UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934
Filed
by the registrant [X]
Filed
by a party other than the registrant [ ]
Check
the appropriate box:
[X]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
for use of the Commission only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
additional materials
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Soliciting
material Pursuant to Rule 14a-11(c) or Rule 14a-12
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REED’S,
INC.
(Name
of Registrant as Specified in Its Charter)
Payment
of filing fee (check the appropriate box):
[X]
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No
fee required.
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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[ ]
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Fee
paid previously with preliminary materials:
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Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date
of its filing.
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(1)
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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Message
from the Founder, Chairman and Chief Executive Officer
To
Our Stockholders:
You
are cordially invited to attend the 2016 Annual Meeting of Stockholders of Reed’s (the “Company”), which will
be held [ ]
on [ ], 2016
. The formal Notice of Annual Meeting of Stockholders and
Proxy Statement, which are contained in the following pages, outline the actions that will, or may, if properly presented, be
taken by the stockholders at the meeting. Enclosed you should have received a
WHITE
proxy card or
WHITE
voting instruction
form and postage-paid return envelope, which are being solicited on behalf of our board of directors (the “board”).
I’m
thrilled to announce our new team of Board of Directors. Your independent board will be a tremendous resource for our company.
This new board will include myself and 4 independent board members with significant and specific areas of expertise.
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1.
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John
Bello
will be Reed’s Chairman of the Board – our first independent Chairman - and our marketing and sales
expert. Mr. Bello is the creator, founder and former CEO of Sobe Beverages, which sold to PepsiCo in 2001 for $370 million.
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2.
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Lewis
Jaffe
will be our new Board’s governance expert. Mr. Jaffe is Entrepreneur-in-Residence at the Fred Kiesner
Center for Entrepreneurship, Loyola Marymount University, Los Angeles. He has extensive public and private board governance
experience and a Masters Professional Director Certification from the American College of Corporate Directors.
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3.
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Charles
Cargile
will be our finance expert. Mr. Cargile has over 20 years experience in financial leadership in three different
public companies, including 15 years as Chief Financial Officer. Mr. Cargile is recognized as a financial expert by the Security
and Exchange Commission and has served on public company boards and audit committees.
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4.
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Stefan
Freeman
will be our Operations and Supply Chain expert. Mr. Freeman resides in Los Angeles and has over 25 years experience
in sales operations, manufacturing, and supply chain operations. Mr. Freeman has been Director of Sales Operations for Dr.
Pepper Snapple Group, Supply Chain Manager and Plant Manager for Pepsi-Cola Bottling Group, Regional Vice President of Manufacturing
for Coca-Cola Refreshments and Vice President of Fleet Operations for Coca-Cola Refreshments.
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Reed’s,
continues to lead the Natural and Craft Soda renaissance nationally. Our core brands, Reed’s Ginger Brews and Virgil’s
Sodas are back on track and growing again in the marketplace after 2015 supply chain issues. Reed’s Ginger Brews grew 14%
and Virgil’s soda grew 13% during the third quarter of 2016. Our new Reed’s Stronger Ginger Brew continues to grow
with 3
rd
quarter of 2016 sales up 293% year over year and our Butterscotch Beer sales were also up 170% year over year.
We
continue to add new retailers. Recent additions include Target, CVS and Stater Bros. We have added significant new distribution
in the last year including the Southern California and San Diego marketplaces, Indiana, select New England markets and Nevada
regions for direct store distribution (“DSD”). International Sales increased 250% year over year with new distributors
in England and the Middle East.
Reed’s
Culture Club Kombucha line experienced significant out of stock instances in 2015 due to supply chain issues. In addition, this
promising brand is also under heavy pressure from a large influx of new Kombucha brands. That being said, we are very enthusiastic
about our upcoming opportunities for our Kombucha beverages. We are preparing to relaunch and aggressively market our Kombucha
brand after a revamp of the product line with positive new innovations from our research and development team. We still make the
best tasting Kombucha brand in the marketplace and with these new changes to our Kombucha products, we will become even more appealing
to consumers.
We
have been exhibiting at trade shows nationwide and have hosted booths at the Natural Products shows, the National Restaurant show,
the National Convenient Store show and the National Specialty Food shows this year. In addition, we continue to participate with
many of our large grocery partners’ consumer marketing programs including in-store advertising and circulars, and participation
in consumer events to drive awareness around our brands.
Capacity
at our new plants is progressing as planned. Our fully automated Los Angeles facility is scheduled to come online by the end of
the year and will be capable of producing three times more product than the old line with much more efficiency. The east coast
back-up facilities have been handling our overflow very well since earlier this year. We now have redundant capacity which will
ensure that we avoid the out of stock issues we experienced last year and will allow us to rationalize the usage in 2017.
