consequences if Stockholder Approval is Obtained

The potentialAdoption of the certificate of amendment will have no immediate dilutive effect on the proportionate voting power or other rights of the company’s existing stockholders. However, any future issuances and salesissuance of additional authorized shares of our common stock, would likely have a dilutive effect on a stockholder’s percentageat the future direction of the Board (and generally without the requirement of stockholder approval, unless specifically required by applicable law or NASDAQ regulation) may, among other things, dilute the earnings per share of common stock and the equity and voting powerrights of those holding common stock at the time such additional shares are issued.

In addition to the general corporate purposes mentioned above, and consequently, could lead to a decreaseas further described above, an increase in the market pricenumber of ourauthorized shares of common stock.stock may make it more difficult to, or discourage an attempt to, obtain control of the company by means of a takeover bid that the board determines is not in the best interest of the company and its stockholders. However, the board does not intend or view the proposed Increase as an anti-takeover measure and is not aware of any attempt or plan to obtain control of the company.

Appraisal Rights

Pursuant to the Delaware General Corporation Law, stockholders are not entitled to appraisal rights with respect to the certificate of amendment.

Effectiveness of the Certificate of Amendment

If the certificate of amendment is adopted, it will become effective upon the filing of the certificate of amendment with the Secretary of State of the State of Delaware.

 

Vote Required

 

The affirmative vote of the majority of the outstanding shares of our common stock is required to amend our CharterCertificate to effect an increase in its authorized common stock from 19,500,000120,000,000 to 40,000,000180,000,000 shares.

 

The board unanimously recommends a vote “FOR” approval of this Proposal No. 3.

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PROPOSAL 4 – AMENDMENT OF THE COMPANY’S CERTIFICATE
OF INCORPORATION TO INCREASE AUTHORIZED BLANK CHECK
PREFERRED STOCK FROM 500,000 TO 2,500,000

Authorization of up to 2,500,000 Shares of Blank-Check Preferred Stock in General

As of the record date, we had a total of 500,000 authorized shares of blank check preferred stock, par value $10.00 per share. The primary purpose of the authorization of an additional 2,000,000 shares of blank-check preferred stock in the Charter is for general corporate purposes, including, without limitation, capital raising, merger and acquisition opportunities, the issuance of stock dividends or stock splits, and other general corporate purposes. 

The effect of the adoption of Proposal No. 4 would be to grant the Board the authority to issue shares of preferred stock in one or more series, with such rights, preferences and designations, as it deems necessary or advisable without any additional action by the Company’s shareholders, unless otherwise required by law or by the rules and policies of the NYSE American market or any other quotation system or exchange upon which the shares of common stock of the Company are listed and trade. With regard to such proposed blank check preferred stock, the Board’s authority to determine the terms of any such shares of preferred stock would include, but not be limited to (i) the designation of each class or series and the number of shares that will constitute each such class or series; (ii) the dividend rate for each class or series; (iii) the price at which, and the terms and conditions on which, the shares of each class or series may be redeemed, if such shares are redeemable; (iv) the terms and conditions, if any, upon which shares of each class or series may be converted into shares of other classes or series of shares of the Company, or other securities; and (v) the voting rights for each class or series. Shares of preferred stock that are issued by the Company and subsequently redeemed or converted into another security of the Company would be available to be reissued by the Company, and the Board may set the terms of the reissued shares as they deem appropriate, in the same manner, and subject to the same limitations, as the authorized preferred shares permit.

The Board has made no decisions or commitments with respect to the use of the requested shares of blank check preferred stock, and it has no plans to commence an offering of any of the Company’s shares related thereto at this time. The Board believes, however, that approval of Proposal No. 4 will provide the flexibility to take advantage of opportunities as they arise.

Our Board has adopted a resolution seeking authorization of our stockholders to amend our Charter to authorize up to an additional 2,000,000 shares of blank-check preferred stock (the “Authorization”). It is proposed that Article IV of the Company’s Charter be amended to read in its entirety as follows (assuming approval of both Proposals Nos. 3 and 4): 

“Section 1. The total number of shares of capital stock which the Corporation is authorized to issue is Forty Million Five Hundred Thousand (40,000,500), of which Forty Million (40,000,000) shall be shares of Common Stock having a par value of $.0001 per share, Five Hundred Thousand (500,000) shall be shares of Preferred Stock having a par value of $10.00 per share, and Two Million (2.000.000) shall be shares of Preferred Stock having a par value of $0.01 per share.” The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences, and rights and the qualifications, limitations, or restrictions thereof, of each such series of Preferred Stock, including without limitation, authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting such series and the designation thereof, or any of the foregoing. The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the powers, preferences, and rights and the qualifications, limitations, and restrictions thereof stated in the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.”

To effect the Authorization as proposed, we will file an amendment to our Charter, substantially as set forth above, with the Secretary of State of Delaware providing an additional 2,000,000 authorized shares of preferred stock with a par value of $0.001 per share, and the Board shall have the ability issue shares of preferred stock in one or more series, with such rights, preferences and designations, as it deems necessary or advisable without any additional action by the Company’s shareholders. We may subsequently abandon the proposed increase if our Board deems it advisable.

Certain Disadvantages of the Authorization

If Proposal No. 4 is approved, the availability of undesignated blank-check preferred stock may have certain negative effects on the rights of holders of the Common Stock. The actual effect of the issuance of any shares of preferred stock upon the rights of holders of Common Stock cannot be stated until the Board determines the specific rights of the holders of such preferred stock. With regard to any proposed new class of blank-check preferred stock, the Board’s authority to determine the terms of any such shares of preferred stock would include, but not be limited to, (i) the designation of each class or series and the number of shares that will constitute each such class or series; (ii) the dividend rate for each class or series; (iii) the price at which, and the terms and conditions on which, the shares of each class or series may be redeemed, if such shares are redeemable; (iv) the terms and conditions, if any, upon which shares of each class or series may be converted into shares of other classes or series of shares of the Company, or other securities; and (v) the voting rights for each class or series. The proposed amendment will permit the Board, without future stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights, which are superior to and could adversely affect the voting power or other rights of the holders of our Common Stock. Specifically, we will be in a position to issue securities which would grant to the holders thereof, preferences or priorities over the holders of Common Stock with respect to, among other things, liquidation, dividends and voting. This could result in holders of Common Stock receiving less in the event of a liquidation, dissolution or other winding up of our company, reduce the amount of funds, if any, available for dividends on Common Stock, and dilute the voting power of the holders of our Common Stock.

Shares of preferred stock that are issued by the Company and subsequently redeemed or converted into another security of the Company would be available to be reissued by the Company and the Board may set the terms of the reissued shares as they deem appropriate, in the same manner, and subject to the same limitations, as the authorized preferred shares permit.

Principal Effects of the Authorization

If our stockholders approve this Proposal 4 authorizing the Authorization, the Authorization would effectively enable the Company to utilize such shares for general corporate purposes, including, without limitation, capital raising, merger and acquisition opportunities, the issuance of stock dividends or stock splits, and other general corporate purposes. The Authorization, in and of itself, will not affect any stockholder’s percentage ownership interests in our Company. We will continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended.

Anti-Takeover Effects

Release No. 34-15230 of the staff of the SEC requires disclosure and discussion of the effects of any proposal that may be used as an anti-takeover device. The blank-check preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. For example, the Board could designate and issue a series of preferred stock in an amount that sufficiently increases the number of outstanding shares to overcome a vote by the holders of our Common Stock or with rights and preferences that include special voting rights to veto a change in control. The effect of such provisions could delay or frustrate a merger, tender offer or proxy contest, the removal of incumbent directors, or the assumption of control by shareholders. Please note that the creation of the blank-check preferred stock has not been proposed by the Board for an anti-takeover related purpose and the Board has no knowledge of any current efforts to obtain control of the Company or to effect large accumulations of our voting stock.

Our Charter and bylaws do not provide for cumulative voting in the election of directors. The combination of the present ownership by a relative few stockholders of a significant portion of the Company’s voting capital stock and lack of cumulative voting makes it more difficult for other stockholders to replace the members of the Board or for another party to obtain control of the Company by replacing our Board.

Potential Consequences if Stockholder Approval is Obtained

This Proposal would enable the Company to utilize the issuance of blank-check preferred stock shares for general corporate purposes, including, without limitation, capital raising, merger and acquisition opportunities, the issuance of stock dividends or stock splits, and other general corporate purposes. The availability of undesignated blank-check preferred stock may have certain negative effects on the rights of the holders of our Common Stock. The actual effect of the issuance of any shares of blank-check preferred stock upon the rights of holders of Common Stock cannot be stated until the Board determines the specific rights of the holders of such blank-check preferred stock.

31 

Vote Required

The affirmative vote of the majority of the outstanding shares of our common stock is required to effect an amendment to our Charter to increase our blank check preferred by 2,000,000 shares.

The board unanimously recommends a vote “FOR” approval of this Proposal No. 4.

PROPOSAL NO. 5: APPROVAL OF ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS WHERE THE MAXIMUM DISCOUNT AT WHICH SECURITIES WILL BE OFFERED AT A PRICE WILL BE EQUIVALENT TO A DISCOUNT OF UP TO 25% BELOW THE MARKET PRICE OF OUR COMMON STOCK IN ACCORDANCE WITH NYSE AMERICAN COMPANY GUIDE SECTION 713

Our common stock is currently listed on NYSE American market and, as such, we are subject to NYSE American market rules. Section 713 of the NYSE American Company Guide requires us to obtain stockholder approval prior to the issuance of our common stock in connection with certain non-public offerings involving the sale, issuance or potential issuance by the Company of common stock (and/or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock outstanding before the issuance. Shares of our common stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other equity securities issued or granted in such non-public offerings will be considered shares issued in such a transaction in determining whether the 20% limit has been reached.

In recognition of our immediate needs to raise capital through one or more financing transactions that will involve the sale of equity securities, we agreed to include this Proposal No. 5 in this Proxy Statement as a post closing covenant to the Warrant Exercise Agreement dated July 13, 2017 with Raptor/ Harbor Reeds SPV, LLC. Since we may seek additional capital that triggers the requirements of Section 713, we are seeking stockholder approval now to enable us to move quickly to take full advantage of any opportunities that may develop in the equity markets.

Additionally, we are not currently in compliance with NYSE American market’s continued listing standards. We previously qualified by exception to the listing rules based on meeting the trading standards of public float, number of shareholders and market capitalization. We have until December 22, 2017 to regain compliance. We have determined increase in shareholder’s equity may help to bring us back into compliance.

We may effectuate the approved offerings or transactions in one or more transactions, subject to the limitations herein. We may seek to raise additional capital to implement our business strategy and enhance our overall capitalization as well as to meet our continuing shareholder’s equity requirements and listing standards pursuant to the NYSE American market rules. We have not determined the particular terms for such prospective offerings.

We hereby submit this Proposal No. 5 to our stockholders for their approval of the potential issuance of shares of our common stock, or securities convertible into our common stock, in one or more non-public capital-raising transactions, or offerings:

 

PROPOSAL NO. 4 –	●	The aggregate numberRatification of shares issued in the offerings will not exceed 6,000,000 sharesappointment of our common stock, subject to adjustment for any reverse stock split effected prior to the offerings (including pursuant to preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock);
	●	The total aggregate consideration will not exceed $8,000,000;

	●	The maximum discount at which securities will be offered (which may consist of a share of common stock and a warrantWeinberg & Company, P.A. as independent registered public accounting firm for the issuance of up to an additional share of common stock) will be equivalent to a discount of up to 25% below the market price of our common stock at the time of issuance in recognition of the limited public float of our traded common stock and historical volatility making the pricing discount of our stock required by investors at any particular time difficult, at this time, to predict;
	●	Such offerings will occur, if at all, on or beforefiscal year ending December 28, 2017; and
	●	Such other terms as the board of directors shall deem to be in the best interests of the Company and its stockholders, not inconsistent with the foregoing.31, 2022

 

The issuance of shares of our common stock, or other securities convertible into shares of our common stock, in accordance with any offerings would dilute, and thereby reduce, each existing stockholder’s proportionate ownership in our common stock. The stockholders do not have preemptive rights to subscribe to additional shares that may be issued by the Company in private offerings in order to maintain their proportionate ownership of the common stock.