In
2015, because our largest plant had a catastrophic equipment failure, we created significant out of stocks on our products. During
this time, these out of stock issues caused us to lose approximately 20% of our shelf placements. We continue to reach out to
our customers to assure them that our out of stock issues were caused by one time events and that we are now back in stock. Our
fill rate on orders is now 97% and we have recovered approximately 25% of the shelf placements we had lost. We expect to get back
much of the remaining lost shelf placements at an even faster pace moving forward. The combination of the plant capacity and the
shelf space opportunity for a sustained sales recovery in 2017.
By
bringing the west coast facility on line and returning to more steady-state production, we expect to increase our profit margins.
Our goal is to exceed 30% gross margins by the end of the 2
nd
quarter 2017. This will be accomplished by negotiating
better packaging contracts, improving production processes and enhancing plant efficiencies. The margin improvements should result
in significant improvement in profitability. We generated cash in the 3
rd
quarter of 2016 and with the improvement
in margins, we expect to continue to generate positive cash flow moving forward.
This
year we have continued to focus on research and development with our primary focus being the development of the first natural
soda fountain system, which we are designing for one of the largest fast casual restaurant chains in the country. In addition,
we have developed new processes for making our Ginger Brews that will simplify the brewing process and improve profitability without
sacrificing quality. We are revamping our Kombucha line to make it more appealing to customers while retaining the great flavor
of these products. We expect the revised Kombucha line to launch in early 2017. Our research and development team has also developed
a new line of products aimed at large national retailers that we will unveil shortly.
As
the quarterly financials continue to improve, we anticipate lower interest rates on working capital lines of credit. In 2017,
we anticipate refinancing our current working capital line of credit resulting in significantly lower interest expenses.
In
2017, we expect continued and accelerating sales growth leading to increased profitability and shareholder value. We eagerly await
our launch of the first natural soda fountain to consumers. As the company continues its march to profitability, we expect to
be able to ramp up the marketing around our products. We are excited about our new product innovations that will soon launch and
the re-launch of our Kombucha. We are excited about our new board and management team that we have assembled around Reed’s.
Chris
Reed
Founder,
Chief Executive Officer and Chairman, Reed’s, Inc.
NYSE
MKT: REED
FORWARD
LOOKING STATEMENTS
This
statement contains forward-looking statements. These statements include projections, predictions, expectations or statements as
to beliefs or future events or results or refer to other matters that are not historical facts. Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from
those contemplated by these statements. The forward-looking statements contained herein are based on various factors and were
derived using numerous assumptions. In some cases, you can identify these forward-looking statements by the words “anticipate”,
“estimate”, “plan”, “project”, “continuing”, “ongoing”, “target”,
“aim”, “expect”, “believe”, “intend”, “may”, “will”, “should”,
“could”, or the negative of those words and other comparable words. You should be aware that those statements reflect
only the Company’s predictions. If known or unknown risks or uncertainties should materialize, or if underlying assumptions
should prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected.
You should bear this in mind not to place undue reliance on these forward-looking statements. Although we believe that the expectations
reflected in the forward-looking statements contained in this statement are reasonable, we cannot guarantee future results, levels
of activity, performance or achievements.
REED’S,
INC.
13000
South Spring Street Los Angeles, California 90061
NOTICE
OF 2016 ANNUAL MEETING OF STOCKHOLDERS
To
be held [ ], 2016
Dear
Stockholder:
You
are cordially invited to attend our annual meeting of stockholders at [ ] on [ ],
2016. The business of the annual meeting will be to:
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●
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Elect
Christopher Reed,
John Bello, Stefan Freeman,
Lewis Jaffe and Charles Cargile to serve as directors until the 2017 annual meeting, or until each director’s successor
is elected and qualified;
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Ratify
the
selection
of Weinberg
&
Company, P.A. as the Company’s independent registered public accounting firm for
the fiscal year ending
December
31,
2017;
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Consider
and vote on whether to approve, on an advisory basis, the compensation paid to our Named Executive Officers (as that term
is defined in the Proxy Statement for the 2016 Annual Meeting) for the fiscal year ended December 31, 2015;
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Approve
management proposal to re-price previously issued stock options,
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To
amend the advance notice provisions of our amended and restated bylaws,
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Consider
shareholder proposals, if properly presented by the relevant shareholder proponents; and
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To
transact such other business as
may
properly come before
the 2016 Annual Meeting and any adjournments
or
postponements thereof.
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The foregoing items of business
are more fully described in the Proxy Statement accompanying this Notice of Annual Meeting of Stockholders. The board recommends:
a vote “
FOR”
each of the three nominees for director named in the accompanying Proxy Statement and a vote “
FOR
”
proposals 2, 3, 4 and 5 on the enclosed
WHITE
proxy card.
The
board has fixed the close of business on October 24, 2016 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting and at any continuation, postponement or adjournment thereof.
*
* * IMPORTANT NOTICE * * *
Regarding
Internet Availability of Proxy Materials
for
the 2016 Annual Meeting of Stockholders to be held on [ ], 2016.
In
accordance with rules issued by the Securities and Exchange Commission, you
may
access our 2015 Annual Report and our Proxy Statement at
[
]
The
board recommends a vote “
FOR
” the election of each of the director nominees named in the accompanying Proxy
Statement and on the enclosed
WHITE
proxy card, and strongly urges you NOT to sign or return any proxy card(s) or instruction
form(s) that you may receive from the Committee or any of their affiliates.
Please
submit a WHITE proxy as soon as possible so that your shares can be represented and voted at the Annual Meeting in accordance
with your instructions. For specific instructions on submitting a proxy to have your shares voted, please refer to the instructions
on the WHITE proxy card or the information forwarded by your bank, broker or other nominee. Even if you have submitted a White
proxy, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record
by a bank, broker or other nominee and you wish to vote in person at the Annual Meeting, you must obtain a legal proxy issued
in your name from such bank, broker or other nominee.
If
you have previously signed a proxy card sent to you by the Committee or any of their affiliates in respect of the Annual Meeting,
you can revoke that proxy and submit a White proxy to vote for the board’s nominees by signing, dating and returning the
enclosed WHITE proxy card or by following the instructions provided in the WHITE proxy card to submit a proxy to vote your shares
over the Internet or by telephone or by voting in person at the Annual Meeting. Signing, dating and returning any proxy card that
the Committee or any of their affiliates may send to you, even with instructions to vote “withhold” with respect to
the Committee Nominees, will cancel any proxy you may have previously submitted to have your shares voted for the board’s
nominees on a WHITE proxy card as only your latest proxy card or voting instruction form will be counted. If you are a beneficial
holder of shares held in “street name,” you should follow the voting instructions provided by your bank, broker or
other nominee to ensure that your shares are represented and voted at the Annual Meeting, or to revoke prior voting instructions.
The board urges you to sign, date and return only the enclosed WHITE proxy card.
Your
vote is very important. Please submit your WHITE proxy card even if you plan to attend the Annual Meeting. To submit a White proxy
card or to vote your shares over the Internet or by telephone, please follow the instructions on the enclosed WHITE proxy card.
The
accompanying Proxy Statement provides a detailed description of the business to be conducted at the Annual Meeting. We urge you
to read the accompanying Proxy Statement, including the appendices and any documents incorporated by reference, carefully and
in their entirety.
Your
vote will be especially important at the meeting. As you may know, Joseph Grace, Edwin R. Lozano, James G. McRitchie, Gary W.
Spiro, Mathew D. Tekulsky, Jeffrey T. Glidden and Jeffrey V. Hembrock (collectively referred to herein as the “Committee”),
have notified the Company that they intend to nominate a slate of five nominees for election as directors in opposition to the
nominees recommended by our board of directors.
The
board recommends a vote “
FOR
” the election of each of the director nominees named in the accompanying Proxy
Statement and on the enclosed
WHITE
proxy card, and strongly urges you NOT to sign or return any proxy card(s) or instruction
form(s) that you may receive from the Committee or any of their affiliates.
Los
Angeles, California
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By
Order of the Board of Directors
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[ ],
2016
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Christopher
J. Reed, Chairman
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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) 274-8654
E-mail:
info@okapipartners.com
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By
Order of the Board of Directors,
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Los
Angeles, California
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Christopher
J. Reed,
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[ ],
2016
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Chief
Executive Officer and Chairman
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PROXY
STATEMENT
FOR
THE 2016 ANNUAL MEETING OF STOCKHOLDERS OF
REED’S,
INC.
To
Be Held on [ ], 2016
The
enclosed the enclosed
WHITE
proxy card is being delivered with this Proxy Statement on behalf of the board of directors
(the “board”) of Reed’s, Inc., a Delaware corporation, for use at the 2016 Annual Meeting of Stockholders (the
“Annual Meeting”) of Reed’s, Inc. and all postponements, continuations or adjournments thereof. These proxy
materials and the enclosed Annual Report on Form 10K for the year ended December 31, 2015, as amended, (“Annual Report”)
are being mailed to our stockholders on or about [ ], 2016. In this Proxy Statement, we use the terms the “Company”,
“Reed’s”, “we”, “our” and “us” to refer to Reed’s, Inc.