The issuance of shares of common stock in one or more non-public offerings could have an anti-takeover effect. Such issuance could dilute the voting power of a person seeking control of the Company, thereby deterring or rendering more difficult a merger, tender offer, proxy contest or an extraordinary corporate transaction opposed by the Company.

The Board of Directors has not yet determined the terms and conditions of any offerings. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than 6,000,000 shares of common stock in the aggregate pursuant to the authority requested from stockholders under this proposal (subject to adjustment for any reverse stock split). It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased by one or more investors who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few stockholders who could exercise greater influence on our operations or the outcome of matters put to a vote of stockholders in the future.

We cannot determine what the actual net proceeds of the offerings will be until they are completed, but as discussed above, the aggregate dollar amount of the non-public offerings will be no more than $8,000,000. If all or part of the offerings is completed, the net proceeds will be used for general corporate purposes. We currently have no arrangements regarding any specific transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any offerings.

Vote Required

The affirmative vote of the majority of the shares represented at the meeting and entitled to vote is required for approval of the issuance of securities in one or more non-public offerings, as required by and in accordance with Section 713.

The board of directors recommends a vote “FOR” this Proposal No. 5.

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PROPOSAL NO. 6: APPROVAL OF ANY CHANGE OF CONTROL THAT COULD RESULT FROM THE POTENTIAL ISSUANCE OF SECURITIES IN ONE OR MORE NON-PUBLIC OFFERINGS AS AUTHORIZED BY THE STOCKHOLDERS IN PROPOSAL No. 5 IN ACCORDANCE WITH NYSE AMERICAN COMPANY GUIDE SECTION 713

NYSE American Company Guide Section 713requiresus to obtain stockholder approval prior to certain issuances with respect to common stock or securities convertible into common stock that will result in a change of control of the Company. This rule does not specifically define when a change in control of a Company may be deemed to occur. However, guidance suggests that a change of control would occur, subject to certain limited exceptions, if after a transaction a person or an entity will hold 20% or more of the Company’s then outstanding capital stock. For the purpose of calculating the holdings of such person or entity, NYSE American market would take into account, in addition to the securities received by such person or entity in the transaction, all of the shares owned by such person or entity unrelated to the transaction and would assume the conversion of any convertible securities held by such person or entity. The issuance of securities pursuant to Proposal No. 5, as applicable, if authorized by the stockholders, could result in a change in control. We are seeking the stockholders’ approval on any change in control in accordance with NYSE American Company Guide Section 713 in the event that potential issuance of securities in the offerings proposed in Proposal 5 would result in a change in control.

Vote Required

The affirmative vote of the majority of the shares represented at the meeting and entitled to vote is required for approval of any change of control that could result from the potential issuance of securities in the non-public offerings following approval of Proposal No. 5.

The board of directors recommends a vote “FOR” this Proposal No. 6.

PROPOSAL 7: APPROVAL OF AMENDMENT TO BYLAWS

TO AUTHORIZE BOARD OF DIRECTORS TO SET MAXIMUM SIZE OF BOARD

BETWEEN FIVE (5) AND NINE (9) SEATS, FROM TIME TO TIME

The Board is seeking stockholder approval of an amendment to the Company’s Bylaws to allow the board to set the maximum size of the Board between five (5) and nine (9) seats, from time to time, in the Board’s sole discretion. This amendment will allow the Board flexibility to expand the board to bring on new directors. Currently, the maximum size of the Board is set between five (5) and seven (7) seats

If the amendment is adopted, it will become effective immediately.

The text of the amendment to the Bylaws is as follows:

“Article II, SECTION 2. NUMBER. The number of members of the Corporation's Board of Directors shall not be less than one (1) nor more than nine (9), as fixed from time to time by resolution of the Board of Directors, except that in the absence of any such designation, such number shall be five (5). All the Directors shall be of full age and at least one shall be a citizen of the United States. Each director shall be elected for a term of one (1) year and until his or her successor is elected and qualified, except as otherwise provided herein or required by law. The presence of a majority of all Directors shall be necessary at any meeting to constitute a quorum for the transaction of business. Meetings of the Directors may be held within or without the state of Delaware. Whenever the authorized number of directors is increased between annual meetings of the stockholders, a majority of the directors then in office shall have the power to elect such new directors for the balance of a term and until their successors are elected and qualified. Any decrease in the authorized number of directors shall not become effective until the expiration of the term of the directors then in office unless, at the time of such decrease, there shall be vacancies on the board which are being eliminated by the decrease.”

Vote Required

The affirmative vote of the majority of the outstanding shares of our common stock is required to authorize the amendment to our bylaws.

The board of directors unanimously recommends a vote “FOR” approval of amendment to bylaws to authorize board of directors to set maximum size of board between five (5) and nine (9) seats, from time to time.

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PROPOSAL 8: RATIFICATION OF THE APPOINTMENT OF WeINBERG & COMPANY, P.A. AS

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The audit committee has reappointed Weinberg & Company, P.A. to audit our consolidated financial statements for the fiscal 2018.year ending December 31, 2022. Weinberg & Company, P.A., an independent registered public accounting firm, has served as our independent auditor continuously since 2009. A representative from Weinberg & Company, P.A. LP is not expected to be present at the annual meeting.

 

Although stockholder ratification of the appointment is not required by law, we desire to solicit such ratification as a matter of good corporate governance. If the appointment of Weinberg & Company, P.A. is not approved by athe affirmative vote of the majority of the shares castrepresented at the annual meeting and entitled to vote on the matter, the audit committee will consider the appointment of another independent registered public accounting firm for fiscal 2018.2022.

 

Vote Required

 

The affirmative vote of the majority of the shares represented at the meeting and entitled to vote on this matter is required for the election of directors. is required to ratify the appointment of Weinberg & Company, P.A. as independent registered public accounting firm.

The board of directorsunanimously recommends a vote “for”“FOR” ratification of the

appointment of Weinberg & Company, P.A. as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2022.

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Independent Registered Public Accounting Firm Fee Information

Weinberg & Company, P.A. (“Weinberg”) was our independent registered public accounting firm for the years ended December 31, 20162020 and 2015.2019.

 

The following table shows the fees paid or accrued by us for the audit and other services provided by Weinberg for the years ended December 31, 20162020 and 2015.2019:

 

		2016				2015				2020				2019
Audit Fees		$	105,382			$	142,000			$	161,597			$	267,184
Audit-Related Fees							0				-				-
Tax Fees			30,902				24,000				36,169				63,561
All Other Fees							0				93,548				83,670
Total		$	136,284			$	166,000			$	291,314			$	414,415

 

As defined by the SEC, (i) “audit fees” are fees for professional services rendered by our principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-K, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years; (ii) “audit-related fees” are fees for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “audit fees;” (iii) “tax fees” are fees for professional services rendered by our principal accountant for tax compliance, tax advice, and tax planning; and (iv) “all other fees” are fees for products and services provided by our principal accountant, other than the services reported under “audit fees,” “audit-related fees,” and “tax fees.”

 

Audit Fees

 

ServicesWeinberg provided to us by Weinberg with respect to such periods consisted ofservices for the audits of our financial statements included in Annual Reports on Form 10-K and limited reviews of the financial statements included in Quarterly Reports on Form 10-Q. Weinberg also provided services with respect to the filing of our registration statements in 2016 and 2015.

 

Audit Related Fees

 

Weinberg did not provide any professional services to us with which would relate tobe considered “audit related fees.”

 

Tax Fees

 

Weinberg prepared our 20152020 and 20142019 Federal and state income taxes.tax returns.

 

All Other Fees

 

Services provided by Weinberg did not provide any professional serviceswith respect to us with which would relate to “otherthe filing of various registration statements made throughout the year are considered “all other fees.”

 

Audit Committee Pre-Approval Policies and Procedures

 

Under the SEC’s rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent registered public accounting firm in order to ensure that they do not impair the auditors’ independence. The Commission’sSEC’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent registered public accounting firm.

 

Consistent with the SEC’s rules, the Audit Committee Charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to us or any of our subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting. Accordingly, 100% of audit services and non-audit services described in this Item 14 were pre-approved by the Audit Committee.

 

There were no hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.

 

35

PROPOSAL NO. 5 –

Reverse stock split of our common stock

Introduction

The board is recommending that the stockholders approve an amendment to the company’s certificate of incorporation to effect a reverse stock split of the Company’s shares of common stock at a ratio within a range of 1-for-2 to 1-for-5, inclusive (the “Reverse Stock Split”). If this Proposal No. 5 is approved, the board or a committee of the board will have the authority to decide, within twelve months from the Annual Meeting, whether to implement the split and the exact ratio of the split within this range, if it is to be implemented. If the board decides to implement the split, it will become effective upon the filing of the amendment to the company’s certificate of incorporation with the Secretary of State of the State of Delaware (the “Effective Date”). If the reverse split is implemented, the number of issued and outstanding shares of common Stock would be reduced in accordance with the exchange ratio selected by the board or committee. The total number of authorized shares of common stock would also be reduced in accordance with the exchange ratio. The form of amendment to the company’s certificate of incorporation to effect the reverse split is attached as Appendix B to this proxy statement. If and when filed, the amendment will contain the number of shares determined by the board within the limits set forth in this Proposal No. 5 to be combined into one share of common stock.

The board may not elect to implement a reverse split. However, the board believes that having the time-limited authority to take such an action is an important proactive step to maintain and build stockholder value.

Background of the Reverse Split

The Nasdaq Listing Qualifications Department notified us on August 16, 2021 that the bid price of our common stock had closed at less than $1 per share over the previous 30 consecutive business days, from July 2, 2021 through August 13, 2021, and, as a result, did not comply with Listing Rule 5550(a)(2) (“Bid Price Rule”). Therefore, in accordance with Listing Rule 5810(c)(3)(A), we were provided 180 calendar days, or until February 14, 2022, to regain compliance with the Bid Price Rule. If, at any time on or before February 14, 2022 the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq staff will provide written notification that it has achieved compliance with the Bid Price Rule.

If we fail to regain compliance with the Bid Price Rule on or before February 14, 2022 but meet all of the other applicable standards for initial listing on the Nasdaq Capital Market with the exception of the minimum bid price, we may be eligible for additional time. To qualify, we would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of our intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary.

Purpose of the Reverse Split

The board’s primary objective in asking for the authority to effect the Reverse Stock Split is to raise the per share trading price of our common stock. The board believes that having the ability to implement the Reverse Stock Split would better enable the company to maintain the listing of its common stock on the NASDAQ Capital Market. Also, if the Reverse Stock Split is implemented, the board believes it would facilitate higher levels of institutional stock ownership, where investment policies generally prohibit investments in lower-priced securities and better enable the company to raise funds to finance operations. 

Although the board presently intends to effect the reverse stock split only if necessary to regain compliance with the Nasdaq Capital Market’s minimum bid price requirement, under Section 242(c) of the Delaware General Corporation Law, our board has reserved the right, notwithstanding our stockholders’ approval of the proposed amendment of the certificate of incorporation at the Annual Meeting, to abandon the proposed amendment at any time (without further action by our stockholders) before the amendment of the certificate of incorporation is filed with the Secretary of State of the State of Delaware. Our board may consider a variety of factors in determining whether or not to proceed with the proposed amendment of the certificate of incorporation, including overall trends in the stock market, recent changes and anticipated trends in the per-share market price of our common stock, business developments and our actual and projected financial performance. If the closing bid price of our common stock on the Nasdaq Capital Market reaches a minimum of $1.00 per share and remains at or above that level for a minimum of ten consecutive trading days, as discussed more fully below, our Board may decide to abandon the filing of the proposed amendment of the certificate of incorporation.

Reducing the number of outstanding shares of our common stock through the Reverse Stock Split is intended, absent other factors, to increase the per share market price of our common stock. However, other factors, such as our financial results, market conditions and the market perception of our business may adversely affect the market price of our common stock As a result, there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following the Reverse Stock Split or that the market price of our common stock will not decrease in the future. Additionally, we cannot assure you that the market price per share of our common stock after a Reverse Stock Split will increase in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split.

Effects of the Reverse Stock Split on Common Stock

The following table provides estimates of the number of shares of our common stock authorized, issued and outstanding, reserved for issuance and authorized but neither issued nor reserved for issuance at the following times (i) prior to the Reverse Stock Split, (ii) assuming a 1-for-2 reverse stock split, (iii) assuming a 1-for-3 Reverse Stock Split, (iv) assuming a 1-for-4 Reverse Stock Split and (v) assuming a 1-for-5 Reverse Stock Split:

Number of  Shares of  our Common Stock  Authorized

Number of Shares of our Common Stock Issued and Outstanding(1)

Percentage of  Authorized  Common  Stock

Number of  Shares of our Common Stock  Available For  Issuance

Current Shares

Assuming passage of Proposal No. 3 increasing the authorized from 120,000,000 to 180,000,000

1-for-2 Reverse Stock Split

1-for-3 Reverse Stock Split

1-for-4 Reverse Stock Split

\

1-for-5 Reverse Stock Split

\

Based on shares of our common stock outstanding as of November         , 2021.

Reduction of Shares Held by Individual Holders of Common Stock. After the effective date of the proposed Reverse Stock Split, each holder will own fewer shares of common stock. However, the proposed Reverse Stock Split will affect all holders of common stock uniformly and will not affect any holder of common stock’s percentage ownership interest in the company, except to the extent that the Reverse Stock Split results in any holder of common stock owning a fractional share as described below. Proportionate voting rights and other rights of the holders of common stock will not be affected by the proposed Reverse Stock Split (other than as a result of rounding up to the nearest whole share in lieu of issuance of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of common stock immediately prior to the Reverse Stock Split would continue to hold 2% of the voting power of the outstanding shares of common stock immediately after the Reverse Stock Split. The number of holders of common stock of record would not be affected by the Reverse Stock Split. However, if the Reverse Stock Split is implemented, it will increase the number of holders of common stock who own “odd lots” of less than 100 shares of common stock. Brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions of more than 100 shares of common stock.

36

Preferred Stock. At the Effective time, conversion price of the outstanding Series A Convertible Preferred Stock will be adjusted such that the number of shares of common stock issuable upon conversion will be decreased in proportion to the decrease in the aggregate shares of common stock outstanding.

Change in Number and Exercise Price of Employee and Director Equity Awards. Under the terms of the company’s outstanding equity awards, the Reverse Stock Split would cause a reduction in the number of shares of common stock issuable upon exercise or vesting of such awards in proportion to the reverse stock split ratio and would cause a proportionate increase in the exercise price of such awards to the extent they are stock options. The number of shares of commons stock authorized for future issuance under the company’s equity plans will also be proportionately reduced. The number of shares of common stock issuable upon exercise or vesting of outstanding equity awards will be rounded to the nearest whole share and no cash payment will be made in respect of such rounding.

Regulatory Effects. The common stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and the common stock is subject to the periodic reporting and other requirements of the Exchange Act. The proposed Reverse Stock Split will not affect the registration of the common stock under the Exchange Act or the company’s obligation to publicly file financial and other information with the SEC. If the proposed Reverse Stock Split is implemented and our common stock has not been delisted from NASDAQ, the common stock will continue to trade on The NASDAQ Capital Market under the symbol “REED” (although NASDAQ would likely add the letter “D” to the end of the trading symbol for a period of 20 trading days to indicate that the reverse stock split has occurred). If the reverse stock split is implemented and our common stock has been delisted from NASDAQ, we believe the common stock would continue to be reported on the OTC. However, if we are delisted from the NASDAQ Capital Market we currently intend to file an application to list our common stock on a national securities exchange following the effectiveness of the Reverse Stock Split.

No Going Private Transaction. Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, the board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

No Anti-Takeover Effect. Upon the effectiveness of the Reverse Stock Split, the number of authorized shares of common stock will be proportionately reduced by the reverse stock split ratio. The Reverse Stock Split will have no anti-takeover or dilutive effect.

The Proposed Reverse Stock Split May Not Increase the Company’s Stock Price over the Long-Term, Which Would Prevent the Company From Realizing Some of the Anticipated Benefits of the Reverse Stock Split. The board expects that the Reverse Stock Split will increase the market price of the common stock so that the company is able to maintain compliance with the NASDAQ minimum bid price listing standard if our common stock remains listed on the NASDAQ Capital Market or meet the eligibility requirements for listing on a national securities exchange, if our common stock is no longer listed on the NASDAQ Capital Market. However, the effect of the Reverse Stock Split upon the market price of the common stock cannot be predicted with any certainty, and the history of similar stock split combinations for companies in like circumstances is varied. It is possible that the per share price of the common stock after the Reverse Stock Split will not rise in proportion to the reduction in the number of shares of common stock outstanding resulting from the Reverse Stock Split, and there can be no assurance that the market price per share of the common stock after the Reverse Stock Split will either exceed or remain in excess of any minimum bid price requirement for a sustained period of time. The market price of the common stock may be affected by other factors which may be unrelated to the number of shares outstanding, including the company’s future performance. In addition, even if the company is able to maintain the listing of its common stock on the NASDAQ Capital Market, there can be no assurance that the company will not be delisted in the future due to a failure to meet other continued listing requirements, even if the market price per share of the common stock after the Reverse Stock Split remains in excess of $1.00. Further, if the company’s common stock is delisted from NASDAQ, there can be no assurance that the common stock will meet the other eligibility requirements for listing on another national securities exchange.

37

The Proposed Reverse Stock Split May Decrease the Liquidity of the Company’s Stock. The liquidity of the common stock may be harmed by the proposed Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the stock price does not increase as a result of the Reverse Stock Split.

Board Discretion to Implement the Reverse Stock Split. If the Reverse Stock Split is approved by the company’s stockholders, it will be effected, if at all, only upon a determination by the board that a Reverse Stock Split is in the best interests of the company and its stockholders at the time of such determination.

Notwithstanding approval of the Reverse Stock Split by the stockholders, the board may, in its sole discretion, abandon the proposed amendment to the certificate of incorporation and determine not to effect the Reverse Stock Split as permitted under Section 242(c) of the Delaware General Corporation Law (“DGCL”). If the board does not implement the Reverse Stock Split prior to the one year anniversary of the Annual Meeting, Stockholder approval would be required again prior to implementing any reverse stock split.

Stockholders’ Equity. Following the effectiveness of the amendment to the company’s Certificate of Incorporation, the stated capital on the company’s balance sheet and the additional paid-in capital account, in each case, attributable to the common stock, will be adjusted to reflect the Reverse Stock Split. The par value per share of the common stock will remain unchanged at $0.0001 per share after the Reverse Stock Split. As a result, on the effective date of the Reverse Stock Split, the stated capital on the company’s consolidated balance sheet attributable to common stock will be reduced and the additional paid-in-capital account will be increased by the amount by which the stated capital is reduced. Per share net income or loss will be increased because there will be fewer shares of the common stock outstanding. The company does not anticipate that any other accounting consequences, including changes to the amount of stock-based compensation expense to be recognized in any period, will arise as a result of the Reverse Stock Split.

Shares Held in Book-Entry and Through a Bank, Broker or Other Nominee

 

PROPOSAl 9: StockholderThe combination of, and reduction in, the number of our outstanding shares of common stock as a result of the Reverse Stock Split will occur automatically at the effective time without any additional action on the part of our shareholders.

Upon the Reverse Stock Split, we intend to treat shareholders holding shares of common stock in “street name” (that is, through a bank, broker or other nominee) in the same manner as registered shareholders whose shares of common stock are registered in their names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding shares of our common stock in “street name”; however, these banks, brokers or other nominees may apply their own specific procedures for processing the Reverse Stock Split. If you hold your shares of common stock with a bank, broker or other nominee, and you have any questions in this regard, we encourage you to contact your nominee.

38

If you hold registered shares of our common stock in a book-entry form, you do not need to take any action to receive your post-Reverse Stock Split shares of our common stock in registered book-entry form. If you are entitled to post-Reverse Stock Split shares of our common stock, a transaction statement will automatically be sent to your address of record as soon as practicable after the effective time indicating the number of shares of our common stock you hold.

If you hold any of your shares of our common stock in certificate form, you will receive a transmittal letter from our transfer agent as soon as practicable after the effective time. The transmittal letter will be accompanied by instructions specifying how you can exchange your certificate representing the pre-Reverse Stock Split shares of our common stock for either: (i) a certificate representing the post-Reverse Stock Split shares of our common stock or (ii) post-Reverse Stock Split shares of our common stock in a book-entry form, evidenced by a transaction statement that will be sent to your address of record as soon as practicable after the effective time indicating the number of shares of our common stock you hold. Beginning on the effective date of the reverse stock split, each certificate representing pre-Reverse Stock Split shares of our common stock will be deemed for all corporate purposes to evidence ownership of post-Reverse Stock Split shares.

Consequences if Our Stockholders Do Not Approve the Reverse Stock Split

If our stockholders do not approve Proposal Entitled “shareholder Proxy Access”3, we may be unable to list our common stock on the NASDAQ Capital Market or another national securities exchange.

Dissenter’s Rights

Under the Delaware General Corporation Law, our stockholders will not be entitled to dissenter’s rights with respect to the consummation of the Reverse Stock Split as contemplated by the Amendment, and we do not intend to independently provide our stockholders with any such rights.

Stockholders should not destroy any share certificate(s) and should not submit any share certificate(s) until requested to do so.

Interests of Certain Persons in the Proposal

Certain of the company’s officers and directors have an interest in this Proposal No. 5 as a result of their ownership or potential ownership of shares of stock of the company, as set forth in the sections entitled “Security Ownership of Certain Beneficial Owners and Management”. However, the company does not believe that its officers or directors have interests in the Reverse Stock Split that are different from or greater than those of any other holder of common stock.

No Fractional Shares

 

The Company received noticecompany does not currently intend to issue fractional shares in connection with the Reverse Stock Split. We will round up to the nearest whole share for stockholders, who own the common stock prior to the effective time of the intentionReverse Stock Split and who otherwise would hold fractional shares because the number of shares of common stock they held before the Reverse Stock Split would not be evenly divisible based on the Reverse Stock Split ratio.