Is
my vote important?
Your vote will be particularly important at the Annual Meeting. As you may know, the Company has received
a notice from Joseph Grace, Edwin R. Lozano, James G. McRitchie, Gary W. Spiro, Mathew D. Tekulsky, Jeffrey T. Glidden and Jeffrey
V. Hembrock (the “Committee”) regarding their intent to nominate a competing slate of directors (the “Committee
Nominees”) at the Annual Meeting.
The
board recommends a vote “
FOR
” the election of each of the director nominees named in this Proxy Statement on
the enclosed
WHITE
proxy card, and strongly urges you
NOT
to sign or return any proxy card(s) or voting instruction
form(s) that you may receive from the Committee or any of their affiliates.
To
vote for all of the board’s nominees, you must sign, date and return the enclosed
WHITE
proxy card or follow the
instructions provided in the
WHITE
proxy card for submitting a proxy over the Internet or by telephone or vote in person
at the Annual Meeting.
If
you have previously signed any proxy card sent to you by the Committee or any of their affiliates in respect of the Annual Meeting,
you can revoke it by signing, dating and returning the enclosed
WHITE
proxy card or by following the instructions provided
in the
WHITE
proxy card for submitting a proxy to vote your shares over the Internet or by telephone or voting in person
at the Annual Meeting. Signing, dating and returning any proxy card that the Committee or any of their affiliates may send to
you, even with instructions to vote “withhold” with respect to the Committee Nominees, will cancel any proxy you may
have previously submitted to have your shares voted for the board’s nominees as only your latest proxy card or voting instruction
form will be counted. Beneficial holders who hold their shares in “street name” should follow the voting instructions
provided by their bank, broker or other nominee to ensure that their shares are represented and voted at the Annual Meeting, or
to revoke prior voting instructions.
The
board urges you to sign, date and return only the enclosed WHITE proxy card.
Where
and when is the Annual Meeting?
Our Annual Meeting will be held [ ],
on [ ] at [ ]
Pacific Standard Time.
Why
did I receive these materials?
You received this Proxy Statement because you held shares of our common stock on October 24,
2016, the record date fixed by our board, and you are entitled to vote at the Annual Meeting. This Proxy Statement and a copy
of our Annual Report will be mailed on or about [ ], 2016. Although
the Proxy Statement and Annual Report are being mailed together, the Annual Report is not incorporated into, and should not be
deemed part of, this Proxy Statement.
Who
can attend the Annual Meeting?
Only stockholders as of the record date, their authorized representatives, and invited guests
will be able to attend the Annual Meeting.
Who
is entitled to vote?
Only holders of record of our common stock at the close of business on October 24, 2016, the record date,
are entitled to vote at the Annual Meeting. Each share is entitled to vote on each matter properly brought before the meeting.
As of the record date, there were 13,973,726 shares of our common stock outstanding. Holders of Series A preferred stock do not
have voting rights on any matters, including, without limitation, the election of directors.
Who
are the proxies?
The board of the Company has appointed Daniel Miles, our Chief Financial Officer and Mark Beaton, our Chief
Operating Officer to serve as proxies at the Annual Meeting. When you fill out your
WHITE
proxy card and return it, or
if you vote electronically, you will be giving the proxies your instruction on how to vote your shares at the Annual Meeting.
Will
there be a proxy contest at the Annual Meeting?
The Committee has provided notice to the Company that the Committee intends
to nominate a competing slate of directors in opposition to the board’s highly qualified director nominees. Our board does
NOT
endorse or recommend the election of the Committee Nominees as directors. You may receive proxy solicitation materials
from the Committee or any of their affiliates, including an opposition proxy statement or proxy card. The board strongly urges
you
NOT
to sign or return any proxy card(s) or voting instruction form(s) that you may receive from the Committee or any
of their affiliates.
Please
be advised that the Company is not responsible for the accuracy of any information provided by, or relating to, the Committee
or any Committee Nominee contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Committee
or any of their affiliates or any other statements that the Committee or any of their affiliates or representatives may otherwise
make.
Our
board is pleased to nominate for election as director the five persons — Christopher Reed, John Bello, Lewis Jaffe, Charles
Cargile, and Stefan Freeman —named in this Proxy Statement and on the enclosed
WHITE
proxy card. We believe our five
director nominees have the breadth of relevant and diverse experiences, integrity and commitment necessary to continue to grow
the Company for the benefit of all of the Company’s stockholders.
What
do I do if I receive a proxy card or voting instruction form from the Committee?