Material U.S. Federal Income Tax Consequences of the Reverse Stock Split

The following discussion is a summary of certain U.S. federal income tax consequences of the Reverse Stock Split to the company and to holders of the common stock that hold such stock as a capital asset for U.S. federal income tax purposes. This discussion is based on laws, regulations, rulings and decisions in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. This discussion applies only to holders that are U.S. persons and does not address all aspects of U.S. federal income taxation that may be relevant to holders in light of their particular circumstances or to holders who may be subject to special tax treatment under the Code, including, without limitation, holders who are dealers in securities or foreign currency, foreign persons, insurance companies, tax-exempt organizations, banks, financial institutions, small business investment companies, regulated investment companies, real estate investment trusts, retirement plans, holders that are partnerships or other pass-through entities for U.S. federal income tax purposes, holders whose functional currency is not the U.S. dollar, traders that mark-to-market their securities, holders subject to the alternative minimum tax, holders who hold the common stock’s common stock or convertible notes as part of a shareholder to present a proposal for voting athedge, straddle, conversion or other risk reduction transaction, or who acquired the Annual Meeting. The proposal will be voted on only if properly presented at the Annual Meeting. In accordance with the rules of the Securities and Exchange Commission, the proposal and supporting statement are set forth below as received from the shareholder proponent. All statements contained in the proposal and supporting statement are the sole responsibility of the shareholder proponent and the Company and the Board disclaim any responsibility for their content. The Company will provide the name, address and shareholdings of the shareholder proponent upon oral or written request directedcommon stock’s common stock pursuant to the Company’s Secretary.

As explained below,exercise of compensatory stock options, the Board recommends that you vote “AGAINST” this Proposal No. 9 shareholder proposal entitled “Shareholder Proxy Access”.vesting of previously restricted shares of stock or otherwise as compensation.

 

The Boardcompany has not sought, and will not seek, a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of Reed’s Inc.the Reverse Stock Split. The following summary does not supportaddress the adoptiontax consequences of the resolution proposed below and asks shareholdersReverse Stock Split under foreign, state, or local tax laws. Accordingly, each holder of common stock should consult his, her or its tax advisor with respect to consider management’s response, which follows the shareholder proposal.particular tax consequences of the Reverse Stock Split to such holder.

 

[REED - Rule 14a-8 Proposal, July 20, 2017]

Proposal [4*] - Shareholder Proxy Access

RESOLVED: ShareholdersThe U.S. federal income tax consequences for a holder of Reeds, Inc. (the “Company” or “Reeds”) askcommon stock and for the board of directors (the “Board”)common stock pursuant to amend its bylaws or other documents, as necessary, to provide proxy access for shareholdersthe Reverse Stock Split will be as follows:

 

	1.	Nominating shareholders or shareholder groups (“Nominators”) must beneficially own 3% or more of the Company’s outstanding common stock (“Required Stock”) continuously for at least three years and pledge to hold such stock through the annual meeting.
	2.	Nominators may submit a statement not exceeding 500 words in support of each nominee to be included in the Company proxy.
	3.	The number of shareholder-nominated candidates eligible to appear in proxy materials shall be one quarter of the directors then serving or two, whichever is greater
	4.	No limitation shall be placed on the number of shareholders that can aggregate their shares to achieve the 3% of Required Stock
	5.	No limitation shall be placed on the re-nomination of shareholder nominees by

Nominators based on the number or percentage of votes received in any election

	6.	The Company shall not require that Nominators pledge to hold stock after the annual meeting if their nominees fail to win election.
	7.	Loaned securities shall be counted as belonging to a nominating shareholder if the shareholder represents it has the legal right to recall those securities for voting purposes and will hold those securities through the date of the annual meeting.

Supporting Statement:

The SEC’s universal proxy access Rule 14a-11 (https://www.sec.gov/rules/final/2010/339136.pdf) was vacated after a court decision regarding the SEC’s cost-benefit analysis. Therefore, proxy access rights must be established on a company-by-company basis. Subsequently,Proxy Access in the United States: Revisiting the Proposed SEC Rule (http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1) a cost-benefit analysis by CFA Institute, found proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising US market capitalization by up to $140.3 billion.Public Versus Private Provision of Governance: The Case of Proxy Access (http://ssrn.com/abstract=2635695) found a 0.5 percent average increase in shareholder value for proxy access targeted firms.

Proxy Access: Best Practices

(http://www.cii.org/files/publications/misc/08_05 15_Best%20Practices%20-

⁰/020Proxy%20Access.pdf) by the Council of Institutional Investors, “highlights the most troublesome provisions” in recently implemented access bylaws, such as the fact that even if the 20 largest public pension fund members were able to aggregate their shares, they would not meet the 3% criteria at most companies examined by the Council.

Adoption of bylaws withall the requested elements outlined above would help ensure meaningful proxy assess is available to shareholders, even groups made up entirely of small shareholders, which is of critical importance at Reeds. Shareholders are tired of an unprofitable decade, constant refinancing and share dilution, as well as uncreative hand picked boards. Give shareholders an opportunity to choose two board directors who will know they work for us because we will be the ones nominating them-

Increase Shareholder Value

Vote for Shareholder Proxy Access Enhancement — Proposal [4*]

James McRitchie, 9295 Yorkship Court, Elk Grove, CA 95758 sponsors this proposal

Board Recommendation

Our Board has carefully considered the foregoing stockholder proposal and unanimously recommends a voteAGAINST this “Shareholder Proxy Access” Proposal No. 9 for the following reasons:

●The proposal is unnecessary because the Company’s governing documents and policies already provide the Company’s stockholders with the opportunity for meaningful input into the director nomination and election process.

● We have an established record of best governance practices that are responsive to shareholders.

● This proposal, if adopted by the Company, could result in repeated, disruptive and divisive director elections without benefit to the stockholders as a whole.

● Proxy access sets up a procedure that creates an uneven playing field in which the Company bears substantial expense while a stockholder proponent of nominees need expend little resources to promote their candidacy.

● To the Company’s knowledge, the proponent did not submit this stockholder proposal based on any perceived Company-specific governance problem or shortcoming.

The proposal is unnecessary because the Company’s governing documents and policies already provide the Company’s stockholders with the opportunity for meaningful input into the director nomination and election process.

The Company’s Board has delegated to its Governance Committee the responsibility to identify, evaluate and recommend nominees for election to the Board. As discussed under “Board Structure and Committees; Nomination of Directors” in this Proxy Statement, in identifying potential director candidates, the Governance Committee relies on any source available for the identification and recommendation of candidates, including stockholders. The Committee does not intend to alter the manner in which it evaluates candidates based on whether the candidate is recommended by a stockholder or not. Additionally, the Company’s bylaws permit stockholders to nominate director candidates for consideration at annual stockholder meetings and to solicit proxies in favor of those candidates.

The Governance Committee endeavors to achieve for the Board an overall balance of diversity of experience at policy-making levels with a complimentary mix of skills and professional experience in areas relevant to the Company’s business, while also ensuring that the size of the Board is appropriate to function effectively and efficiently. The Board believes that its Governance Committee is in the best position to review and recommend director nominees who have the skills and qualifications to enhance the effectiveness of the Board and who are free from conflicts of interest and will represent the interests of all stockholders and not just those with special interests. Proxy access bypasses the Governance Committee’s process by placing directly into nomination candidates who may fail to meet the independence or other qualifications established by the Board or who may fail to contribute to the mix of needed skills and professional experience.

We have an established record of best governance practices and are responsive to shareholders.

	●	Any shareholder may nominate directors pursuant to the Company’s amended and restated bylaws and solicit proxiesholder should not recognize any gain or loss for director nominees underU.S. federal proxy rules;
		income tax purposes;
	●	Any shareholder may submit proposals for consideration at the Company’s annual meeting and for inclusionholder’s aggregate tax basis in the Company’s proxy statement, subjectcommon stock received pursuant to certain conditions and SEC rules and regulations;
		the Reverse Stock Split, should be equal to the aggregate tax basis of such holder’s common stock surrendered in exchange therefor;
	●	Stockholder may express their views on our executive compensation program through an annual “say-on-pay” vote;
		the holder’s holding period for the common stock received pursuant to the Reverse Stock Split, should include such holder’s holding period for the common stock surrendered in exchange therefor;
	●	We have majority voting;
	●	Our Board adoptedwe should not recognize gain or loss solely as a director resignation policy consistent withresult of the Company’s majority voting standard and we have adopted changes to the advance notice provision in our bylaws to address the potential problem of a holdover director;
	●	Five of seven of our Board nominees are independent under the rules of NYSE American Market; and
	●	Our Chief Executive Officer and Chairman positions are separate.Reverse Stock Split.

We are required to provide the holders of our common stock with information regarding the tax impact of the Reverse Stock Split, which we intend to provide on our website at www.reedsinc.com.

This proposal, if adopted by the Company, could result in repeated, expensive, disruptive and divisive director elections without benefit to the stockholders as a whole.

 

Bypasses Current Processes

The Board’s Governance Committee serves an important function in considering the effectiveness of the Board and in identifying, assessing and recommending nominees who possess a combination of skills, professional experience and diversity of background necessary to oversee the Company’s business. The Governance Committee also considers whether a candidate would contribute to an effective, well-rounded and diverse Board that operates openly and collaboratively and represents the best interests of all shareholders. Nominees proposed through proxy access are not subject to any evaluation or screening by the Governance Committee and therefore proxy access could result in loss of important skills, experience and diversity on the Board.

Furthermore, there is no limit on the ability of shareholders, even the same ones, to advance additional candidates in subsequent years, and the proxy access proposal does not require that nominating shareholders disclaim any intent to effect a change in control. Such shareholders’ true intentions would be unknown. Such lack of important safeguards against abuse of the proxy access mechanism is not in the best interest of our shareholders and could cause abrupt changes in our Board.

Increasing Likelihood of Special Interest Directors

In addition, stockholder activists could publicize and promote special interest agendas at the expense of the Company’s stockholders by nominating directors for the Board, which could lead to the election of “special interest directors” who may be inclined to represent the interests of the stockholders who nominated them and not the interests of all of the Company’s stockholders. The nomination of candidates through the proponent’s proxy access proposal would convert each such Board election into a contested election in which the proposed director nominees would only need to win a plurality of votes to be elected.

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Disruption

This proposal, if implemented, could have a tremendously disruptive effect by turning director elections into proxy contests, effectively requiring the expenditure of significant management resources in a manner inconsistent with the creation of stockholder value and discouraging qualified directors from serving on the Board. One of the principal reasons that the United States Court of Appeals for the District of Columbia invalidated the Securities Exchange Commission’s proxy access rule was that the Court determined that the Securities Exchange Commission did not adequately assess the potential for increased proxy contests and the increased expenses and distractions resulting from proxy contests.

Further, a director elected by one shareholder group in one year may face successful opposition from a director nominated by another shareholder group in a subsequent year, setting up ongoing instability on the Board. The potential disruption of perennial proxy contests would substantially distract the Board from its highest value activities, would contravene our shareholders’ focus on the adoption of governance practices that enhance their long-term economic interests, and could discourage highly qualified candidates from serving on the Board, causing higher turnover and resulting in a less experienced Board.

Proxy access sets up a procedure that creates an uneven playing field in which the Company bears substantial expense while a stockholder proponent of nominees need expend little resources to promote their candidacy. Electronic delivery of proxy materials has substantially reduced the cost of third-party solicitations of proxy statements.

Proxy access sets up a procedure that creates an uneven playing field in which the Company bears substantial expense while a stockholder proponent of nominees for election need expend little resources to promote their candidacy. The Company already bears the expense of filing and distributing proxy materials, which would be required to include the proponents’ stockholder nominees, and the Board is likely to feel compelled to undertake an additional and expensive campaign to inform stockholders of the reasons the Board’s nominees, and not the proponents’ nominees, should be elected. Further, a stockholder activist seeking to publicize and promote a special interest agenda could use the threat of a contested election solely to extract concessions from the Company relating to that special interest.

The Securities Exchange Commission allows such proponents to distribute their proxy materials relating to their director candidates electronically by posting the materials on the Internet and giving stockholders a notice of their availability. Electronic delivery of proxy materials has substantially reduced the mailing and printing costs associated with third party solicitations. By utilizing the additional flexibility provided by electronic delivery of proxy materials, stockholders have a greater ability to express their views on and influence the outcome of annual elections than ever before.

We believe that stockholders holding 3% of the Company’s outstanding shares (which would constitute approximately $[●] worth of shares based on the August 30, 2017 closing price), if they have a legitimate interest in selecting directors to sit on the Board, should be financially capable of bearing the expense of soliciting proxies rather than shifting those costs to the Company and, therefore, to its other stockholders.

To the Company’s knowledge, the proponent did not submit this stockholder proposal based on any perceived Company-specific governance problem or shortcoming.

The proponents of this stockholder proposal submitted a similar proposal regarding proxy access at our 2016 Annual Meeting of Stockholders. That proposal was defeated by a majority vote of our stockholders. The Board is aware that the proponent has submitted this proposal to numerous in an effort to lead toward the adoption of a standard for public companies, and to the Company’s knowledge, the Company was selected solely because of the industry in which it operates. The Board intends to continue to monitor developments in the area of proxy access and to listen to its stockholders, but does not believe that this “one-size-fits-all” approach is in the best interests of the Company’s stockholders.

Vote Required

 

The affirmative vote of the majority of the outstanding shares represented at the meeting and entitled to voteof our common stock is required to adoptamend our Certificate to effect the Shareholder Proxy Access proposal.Reverse Stock Split.

 

The board of directors recommends a vote “AGAINST” this Proposal No. 9.“FOR” the grant of authority to the board to effect the Reverse Stock Split .

 

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HOUSEHOLDING

 

The SEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement or Notice of Internet Availability of Proxy Materials addressed to those stockholders. This practice, known as “householding”, is designed to reduce the volume of duplicate information and reduce printing and postage costs.

 

If you and others who share your mailing address own our common stock in street name, meaning through bank or brokerage accounts, you may have received a notice that your household will receive only one annual report and proxy statement or Notice of Internet Availability of Proxy Materials from each company whose stock is held in such accounts. Unless you responded that you did not want to participate in householding, you were deemed to have consented to it and a single copy of our proxy statement and annual report or Notice of Internet Availability of Proxy Materials has been sent to your address.

 

We will promptly deliver separate copies of our proxy statement and annual report at the request of any stockholder who is in a household that participates in the householding of our proxy materials. You may send your request by mail to Reed’s Inc., 13000 South Spring Street, Los Angeles, California 90061,201 Merritt 7 Corporate Park, Norwalk, Connecticut 06851, attention: Judy Holloway Reed,Thomas J. Spisak, Chief Executive Officer and Secretary, or by telephone at (310) 920-0879.(203) 890-0557.

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STOCKHOLDER PROPOSALS FOR NEXT YEAR’s ANNUAL MEETING

 

Stockholder proposals for inclusion in our proxy statement: If a stockholder wishes to present a proposal to be included in our proxy statement and form of proxy for the 20182022 Annual Meeting of Stockholders, the proponent and the proposal must comply with the proxy proposal submission rules of the SEC and namely, Securities Exchange Act Rule 14a-8. One of the requirements is that the proposal be received by our Secretary no later than May 4, 2018,August 1, 2022, which is 120 calendar days before September 1, 2018November 29, 2022 - the anniversary date of this Proxy Statement was released to stockholders in connection with the 20172021 Annual Meeting. If the date of next year’s annual meeting is changed by more than 30 days from the anniversary date of this year’s Annual Meeting on September 29, 2017,December 30, 2021, then the deadline is a reasonable time before we begin to print and mail proxy materials. Proposals we receive after that date will not be included in the proxy statement for the 20182022 Annual Meeting of Stockholders.

 

Other stockholder proposals: A stockholder proposal not included in our proxy statement for the 20182022 Annual Meeting of Stockholders will not be eligible for presentation at the meeting unless the stockholder gives timely notice of the proposal in writing to our Secretary at our principal executive offices and otherwise complies with the provisions of our bylaws. The bylaws provide that we must have received the stockholder’s notice norno more than 120 days in advance of the one-year anniversary of the date of the previous year’s Annual Meeting of Stockholders. To be timely, a stockholder proposal not included in our proxy statement for the 20182022 Annual Meeting of Stockholders must be received by our Secretary no later than JuneSeptember 1, 2018,2022, provided, however, that if the date of the annual meeting is more than thirty (30) days before or sixty (60) days after such anniversary date, such notice will be timely only if so delivered or mailed and received no later than the later of one hundred twenty (120) days prior to the date of the meeting or ten (10) days after the first public announcement of the date of the annual meeting. Except to the extent otherwise required by law, the adjournment of a meeting of stockholders shall not commence a new time period for the giving of a stockholder’s notice as describe above. The presiding officer of the meeting may refuse to acknowledge any matter not made in compliance with the foregoing procedure and provisions of our bylaws.

 

We urge stockholders to submit all proposals by Certified Mail - Return Receipt Requested. Stockholder proposals should be sent to 13000 South Spring Street, Los Angeles, California 90061,Reed’s Inc., 201 Merritt 7 Corporate Park, Norwalk, Connecticut 06851, attention: Judy Holloway Reed,Thomas J. Spisak, Chief Financial Officer and Secretary.

 

STOCKHOLDER ADVISORY VOTES

 

The current frequency of stockholder advisory vote on the compensation paid to our Named Executive Officers is every three years. The next stockholder advisory vote on the compensation paid to our Named Executive Officers andwill occur at our 2022 annual meeting, unless changed by the board as a result of this year’s say-on-frequency proposal. The next stockholder advisory vote on how frequently we should seek approval from our stockholders, on an advisory basis, of the compensation paid to our Named Executive Officers will occur at the Company’s 2019our 2025 annual meeting.

 

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OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING

 

The Boardboard does not intend to present for action at this annual meeting any matter other than those specifically set forth in the Notice of Annual Meeting. If any other matter is properly presented for action at the annual meeting, it is the intention of persons named in the proxy to vote thereon in accordance with their judgment pursuant to the discretionary authority conferred by the proxy.

 

If you have any questions or require any additional information concerning this Proxy Statement, please contact Okapi Partners at the address set forth below.

 

 

1212 Avenue of the Americas, 24th Floor

New York, NY 10036

(212) 297-0720

Call Toll-Free at: (877) 259-6290

E-mail: info@okapipartners.com

 

	By Order of the Board of Directors,
	/s/ John J. Bello
	John J. Bello
	Chairman

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APPENDIX B

Reed’s Inc. 2020 Equity Incentive Compensation Plan

 

As Amended. _______, 2021

1.Purpose of the Plan

 

This Plan is intended to promote the interests of the Company (as defined below) and its shareholders by providing employees non-employee directors, consultants, and other selected service providers of the Company, who are largely responsible for the management, growth, and protection of the business of the Company, with incentives and rewards to encourage them to continue in the service of the Company.

 

2.Definitions

 

As used in the Plan or in any instrument governing the terms of any award granted under the Plan, the following definitions apply to the terms indicated below:

 

(a) “Award Agreement” means a written agreement, in a form determined by the Committee from time to time, entered into by each Participant and the Company, evidencing the grant of a Stock Incentive Award under the Plan.

 

(b) “Board of Directors” means the Board of Directors of Reed’s Inc., a Delaware corporation.

 

(c) “Change-in-Control”: “Change-in-Control”“Change in Control” means (i) any one person, or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company or any employee benefit plan sponsored by the Company acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent of the total fair market value or total Voting Power of the stock of the Company; or (ii) any one person, or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company or any employee benefit plan sponsored by the Company acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty percent or more of the total Voting Power of the stock of the Company; or (iii) a majority of members of the Board of Directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the date of each appointment or election; or (iv) any one person, or more than one person acting as a group (as defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions. For purposes of subsection (iv), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. The foregoing subsections (i) through (iv) shall be interpreted in a manner that is consistent with the Treasury Regulations promulgated pursuant to section 409A of the Code so that all, and only, such transactions or events that could qualify as a “change-in-control event” within the meaning of Treasury Regulation §1.409A-3(i)(5)(i) will be deemed to be a Change-in-ControlChange in Control for purposes of this Plan.

 

(d) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and all regulations, interpretations, and administrative guidance issued thereunder.

 

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(e) “Committee” means the Compensation Committee of the Board of Directors a sub-committee of the Compensation Committee, or such other committee as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Committee under the terms of the Plan.

 

(f) “Common Stock” means the Company’sReed’s Inc. common stock, $0.0001 par value per share, or any other security into which the common stock shall be changed pursuant to the adjustment provisions of Section 99. of the Plan.

 

(g) “Company” means Reed’s Inc., a Delaware corporation and all of its Subsidiaries, collectively.

(and any successor thereto). (h) “Covered Employee”“Effective Date” means each Participant who is an executive officer (within the meaning of Rule 3b-7 under the Exchange Act) of the Company.September 16, 2020.

 

(i) “Deferred Compensation Plan” means any plan, agreement, or arrangement maintained by the Company from time to time that provides opportunities for deferral of compensation.

(j) “Effective Date” means the date the Plan is approved by shareholders of the Company.

(k) “Employment” means the period during which an individual is classified or treated by the Company as an employee, non-employee director, consultant, or other service provider of the Company, as applicable.

 

(l)(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(m)(k) “Fair Market Value” means, with respect to a share of Common Stock, as of the applicable date of determination or if the market is not open for trading on such date, the immediately preceding day on which the market is open for trading, the closing price as reported on the date of determination on the principal securities exchange on which shares of Common Stock are then listed or admitted to trading (or if shares of Common Stock are then principally traded on a national securities exchange, in the reported “composite transactions” for such exchange). In the event that the price of a share of Common Stock shall not be so reported, the Fair Market Value of a share of Common Stock shall be determined by the Committee in its sole discretion.

 

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(n)

(l) “Option” means a stock option to purchase shares of Common Stock granted to a Participant pursuant to

Section 6.

 

(o)(m) “Other Stock-Based Award” means an award granted to a Participant pursuant to Section 7.

 

(p)(n) “Participant” means an employee, consultant or director of the Company who is eligible to participate in the Plan and to whom one or more Stock Incentive Awards have been granted pursuant to the Plan and have not been fully settled or cancelled and, following the death of any such Person, his successors, heirs, executors, and administrators, as the case may be.

 

(q) “Performance-Based Award” means any Stock Incentive Award pursuant to which any compensation paid is intended to be Performance-Based Compensation.

(r) “Performance-Based Compensation” means compensation that satisfies the requirements of section 162(m) of the Code for “qualified performance-based compensation.”

(s) “Performance Measures” means such measures as are described in Section 8 on which performance goals are based in order to qualify certain awards granted hereunder as Performance-Based Compensation.

(t) “Performance Percentage” means the factor determined pursuant to a Performance Schedule that is to be applied to a Target Award and that reflects actual performance compared to the Performance Target.

(u) “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to a Stock Incentive Award that is intended to qualify as Performance-Based Compensation. Performance Periods may be overlapping.

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(v) “Performance Schedule” means a schedule or other objective method for determining the applicable Performance Percentage to be applied to each Target Award.

(w) “Performance Target” means performance goals and objectives with respect to a Performance Period.

(x)(o) “Person” means a “person” as such term is used in section 13(d) and 14(d) of the Exchange Act, including any “group” within the meaning of section 13(d)(3) under the Exchange Act.

 

(y)(p) “Plan” means the 20172020 Reed’s Inc. Equity Incentive Compensation Plan, as it may be amended from time to time.

 

(z)(q) “Securities Act” means the Securities Act of 1933, as amended.

 

(aa)(r) “Stock Incentive Award” means an Option or Other Stock-Based Award granted pursuant to the terms of the Plan.

 

(bb) “Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act.

(cc) “Target Award” means target payout amount for a Stock Incentive Award.