The
board strongly urges you
NOT
to sign or return any proxy card(s) or voting instruction form(s) that you may receive from
the Committee or any of their affiliates, even with instructions to vote “withhold” with respect to the Committee
Nominees. Instructions to withhold votes with respect to the Committee Nominees on a proxy card provided by, or on behalf of,
the Committee or their affiliates will cancel any proxy previously submitted by you to vote for the board’s nominees on
a
WHITE
proxy card or
WHITE
voting instruction form as only your latest proxy card or voting instruction form will
be counted.
If
you previously signed a proxy card or submitted a voting instruction form sent to you by, or on behalf of, the Committee or their
affiliates, you can change or revoke that proxy and have your shares voted for the board’s nominees by (i) signing, dating
and returning only the enclosed
WHITE
proxy card in the enclosed postage-paid return envelope to submit your proxy by mail,
(ii) following the instructions provided in the
WHITE
proxy card for submitting a proxy over the Internet or by telephone,
or (iii) attending the Annual Meeting to vote in person. Only your latest dated proxy will be counted at the Annual Meeting.
If
you need assistance changing or revoking your proxy, please call the Company’s proxy solicitor, Okapi Partners, toll free
at (877) 274-8654 (within the U.S.).
How
do I vote if I am a registered stockholder?
You may vote in person, electronically via the Internet, or by proxy. Proxies
are solicited to give all stockholders who are entitled to vote on the matters that come before the meeting the opportunity to
do so whether or not they attend the meeting in person. If you are a registered holder, you can vote your
WHITE
proxy card
by mail, electronically via the Internet, or in person at the Annual Meeting.
If you choose to vote by mail, mark your
WHITE
proxy card enclosed with this Proxy Statement, date and sign it, and mail it in the postage-paid envelope. If you wish to
vote in person, you can vote the
WHITE
proxy card in person at the Annual Meeting. Signing and returning a proxy will not
prevent you from voting in person at the meeting.
How
do I vote electronically?
If you are a registered stockholder, you may vote electronically via the Internet. Please review
the voting instructions on the
WHITE
proxy card.
How
do I specify how I want my shares voted?
If you are a registered stockholder, you can specify how you want your shares voted
on each proposal by marking the appropriate boxes on the
WHITE
proxy card. Please review the voting instructions on the
WHITE
proxy card and read the entire text of the proposals and the positions of the board of Directors in the Proxy Statement
prior to marking your vote.
If your
WHITE
proxy card is signed and returned without specifying a vote, it will be voted
according to the recommendation of the board of Directors on that proposal.
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
WHITE
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:
●
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Elect
Christopher
Reed,
John Bello, Stefan Freeman, Lewis Jaffe and Charles Cargile
to
serve
as
directors until the 2017 annual
meeting, or until each director’s successor is elected and qualified;
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Ratify the selection
of Weinberg & Company, P.A. as the Company’s independent registered public accounting firm to audit the financial
statements of the Company for the fiscal year ending December 31, 2017;
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●
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Consider and vote
on whether to approve, on an advisory basis, the compensation paid to our Named Executive Officers (as that term is defined
in the Proxy Statement for the 2016 Annual Meeting) for the fiscal year ended December 31, 2015;
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●
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Approve management
proposal to re-price previously issued stock options,
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●
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Vote for the amendment
to our amended and restated bylaws to amend the advance notice provisions of the amended and restated bylaws; and
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●
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Consider shareholder
proposals, if properly presented by the relevant shareholder proponents.
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The
board 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
WHITE
proxy card to vote on them according
to their best judgment.
What is the board of directors’ voting
recommendation?
For the reasons set forth in more detail later in the Proxy Statement, the board recommends you vote using
the enclosed WHITE proxy card FOR the election of all nominees for director proposed by our board (Proposal 1). The board has
ratified the selection of Weinberg & Company, P.A. as the Company’s independent registered public accounting firm to
audit the financial statements of the Company for the fiscal year ending December 31, 2017 (Proposal 2) which selection was made
by the Company’s Audit Committee. The board recommends a vote FOR the ratification of the auditors (Proposal 2). The board
recommends a vote FOR Proposal 3, the say-on-pay proposal, to approve, on an advisory basis, the compensation paid to our Named
Executive Officers for the fiscal year ended December 31, 2015. The board recommends a vote FOR Proposal 5 to approve management
proposal to re-price previously issued stock options. The board recommends a vote FOR Proposal 5 to amend the advance notice provision
of our amended and restated bylaws. The board recommends a vote AGAINST shareholder proposals (Proposals 6 and 7).