(dd)(s) “Voting Power” means the number of votes available to be cast (determined by reference to the maximum number of votes entitled to be cast by the holders of Voting Securities, or by the holders of any Voting Securities for which other Voting Securities may be convertible, exercisable, or exchangeable, upon any matter submitted to shareholders where the holders of all Voting Securities vote together as a single class) by the holders of Voting Securities.

 

(ee)(t) “Voting Securities” means any securities or other ownership interests of an entity entitled, or which may be entitled, to matters submitted to Persons holding such securities or other ownership interests in such entity generally (whether or not entitled to vote in the general election of directors), or securities or other ownership interests which are convertible into, or exercisable in exchange for, such Voting Securities, whether or not subject to the passage of time or any contingency.

 

(ff) “Reed’s” means Reed’s, Inc., a Delaware corporation (and any successor thereto).

3.Stock Subject to the Plan

 

(a)Stock Subject to the Plan

 

The maximum number of shares of Common Stock that may be covered by Stock Incentive Awards granted under the Plan shall not exceed 3,000,00015,000,000 shares of Common Stock in the aggregate. Out of such aggregate, the maximum number of shares of Common Stock that may be covered by Options that are designated as “incentive stock options” within the meaning of section 422 of the Code shall not exceed 3,000,00014,500,0000 shares of Common Stock. The maximum number of shares referred to in the preceding sentences of this Section 3(a)3.(a) shall in each case be subject to adjustment as provided in Section 99. and the following provisions of this Section 3. Of the shares described, one hundred percent may be delivered in connection with “full-value Awards,” meaning Stock Incentive Awards other than Options or stock appreciation rights; provided, however, that anyrights. Any shares granted under Options or stock appreciation rights shall be counted against the share limit on a one-for-one basis and any shares granted as full-value Stock Incentive Awards shall be counted against the share limit as one share for every one share subject to such Stock Incentive Award.on a one-for-one basis. Shares of Common Stock issued under the Plan may be authorized and unissued shares, treasury shares, shares purchased by the Company in the open market, or any combination of the preceding categories as the Committee determines in its sole discretion.

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For purposes of the preceding paragraph, shares of Common Stock covered by Stock Incentive Awards shall only be counted as used to the extent they are actually issued and delivered to a Participant (or such Participant’s permitted transferees as described in the Plan) pursuant to the Plan; provided, however, that if a Stock Incentive Award is settled for cash or if shares of Common Stock are withheld to pay the exercise price of an Option or to satisfy any tax withholding requirement in connection with a Stock Incentive Award, the shares issued (if any) in connection with such settlement, the shares in respect of which the Stock Incentive Award was cash-settled, and the shares withheld, will be deemed delivered for purposes of determining the number of shares of Common Stock that are available for delivery under the Plan. In addition, if shares of Common Stock are issued subject to conditions which may result in the forfeiture, cancellation, or return of such shares to the Company, any portion of the shares forfeited, cancelled or returned shall be treated as not issued pursuant to the Plan. In addition, if shares of Common Stock owned by a Participant (or such Participant’s permitted transferees as described in the Plan) are tendered (either actually or through attestation) to the Company in payment of any obligation in connection with a Stock Incentive Award, the number of shares tendered shall be added to the number of shares of Common Stock that are available for delivery under the Plan.

 

2

Shares of Common Stock covered by Stock Incentive Awards granted pursuant to the Plan in connection with the assumption, replacement, conversion, or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger (within the meaning of section 303A.08 of the NYSE Listed Company Manual)Nasdaq Listing Rule 5635) shall not count as used under the Plan for purposes of this Section 3.

 

(b)Individual Award Limits

 

Subject to adjustment as provided in Section 9,8., the maximum number of shares of Common Stock that may be covered by Stock Incentive Awards granted under the Plan to any Covered EmployeeParticipant in any calendar year shall not exceed Fair Market Value2,000,000 shares.

(c) Non-Employee Director Limits

Subject to adjustment as provided in Section 8., the maximum number of $1,000,000. For purposesshares of Common Stock that may be covered by Stock Incentive Awards granted under the preceding sentences, the phrase “amount payable with respectPlan to any calendar year” means the amount of cash, or value of other property, required to be paid based on the achievement of applicable Performance Measures during a Performance Period that endsnon-employee director in suchany calendar year disregarding any deferral pursuant to the terms of a Deferred Compensation Plan unless the terms of the deferral are intended to comply with the requirements for qualified performance-based compensation under section 162(m) of the Code.shall not exceed 500,000 shares.

 

4.Administration of the Plan

 

The Plan shall be administered by a Committee of the Board of Directors consisting of two or more persons, each of whom qualifies as a “non-employee director” (within the meaning of Rule 16b-3 promulgated under section 16 of the Exchange Act), an “outside director” within the meaning of Treasury Regulation section 1.162-27(e)(3) and as “independent” as required by NYSENasdaq or any security exchange on which the Common Stock is listed, in each case if and to the extent required by applicable law or necessary to meet the requirements of such rule, section or listing requirement at the time of determination. The Committee shall, consistent with the terms of the Plan, from time to time designate those individuals who shall be granted Stock Incentive Awards under the Plan and the amount, type, and other terms and conditions of such Stock Incentive Awards. All of the powers and responsibilities of the Committee under the Plan may be delegated by the Committee, in writing, to any subcommittee thereof, in which case the acts of such subcommittee shall be deemed to be acts of the Committee hereunder. The Committee may also from time to time authorize a subcommittee consisting of one or more members of the Board of Directors (including members who are employees of the Company) or employees of the Company to grant Stock Incentive Awards to persons who are not “executive officers” of the Company (within the meaning of Rule 16a-1 under the Exchange Act), subject to such restrictions and limitations as the Committee may specify and to the requirements of section 157 of the Delaware General Corporation Law.

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The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and any Award Agreement thereunder, and to adopt, amend, and rescind from time to time such rules and regulations for the administration of the Plan, including rules and regulations related to sub-plans established for the purpose of satisfying applicable foreign laws and/or qualifying for preferred tax treatment under applicable foreign tax laws, as the Committee may deem necessary or appropriate. Decisions of the Committee shall be final, binding, and conclusive on all parties. For the avoidance of doubt, the Committee may exercise all discretion granted to it under the Plan in a non-uniform manner among Participants.

 

The Committee may delegate the administration of the Plan to one or more officers or employees of the Company, and such administrator(s) may have the authority to execute and distribute Award Agreements, to maintain records relating to Stock Incentive Awards, to process or oversee the issuance of Common Stock under Stock Incentive Awards, to interpret and administer the terms of Stock Incentive Awards, and to take such other actions as may be necessary or appropriate for the administration of the Plan and of Stock Incentive Awards under the Plan, provided that in no case shall any such administrator be authorized (i) to grant Stock Incentive Awards under the Plan (except in connection with any delegation made by the Committee pursuant to the first paragraph of this Section 4)4.), (ii) to take any action that would cause Stock Incentive Awards intended to qualify as Performance-Based Compensation to fail to so qualify, (iii) to take any action inconsistent with section 409A of the Code, or (iv)(iii) to take any action inconsistent with applicable provisions of the Delaware General Corporation Law. Any action by any such administrator within the scope of its delegation shall be deemed for all purposes to have been taken by the Committee and, except as otherwise specifically provided, references in this Plan to the Committee shall include any such administrator. The Committee and, to the extent it so provides, any subcommittee, shall have sole authority to determine whether to review any actions and/or interpretations of any such administrator, and if the Committee shall decide to conduct such a review, any such actions and/or interpretations of any such administrator shall be subject to approval, disapproval, or modification by the Committee.

 

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On or after the date of grant of a Stockan Incentive Award under the Plan, the Committee may (i) accelerate the date on which any such Stock Incentive Award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such Stock Incentive Award, including, without limitation, extending the period following a termination of a Participant’s Employment during which any such Stock Incentive Award may remain outstanding, (iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such Stock Incentive Award or (iv) provide for the payment of dividends or dividend equivalents with respect to any such Stock Incentive Award;provided,, that the Committee shall not have any such authority to the extent that the grant of such authority would cause any tax to become due under sectionSection 409A of the Code. Notwithstanding anything herein to the contrary, the Company shall not reprice any stock option (within the meaning of Section 711 of the NYSE American Company GuideNasdaq Listing Rule 5635(c) and any other formal or informal guidance issued by the NYSE)Nasdaq) without the approval of the shareholders of the Company.

Company, nor shall the Company purchase any underwater options for cash. No member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and the Company shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission, or determination relating to the Plan, unless, in either case, such action, omission, or determination was taken or made by such member, director, or employee in bad faith and without reasonable belief that it was in the best interests of the Company.

 

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5.Eligibility

 

The Persons who shall be eligible to receive Stock Incentive Awards pursuant to the Plan shall be those employees non-employee directors, consultants and other selected service providers of the Company whom the Committee shall select from time to time, including officers of the Company, whether or not they are directors. Each Stock Incentive Award granted under the Plan shall be evidenced by an Award Agreement.

 

6.Options

 

The Committee may from time to time grant Options on such terms as it shall determine, subject to the terms and conditions set forth in the Plan. The Award Agreement shall clearly identify such Option as either an “incentive stock option” within the meaning of section 422 of the Code or as a non-qualified stock option.

 

(a)Exercise Price

 

The exercise price per share of Common Stock covered by any Option shall be not less than one hundred percent of the Fair Market Value of a share of Common Stock on the date on which such Option is granted, other than assumptions in accordance with a corporate acquisition or merger as described in Section 3.

 

(b)Term and Exercise of Options

 

(1) Each Option shall become vested and exercisable on such date or dates, during such period and for such number of shares of Common Stock as shall be determined by the Committee on or after the date such Option is granted;granted, subject to Approval as provided in Section 21.; provided,,however further that no Option shall be exercisable after the expiration of ten years from the date such Option is granted; and,provided,further, that each Option shall be subject to earlier termination, expiration, or cancellation as provided in the Plan or the Award Agreement.

 

(2) Each Option shall be exercisable in whole or in part;provided,however that no partial exercise of an Option shall be for an aggregate exercise price of less than $1,000 (unless waived by the Committee).$1,000. The partial exercise of an Option shall not cause the expiration, termination, or cancellation of the remaining portion thereof.

 

(3) An Option shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation through net physical settlement or other method of cashless exercise.

 

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(c)Special Rules for Incentive Stock Options

 

(1) The aggregate Fair Market Value of shares of Common Stock with respect to which “incentive stock options” (within the meaning of section 422 of the Code) are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of the Company or any of its “subsidiaries” (within the meaning of section 424 of the Code) shall not exceed $100,000. Such Fair Market Value shall be determined as of the date on which each such stock option is granted. In the event that the aggregate Fair Market Value of shares of Common Stock with respect to such incentive stock options exceeds $100,000, then incentive stock options granted hereunder to such Participant shall, to the extent and in the order required by regulations promulgated under the Code (or any other authority having the force of regulations), automatically be deemed to be non-qualified stock options, but all other terms and provisions of such stock options shall remain unchanged. In the absence of such regulations (and authority), or in the event such regulations (or authority) require or permit a designation of the Options which shall cease to constitute incentive stock options, incentive stock options granted hereunder shall, to the extent of such excess and in the order in which they were granted, automatically be deemed to be non-qualified stock options, but all other terms and provisions of such stock options shall remain unchanged.

 

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(2) Incentive stock options may only be granted to individuals who are employees of the Company. No incentive stock option may be granted to an individual if, at the time of the proposed grant, such individual owns stock possessing more than ten percent of the total combined Voting Power of all classes of stock of the Company or any of its “subsidiaries” (within the meaning of section 424 of the Code), unless (i) the exercise price of such incentive stock option is at least 110 percent of the Fair Market Value of a share of Common Stock at the time such incentive stock option is granted and (ii) such incentive stock option is not exercisable after the expiration of five years from the date such incentive stock option is granted.