Please
note that the best way to support the board’s nominees is to vote “
FOR
” the board’s nominees by
signing, dating and returning the enclosed
WHITE
proxy card or by submitting a proxy over the Internet or by telephone
by following the instructions on the
WHITE
proxy card. The board strongly urges you
NOT
to sign or return any proxy
card(s) or voting instruction form(s) that you may receive from the Committee or any of their affiliates. Signing and returning
any proxy card that the Committee or any of their affiliates may send to you, even to vote “withhold” with respect
to the Committee Nominees, will cancel any proxy you may have previously submitted to have your shares voted for the board’s
nominees on a
WHITE
proxy card, as only your latest dated proxy card will be counted. Therefore, the board urges you to
sign, date and return only the enclosed
WHITE
proxy card.
How
can I provide my comments to the Company?
We urge you to let us know your comments 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, attention:
Judy Holloway Reed, Secretary.
How
many votes are needed to have the proposals pass?
The affirmative vote of the majority of the votes cast at the Annual Meeting
is required to elect the directors, ratify the selection of the auditors, and proposals regarding independent board Chairman and
shareholder proxy access. Because the say-on-pay proposal asks for a non-binding, advisory vote, there is no required vote that
would constitute approval. We value the opinions expressed by our stockholders in this advisory vote, and our Compensation Committee,
which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of the vote
when designing our compensation programs and making future compensation decisions for our Named Executive Officers.
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
WHITE
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 WHITE proxy
card.
If a
WHITE proxy card is unmarked, or if you indicate
no
vote,
the shares of common stock it represents will
be
voted
FOR
Proposal
No. 1,
the election of directors recommended
by
the
Board,
FOR
Proposal No.
2
the ratification
of the auditors for this year,
FOR
Proposal 3, the say-on-pay proposal,
FOR
Proposal 4,
the re-price stock options,
FOR
Proposal 5, the amendment to
the advance notice provision of our amended and restated bylaws, and
AGAINST
shareholder
proposals (Proposals 6 and 7).
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.
Abstentions will be treated as present and entitled to vote for purposes of determining the presence of a quorum. Abstentions
will not constitute a vote FOR or AGAINST any matter, and thus will be disregarded in the calculation of shares voting or votes
cast on any matter submitted to the stockholders for a vote.
Broker
Non-Votes
. Brokers that are members of certain securities exchanges and that hold shares of our common stock in street
name on behalf of beneficial owners have authority to vote on certain items when they have not received instructions from beneficial
owners. Under the applicable rules governing such brokers, Proposal 2 to ratify the appointment of Weinberg & Company, P.A.
as our independent registered public accounting firm is considered a “discretionary” item. This means that brokers
may vote using their discretion on this proposal on behalf of beneficial owners who have not furnished voting instructions. In
contrast, all other proposals are “non- discretionary matters”, which means your bank, brokerage firm, broker-dealer
or other similar organization may not vote your shares without voting instructions from you. Therefore, you must give your broker
instructions in order for your vote to be counted. If your shares are held of record by a bank, broker or other nominee, we urge
you to give instructions to your bank, broker, or other nominee as to how you wish your shares to be voted so you may participate
in the stockholder voting on these important matters.
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 October 24, 2016 we had [ ] shares of common stock outstanding. The number of shares required
to be represented in person or by proxy at the Annual Meeting to constitute a quorum is [ ].
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:
1.
|
Giving timely
written notice of the revocation to our Secretary,
|
|
|
2.
|
Executing
and delivering a WHITE proxy card with a later date, or
|
|
|
3.
|
Voting in
person at the meeting.
|
How
would my proxy be voted on other matters?
The persons named on the WHITE proxy card will have discretionary authority to vote
only on Proposal 2.
Who
will solicit proxies on behalf of the board?
Proxies may be solicited on behalf of the board, without additional compensation,
by the Company’s directors, director nominees and certain executive officers and other employees of the Company. Such persons
are listed in Appendix A to this Proxy Statement. Additionally, the Company 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
.
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
WHITE
proxy card and any additional
soliciting materials furnished to stockholders by, or on behalf of, the Company, will be borne by the Company. Copies of the Company’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 2015 Annual Report, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2015,
to beneficial owners. In addition, if asked, the Company will reimburse these persons for their reasonable expenses in forwarding
these materials to the beneficial owners. Due to the possibility of a proxy contest, we have engaged Okapi Partners to solicit
proxies from stockholders in connection with the Annual Meeting. Okapi Partners expects that approximately [ ]
of its employees will assist in the solicitation of proxies. We will pay Okapi Partners a fee of up to $[ ]
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.
The
Company estimates that its additional out-of-pocket expenses beyond those normally associated with soliciting proxies for the
Annual Meeting as a result of the potential proxy contest will be $200,000 in the aggregate, of which approximately $7,500 has
been spent to date. Such additional solicitation costs are expected to include the fees incurred to retain Okapi Partners as the
Company’s proxy solicitor, as discussed above, fees of outside counsel, financial advisors and public relations advisors
to advise the Company in connection with a possible contested solicitation of proxies, increased mailing costs, such as the costs
of additional mailings of solicitation materials to stockholders, including printing costs, mailing costs and the reimbursement
of reasonable expenses of banks, brokerage houses and other agents incurred in forwarding solicitation materials to beneficial
owners, as described above, and the costs of retaining an independent inspector of election.
Are
there interests of certain persons in matters to be acted upon?
No director or executive officer of the Company who has served
at any time since the beginning of the 2016 fiscal year, and no nominee for election as a director of the Company, or any of their
respective associates, has any substantial interest, direct or indirect, in any matter to be acted upon at the Annual Meeting
other than Proposal No. 1–Election of Directors. Other than Director Dan Muffoletto, who has indicated that he does not
support certain of the board’s nominees, no director has informed the Company in writing that he or she intends to oppose
any action intended to be taken by the Company at the Annual Meeting.
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.
When
will the voting results be announced?
The final voting results will be reported in a Current Report on Form 8-K, which will
be filed with the Securities and Exchange Commission (“SEC”) within four business days after the Annual Meeting. If
our final voting results are not available within four business days after the Annual Meeting, we will file a Current Report on
Form 8-K reporting the preliminary voting results and subsequently file the final voting results in an amendment to the Current
Report on Form 8-K within four business days after the final voting results are known to us.
Who
can answer my questions?
Your vote at this year’s Annual Meeting is especially important, no matter how many or how
few shares you own. Please sign and date the enclosed
WHITE
proxy card or
WHITE
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:
1212
Avenue of the Americas, 24th Floor
New
York, NY 10036
(212)
297-0720
Call
Toll-Free at: (877) 274-8654
E-mail:
info@okapipartners.com
|
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,
2015, are also available at https://www.sec.gov/Archives/edgar/data/1140215/000149315216011118/0001493152-16-011118-index.htmYou
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.
DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
The
SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy delivery requirements for proxy statements
with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders.
This process, which is commonly referred to as ’‘householding’’, potentially provides extra convenience
for stockholders and cost savings for us. Under this procedure, multiple stockholders who share the same last name and address
will receive only one copy of the annual proxy materials, unless they notify us that they wish to continue receiving multiple
copies. We have undertaken householding to reduce our printing costs and postage fees. If you wish to opt out of householding
and receive multiple copies of the proxy materials at the same address you may do so at any time prior to thirty days before the
mailing of proxy materials, which will typically be mailed in November of each year, by notifying us in writing at the address
below. You may also request additional copies of the proxy materials by notifying us in writing at the address below or by contacting
us at the phone number listed below, and we will undertake to deliver such additional copies promptly. If you share an address
with another stockholder and currently are receiving multiple copies of the proxy materials, you may request householding by notifying
us at the above referenced address or telephone number. We will only deliver one Proxy Statement to multiple stockholders sharing
an address unless we have received contrary instructions from one or more of the stockholders. We will promptly deliver a separate
copy of this Proxy Statement to a stockholder at a shared address to which a single copy of the document was delivered upon oral
or written request:
Reed’s,
Inc.
Attention:
Judy Holloway Reed, Secretary 13000 South Spring Street
Los
Angeles, California 90061 Tel: (310) 217-9400
Fax:
(310) 217-9411
Stockholders
may also address future requests for separate delivery of Proxy Statements and/or annual reports by contacting us at the address
listed above. Stockholders sharing an address with another stockholder who has received multiple copies of the Company’s
proxy materials may contact us to request delivery of a single copy of these materials.
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 and 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 2019 annual meeting.
IMPORTANT
Your
vote is important. No matter how many shares of Common Stock you own, please give the board your proxy FOR the election of the
Nominees by taking three steps:
●
|
SIGNING
the enclosed
WHITE
proxy card,
|
|
|
●
|
DATING
the enclosed
WHITE
proxy card, and
|
|
|
●
|
MAILING
the enclosed
WHITE
proxy card TODAY in the envelope provided (no postage is required if mailed in the United
States).
|
If
any of your shares of Common Stock are held in the name of a brokerage firm, bank, bank nominee or other institution, only it
can vote such shares of Common Stock and only upon receipt of your specific instructions.
Depending upon your broker or custodian,
you may be able to vote either by toll-free telephone or by the Internet. Please refer to the enclosed voting form for instructions
on how to vote electronically. You may also vote by signing, dating and returning the enclosed
WHITE
voting form.