 

7.Other Stock-Based Awards

 

The Committee may from time to time grant equity-based or equity-related awards not otherwise described herein in such amounts and on such terms as it shall determine, subject to the terms and conditions set forth in the Plan.Plan, including Approval requirement set forth in Section 21. Without limiting the generality of the preceding sentence, each such Other Stock-Based Award may (i) involve the transfer of actual shares of Common Stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares of Common Stock, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units, or share-denominated performance units, and (iv) be designed to comply with applicable laws of jurisdictions other than the United States, and (v) be designed to qualify as Performance-Based Compensation;States; provided, that each Other Stock-Based Award shall be denominated in, or shall have a value determined by reference to, a number of shares of Common Stock that is specified at the time of the grant of such Stock Incentive Award.

 

8.Performance-Based Compensation

(a)Calculation

The amount payable with respect to a Stock Incentive Award that is intended to qualify as Performance-Based Compensation shall be determined in any manner permitted by section 162(m) of the Code.

(b)Discretionary Reduction

Unless otherwise specified in the Award Agreement, the Committee may, in its discretion, reduce or eliminate the amount payable to any Participant with respect to the Stock Incentive Award, based on such factors as the Committee may deem relevant, but the Committee may not increase any such amount above the amount established in accordance with the relevant Performance Schedule. For purposes of clarity, the Committee may exercise the discretion provided for by the foregoing sentence in a non-uniform manner among Participants.

(c)Performance Measures

The performance goals upon which the payment or vesting of any Stock Incentive Award (other than Options and stock appreciation rights) that is intended to qualify as Performance-Based Compensation depends shall (a) be objective business criteria and shall otherwise meet the requirements of section 162(m) of the Code, including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain” at the time of grant and (b) relate to one or more of the following Performance Measures: market price of the Common Stock, net earnings, earnings before or after any or all of interest, taxes, depreciation, and amortization, net income (including, net income or operating income), cash flow (including, operating cash flow, free cash flow, and cash flow return on capital), cash position, cash valued added, customer satisfaction or growth measures, safety, revenues (including net revenues, net revenue growth or gross revenue), enterprise value, financial return ratios, market performance, margins (including gross margins or operating margins), productivity or efficiency ratios, costs, profits (including net profits, net operating profits, gross profit, gross profit growth, and profit returns or margins), earnings per share, stock price, working capital turnover and targets, total shareholder return, economic value added or other value added measurements, return on assets, return on capital or invested capital, return on equity, return on sales, new product innovation, product release schedules or ship targets, product cost reduction, inventory or supply chain management activities, and budget and expense management.

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A Performance Measure (i) may relate to the performance of the Participant, the Company, a Subsidiary, any business group, business unit, or other subdivision of the Company, or any combination of the foregoing, as the Committee deems appropriate and (ii) may be expressed as an amount, as an increase or decrease over a specified period, as a relative comparison to the performance of a group of comparator companies or a published or special index, or any other measure of the selected performance criteria, as the Committee deems appropriate. The measurement of any Performance Measure shall exclude the impact positive and/or negative of unusual and/or infrequently occurring items or expenses; charges for restructurings; discontinued operations; acquisitions or divestitures; the cumulative effect of changes in accounting treatment; changes in tax laws, accounting standards or principles or other laws or regulatory rules affecting reporting results; any impact of impairment of tangible or intangible assets; any impact of the issuance or repurchase of equity securities and/or other changes in the number of outstanding shares of any class of the Company’s equity securities; any gain, loss, income, or expense attributable to acquisitions or dispositions of stock or assets; stock-based compensation expense; asset write-downs, in-process research and development expense; gain or loss from all or certain claims and/or litigation and insurance recoveries; foreign exchange gains and losses; any impact of changes in foreign exchange rates and any changes in currency; a change in the Company’s fiscal year; and any other items, each determined in accordance with United States generally accepted accounting principles and as identified in the Company’s audited financial statements, including the notes thereto.

(d)Performance Schedules

Within ninety days after the beginning of a Performance Period, and in any case before twenty-five percent of the Performance Period has elapsed, the Committee shall establish (a) Performance Targets for such Performance Period, (b) Target Awards for each Participant, and (c) Performance Schedules for such Performance Period.

(e)Committee Discretion

Nothing in this Plan is intended to limit the Committee’s discretion to adopt conditions with respect to any Stock Incentive Award that is not intended to qualify as Performance-Based Compensation that relate to performance other than the Performance Measures. Furthermore, nothing in this Plan shall be construed to require the Committee to grant any Award intended to qualify as Performance-Based Compensation. The Committee may, subject to the terms of the Plan, amend previously granted Stock Incentive Awards in a way that disqualifies them as Performance-Based Compensation.

(f)Committee Determinations

Determinations by the Committee as to the establishment of Performance Measures, the level of actual achievement of Performance Targets, and the amount payable with respect to a Stock Incentive Award intended to qualify as Performance-Based Compensation shall be recorded in writing. Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under section 162(m) of the Code, prior to settlement of each such Stock Incentive Award granted to a Covered Employee, that the Performance Targets and other material terms upon which settlement of the Stock Incentive Award was conditioned have been satisfied.

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9.Adjustment upon Certain Changes

 

Subject to any action by the shareholders of the Company required by law, applicable tax rules or the rules of any exchange on which shares of common stock of the Company are listed for trading:

 

(a)Shares Available for Grants

 

In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, recapitalization, merger, consolidation, combination, or exchange of shares or similar corporate change, the maximum aggregate number or type of shares of Common Stock with respect to which the Committee may grant Stock Incentive Awards, the maximum number of shares of Common Stock that may be covered by Options that are designated as “incentive stock options” within the meaning of section 422 of the Code and the maximum aggregate number of shares of Common Stock with respect to which the Committee may grant Stock Incentive Awards to any individual Participant in any year and to any non-employee director shall be appropriately adjusted or substituted by the Committee. In the event of any change in the type or number of shares of Common Stock of the Company outstanding by reason of any other event or transaction, the Committee shall, to the extent deemed appropriate by the Committee, make such adjustments to the type or number of shares of Common Stock with respect to which Stock Incentive Awards may be granted.

 

(b)Increase or Decrease in Issued Shares Without Consideration

 

In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend (but only on the shares of Common Stock), or any other increase or decrease in the number of such shares effected without receipt or payment of consideration by the Company, the Committee shall, to the extent deemed appropriate by the Committee, adjust the type or number of shares of Common Stock subject to each outstanding Stock Incentive Award and the exercise price per share of Common Stock of each such Stock Incentive Award.

 

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(c)Certain Mergers and Other Transactions

 

In the event of any merger, consolidation, or similar transaction as a result of which the holders of shares of Common Stock receive consideration consisting exclusively of securities of the surviving corporation in such transaction, the Committee shall, to the extent deemed appropriate by the Committee, adjust each Stock Incentive Award outstanding on the date of such merger or consolidation so that it pertains and applies to the securities which a holder of the number of shares of Common Stock subject to such Stock Incentive Award would have received in such merger or consolidation.

 

In the event of (i) a dissolution or liquidation of the Company, (ii) a sale of all or substantially all of the Company’s assets (on a consolidated basis), (iii) a merger, consolidation, or similar transaction involving the Company in which the holders of shares of Common Stock receive securities and/or other property, including cash, other than shares of the surviving corporation in such transaction, the Committee shall, to the extent deemed appropriate by the Committee, have the power to:

 

(i) cancel, effective immediately prior to the occurrence of such event, each Stock Incentive Award (whether or not then exercisable or vested), and, in full consideration of such cancellation, pay to the Participant to whom such Stock Incentive Award was granted an amount in cash, for each share of Common Stock subject to such Stock Incentive Award, equal to the value, as determined by the Committee, of such Stock Incentive Award, provided that with respect to any outstanding Option such value shall be equal to the excess of (A) the value, as determined by the Committee, of the property (including cash) received by the holder of a share of Common Stock as a result of such event over (B) the exercise price of such Option; or

 

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(ii) provide for the exchange of each Stock Incentive Award (whether or not then exercisable or vested) for a Stock Incentive Award with respect to (A) some or all of the property which a holder of the number of shares of Common Stock subject to such Stock Incentive Award would have received in such transaction or (B) securities of the acquiror or surviving entity and, incident thereto, make an equitable adjustment as determined by the Committee in the exercise price of the Stock Incentive Award, or the number of shares or amount of property subject to the Stock Incentive Award or provide for a payment (in cash or other property) to the Participant to whom such Stock Incentive Award was granted in partial consideration for the exchange of the Stock Incentive Award.

 

(d)Other Changes

 

In the event of any change in the capitalization of the Company, corporate change, corporate transaction or other event other than those specifically referred to in Sections 9(a), (b) or (c), the Committee shall, to the extent deemed appropriate by the Committee, make such adjustments in the number and class of shares subject to Stock Incentive Awards outstanding on the date on which such change occurs and in such other terms of such Stock Incentive Awards as the Committee deems appropriate.

 

(e)No Other Rights

 

Except as expressly provided in the Plan or any Award Agreement, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividends or dividend equivalents, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares or amount of other property subject to, or the terms related to, any Stock Incentive Award.

 

(f)Savings Clause

 

No provision of this Section 98. shall be given effect to the extent that such provision would cause any tax to become due under section 409A of the Code.

 

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With respect to Stock Incentive Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation, no provision of this Section 9 shall be given effect to the extent that such provision would cause such Stock Incentive Award to fail to so qualify as Performance-Based Compensation under section 162(m) of the Code unless the Committee expressly acknowledges and affirms such consequences.

 

10.9. Change-in-Control;Change in Control; Termination of Employment

 

(a)Change-in-ControlChange in Control

 

The consequences of a Change-in-Control, if any, will be set forthUnless otherwise provided in thean Award Agreement, in additionthe event of a Change in Control of the Company to whatthe extent the successor company does not assume or substitute for a Stock Incentive Award (or in which the Company is providedthe ultimate parent corporation and does not continue the Stock Incentive Award), then immediately prior to the Change in Section 10 hereof.Control: (i) those Options and stock appreciation rights outstanding as of the date of the Change in Control that are not assumed or substituted for (or continued) shall immediately vest and become fully exercisable, and (ii) the restrictions, other limitations and other conditions applicable to any Other Stock-Based Awards or any other Awards that are not assumed or substituted for (or continued) shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all restrictions, limitations, and conditions and become fully vested and transferable to the full extent of the original grant.

 

(b)Termination of Employment

 

(1) Except as to any awards constituting stock rights subject to section 409A of the Code, termination of Employment shall mean a separation from service within the meaning of section 409A of the Code, unless the Participant is retained as a consultant pursuant to a written agreement and such agreement provides otherwise. Without limiting the generality of the foregoing, the Committee shall determine whether an authorized leave of absence, or absence in military or government service, shall constitute termination of Employment, provided that a Participant who is an employee will not be deemed to cease employment in the case of any leave of absence approved by the Company. Furthermore, no payment shall be made with respect to any Stock Incentive Awards under the Plan that are subject to section 409A of the Code as a result of any such authorized leave of absence or absence in military or government service unless such authorized leave or absence constitutes a separation from service for purposes of section 409A of the Code and the regulations promulgated thereunder.

 

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(2) Unless otherwise specified in theThe Award Agreement no Stock Incentive Award will continue to vest after termination of Employment andshall specify the consequences with respect to any Optionsuch Stock Incentive Awards of the termination of Employment of the Participant holding the Option shall be as follows:Stock Incentive Awards.

 

(i) If the Participant’s termination of Employment occurs prior(3) A Participant who ceases to the Option’s expiration date, for any reason whatsoever other than death or authorized retirement (as defined in subparagraph (ii) below), any unexercised portion of the Award shall terminate automatically.

(ii) If a Participant retires upon reaching the Company’s normal retirement age or earlier, with the written consentbe an employee of the Company because of physicalbut continues, or mental disability (collectively, “authorized retirement”), any unexercised or unvested portionsimultaneously commences, services as a director of the OptionCompany shall expire three months after the effective date of such authorized retirement. The Participant may exercise all or any vested portion of a Option from the date of his or her authorized retirementbe deemed to three months thereafter.

(iii) If prior to the expiration datecontinue Employment for purposes of the Option, the Participant dies while employed by the Company or its subsidiary or within three months of his or her authorized retirement, the Participant’s estate, heirs or legatees shall have the privilege of exercising all or part of the unexercised Option within six months after the Participant’s death.

Nothing contained in this Section shall extend the time for exercising all or any part of the then unexercised portion of an Option.Plan.

 

11.10. Rights Under the Plan

 

No Person shall have any rights as a shareholder with respect to any shares of Common Stock covered by or relating to any Stock Incentive Award until the date of the issuance of such shares on the books and records of the Company.Company Except as otherwise expressly provided in Section 98. hereof, no adjustment of any Stock Incentive Award shall be made for dividends or other rights for which the record date occurs prior to the date of such issuance. Nothing in this Section 1110. is intended, or should be construed, to limit authority of the Committee to cause the Company to make payments based on the dividends that would be payable with respect to any share of Common Stock if it were issued or outstanding, or from granting rights related to such dividends.

 

The Company shall not have any obligation to establish any separate fund or trust or other segregation of assets to provide for payments under the Plan. To the extent any person acquires any rights to receive payments hereunder from the Company, such rights shall be no greater than those of an unsecured creditor.

 

12.11. No Special Employment Rights; No Right to Stock Incentive Awards

 

(a) Nothing contained in the Plan or any Award Agreement shall confer upon any Participant any right with respect to the continuation of his or her Employment by the Company or interfere in any way with the right of the Company at any time to terminate such Employment or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of a Stock Incentive Award.

 

(b) No person shall have any claim or right to receive a Stock Incentive Award hereunder. The Committee’s granting of a Stock Incentive Award to a Participant at any time shall neither require the Committee to grant a Stock Incentive Award to such Participant or any other Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other Participant or other person.

 

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13.12. Securities Matters

 

(a) The Company shall be under no obligation to affect the registration pursuant to the Securities Act of any shares of Common Stock to be issued hereunder or to effect similar compliance under any state or local laws. Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued shares of Common Stock pursuant to the Plan unless and until the Company is advised by its counsel that the issuance is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition to the issuance of shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements, and representations, and that any related certificates representing such shares bear such legends, as the Committee, in its sole discretion, deems necessary or desirable.

 

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(b) The exercise or settlement of any Stock Incentive Award (including, without limitation, any Option) granted hereunder shall only be effective at such time as counsel to the Company shall have determined that the issuance and delivery of shares of Common Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any securities exchange on which shares of Common Stock are traded. The Company may, in its sole discretion, defer the effectiveness of any exercise or settlement of a Stock Incentive Award granted hereunder in order to allow the issuance of shares pursuant thereto to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state or local securities laws. The Company shall inform the Participant in writing of its decision to defer the effectiveness of the exercise or settlement of a Stock Incentive Award granted hereunder. During the period that the effectiveness of the exercise of a Stock Incentive Award has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.

 

14.13. Withholding Taxes

 

(a)Cash Remittance

 

Whenever withholding tax obligations are incurred in connection with any Stock Incentive Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state, and local withholding tax requirements, if any, attributable to such event. In addition, upon the exercise or settlement of any Stock Incentive Award in cash, or the making of any other payment with respect to any Stock Incentive Award (other than in shares of Common Stock), the Company shall have the right to withhold from any payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state, and local withholding tax requirements, if any, attributable to such exercise, settlement, or payment.

 

(b)Stock Remittance

 

At the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in connection with any Stock Incentive Award, the Participant may tender to the Company (including by attestation) a number of shares of Common Stock having a Fair Market Value at the tender date determined by the Committee to be sufficient to satisfy the minimum federal, state, and local withholding tax requirements, if any, attributable to such event. Such election shall satisfy the Participant’s obligations under Section 14(a)13.(a) hereof, if any.

 

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(c)Stock Withholding

 

At the election of the Participant, subject to the approval of the Committee, whenever withholding tax obligations are incurred in connection with any Stock Incentive Award, the Company shall withhold a number of such shares having a Fair Market Value determined by the Committee to be sufficient to satisfy the minimum federal, state, and local withholding tax requirements, if any, attributable to such event. Such election shall satisfy the Participant’s obligations under Section 14(a)13.(a) hereof, if any.

 

15.14. No Obligation to Exercise

 

The grant to a Participant of a Stock Incentive Award shall impose no obligation upon such Participant to exercise such Stock Incentive Award.

 

16.15. Transfers

 

Stock Incentive Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant;provided,however that the Committee may permit Options or other Stock Incentive Awards that are not incentive stock options to be sold, pledged, assigned, hypothecated, transferred, or disposed of, on a general or specific basis, subject to such conditions and limitations as the Committee may determine. Upon the death of a Participant, outstanding Stock Incentive Awards granted to such Participant may be exercised only by the executors or administrators of the Participant’s estate or by any person or persons who shall have acquired such right to exercise by will or by the laws of descent and distribution. No transfer by will or the laws of descent and distribution of any Stock Incentive Award, or the right to exercise any Stock Incentive Award, shall be effective to bind the Company unless the Committee shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Stock Incentive Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Stock Incentive Award. .

 

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17.16. Expenses and Receipts

 

The expenses of the Plan shall be paid by the Company. Any proceeds received by the Company in connection with any Stock Incentive Award will be used for general corporate purposes.

 

18.17. Failure to Comply

 

In addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms and conditions of the Plan or any Award Agreement, unless such failure is remedied by such Participant within ten days after having been notified of such failure by the Committee, shall be grounds for the cancellation and forfeiture of such Stock Incentive Award, in whole or in part, as the Committee, in its absolute discretion, may determine.

 

19.18. Relationship to Other Benefits

 

No payment with respect to any Stock Incentive Awards under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance, or other benefit plan of the Company except as otherwise specifically provided in such other plan.

 

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20.19. Governing Law

 

The Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws of the State of Delaware without regard to its conflict of law principles.

 

21.20. Severability

 

If all or any part of this Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any portion of this Plan not declared to be unlawful or invalid. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner that will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

22.21. Effective Date and Term of Plan

The Effective Date of the Plan is September 30, 2017,16, 2020, subject to the approval of the Plan by the shareholders of Company within 12 months of the Company.Effective Date (“Approval”). Only Options may be granted prior to Approval, provided no Option granted prior to Approval may be exercisable, in whole or in part, prior to Approval, and the Plan will be unwound, and all outstanding Options forfeited and cancelled, if Approval is not obtained. No grants of Stock Incentive Awards may be made under the Plan after September 30, 2027.16, 2030.

 

23.22. Amendment or Termination of the Plan

 

The Board of Directors may at any time suspend or discontinue the Plan or revise or amend it or any Stock Incentive Award in any respect whatsoever;provided,however, that to the extent that any applicable law, tax requirement, or rule of a stock exchange requires shareholder approval in order for any such revision or amendment to be effective, such revision or amendment shall not be effective without such approval. The preceding sentence shall not restrict the Committee’s ability to exercise its discretionary authority hereunder pursuant to Section 44. hereof, which discretion may be exercised without amendment to the Plan. No provision of this Section 2322. shall be given effect to the extent that such provision would cause any tax to become due under section 409A of the Code. Except as expressly provided in the Plan, no action hereunder may, without the consent of a Participant, adversely affect the Participant’s rights under any previously granted and outstanding Stock Incentive Award. Nothing herein shall cause a Performance-Based Award to cease to qualify under section 162(m) of the Code unless the Committee expressly acknowledges and affirms such consequences in connection with this Section 23. Nothing in the Plan shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.

 

23. Recoupment

Notwithstanding anything in the Plan or in any Award Agreement to the contrary, the Company will be entitled to the extent permitted or required by applicable law, Company policy and/or the requirements of an exchange on which the Company’s shares are listed for trading, in each case, as in effect from time to time to recoup compensation of whatever kind paid by the Company at any time to a Participant under this Plan.

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APPENDIX B

Reed’s, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), hereby adopts this Certificate of Amendment (this “Certificate of Amendment”), which amends its Certificate of Incorporation (the “Certificate of Incorporation”), as described below, and does hereby further certify that:

FIRST: The Board of Directors of the Corporation duly adopted a resolution proposing and declaring advisable the amendment to the Certificate of Incorporation described herein, and the Corporation’s stockholders duly adopted such amendment, all in accordance with the provisions of Section 242 of the DGCL.

SECOND: Article FOURTH of the Certificate of Incorporation is hereby amended by adding the following paragraph to the end of such Article:

“That, effective on the filing of this Certificate of Amendment of Restated Certificate of Incorporation with the Office of the Secretary of State of the State of Delaware (the “Effective Time”), a one-for-[●]¹ reverse stock split of the Corporation’s Common Stock shall become effective, pursuant to which each [●] shares of Common Stock outstanding and held of record by each stockholder of the Corporation immediately prior to the Effective Time shall be reclassified and combined into one validly issued, fully-paid and nonassessable share of Common Stock automatically and without any action by the holder thereof upon the Effective Time and shall represent one share of Common Stock from and after the Effective Time (such reclassification and combination of shares, the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain at $0.0001 per share. No fractional shares of Common Stock shall be issued as a result of the Reverse Stock Split. In lieu thereof, (i) with respect to holders of one or more certificates which formerly represented shares of Common Stock that were issued and outstanding immediately prior to the Effective Time, upon surrender after the Effective Time of such certificate or certificates, any holder who would otherwise be entitled to a fractional share of Common Stock as a result of the Reverse Stock Split, following the Effective Time, shall be entitled to receive one (1) additional whole share of Common Stock; provided that, whether or not fractional shares would be issuable as a result of the Reverse Stock Split shall be determined on the basis of (a) the total number of shares of Common Stock that were issued and outstanding immediately prior to the Effective Time and (b) the aggregate number of shares of Common Stock after the Effective Time into which the shares of Common Stock have been reclassified; and (ii) with respect to holders of shares of Common Stock in book-entry form in the records of the Corporation’s transfer agent that were issued and outstanding immediately prior to the Effective Time, any holder who would otherwise be entitled to a fractional share of Common Stock as a result of the Reverse Stock Split, following the Effective Time, shall be entitled to receive one (a) additional share of Common Stock automatically and without any action by the holder.

The total number of shares of capital stock which the Corporation shall have authority to issue is [●]² shares consisting of (a) [●]³ shares of Common Stock, $0.0001 par value per share (the “Common Stock”) and (b) 500,000 shares of Preferred Stock, $10.00 par value per share (the “Preferred Stock”). The Preferred Stock may be issued from time to time in one or more series. The board of directors is hereby authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences, and rights and the qualifications, limitations, or restrictions thereof, of each such series of Preferred Stock, including without limitation, authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting such series and the designation thereof, or any of the foregoing. The board of directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the powers, preferences, and rights and the qualifications, limitations, and restrictions thereof stated in the resolution of the board of directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series.

¹ Final split ratio, within a range of 1-for-2 to 1-for-5, inclusive, to be determined by Board pursuant to authority granted by stockholders, as described in the accompanying proxy statement. 

² Total authorized capital to be determined based on final split ratio and on implementation of proposed to increase in authorized Common Stock, as described in the accompanying proxy statement.

³ Total authorized Common Stock to be to be determined based on final split ratio and on implementation of proposed to increase in authorized Common Stock, as described in the accompanying proxy statement.