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) 274-8654
E-mail:
info@okapipartners.com
|
BACKGROUND
OF THE SOLICITATION
The
following outlines certain interactions the Company has had with the Committee and its representatives:
1.
|
In
mid-2013, Mr. Edward Lozano approached the Company to discuss the possibility of joining Reeds Inc.’s Board of Directors.
He described himself as a seasoned beverage executive with extensive background in the beverage industry. He communicated
that he thought our products were good, but had not reached their potential and offered his help. The CEO, Mr. Christopher
Reed, offered Mr. Lozano a consulting job at $10,000 per month for 3 months. Mr. Lozano turned down the offer.
|
|
|
2.
|
On
July 18, 2016, Mr. Lozano approached Mr. Reed again and asked if he and an associate, Mr. Jeff Glidden, could be placed on
the Board since he thought there were two board seats available. Reed’s had only one board seat available because director
Mr. Mark Harris had resigned from the Board in June.
|
|
|
3.
|
On
July 27, 2016, Mr. Lozano called to inquire about status of his and Mr. Glidden’s applications for the Board. Mr. Lozano
offered the services of his lawyers to help get him on Reed’s board. Mr. Reed informed Mr. Lozano that the vetting process
for a new board member was significant and it would take more than nine days to find the right candidate for the open position
created by Director Harris’ abrupt resignation. Mr. Lozano expressed dissatisfaction with the answer.
|
|
|
4.
|
On
August 2, 2016 , Mr. Lozano sent a letter stating: “I have retained Olshan Frome Wolosky LLP, the leading law firm in
the nation representing shareholders in corporate governance and board-related matters, to advise me in seeking improvements
to the composition of the Board and the Company’s corporate governance practices. To ensure that shareholder viewpoints
and interests are adequately represented in the boardroom, I am requesting the immediate appointment of two new, independent
directors to the board. Jeffrey T. Glidden and I are very well qualified to help improve strategy, business execution, investor
relations and corporate governance at Reed’s.” Mr. Lozano said in the same letter that if we did not put him on
the Board, “I am thus prepared to go public with my concerns and, in the event we cannot come to an amicable resolution,
I reserve all of my rights to take any actions as a shareholder that I believe may be required, including the nomination of
a full slate of director candidates to replace current board members at the upcoming 2016 Annual Meeting of Stockholders.”
|
|
|
5.
|
On
August 9, 2016, Mr. Lozano flew out to Los Angeles, arrived at the offices of Reed’s Inc. and demanded an immediate
meeting with Mr. Reed, CEO. No meeting had been previously scheduled. Mr. Reed was unavailable and could not meet at that
time.
|
|
|
6.
|
On
August 11, 2106, Mr. McRitchie called Mr. Reed and requested a phone conversation on the subject of corporate governance.
|
|
|
7.
|
On
Aug 12, 2016, Mr. McRitchie and Mr. Reed talked. To start the discussion, Mr. McRitchie suggested that it was urgent for Reed’s
Inc. to put Mr. Lozano and Mr. Glidden on the board. Mr. McRitchie then explained what would happen if Reed’s did not
do as he suggested. He said as shareholders of Reeds Inc., his group had the right to review corporate documents and they
would look for any negative activity in those documents with the intention of exposing this to the shareholders. Mr. McRitchie
mentioned that he was a shareholder in another small company, Marrone Bio Innovations, that had recently settled a lawsuit
and would pay out $12 million because of discrepancies in how they booked versus how they reported sales. Mr. McRitchie said
these discrepancies had been discovered by shareholder activists using the shareholders’ right to review documents.
Mr. Reed felt there was in implied threat to Reed’s Inc. in what Mr. McRitchie was saying to him. Mr. Reed told Mr.
McRitchie that he did not appreciate being threatened, and felt Mr. McRitchie was attempting to force him (Mr. Reed) to accept
Mr. McRitchie’s candidates (Mr. Glidden and Mr. Lozano) onto the Board. Mr. Reed told Mr. McRitchie: “In the universe
of qualified candidates for Reed’s board, why would we choose people who start out by threatening us?”
|
|
|
8.
|
On
August 18, 2016, Mr. Lozano sent out a press release announcing that he had formed The Committee to Rescue Reed’s (“The
Committee”) and intended to contest the board at the next shareholder meeting. The press release was later recalled
and replaced.
|
|
|
9.
|
On
September 17, 2016, a long term investor in Reed’s, Mr. Joseph Grace called Mr. Reed and suggested that both sides get
together to see if they could work out a compromise and settle on a common board.
|
|
|
10.
|
Mr.
Reed accomodated Mr. Grace’s request. On September 19 and 20, 2016 Mr. Reed, Mr. Lozano and Mr. Daniel Miles (Reed’s
CFO) met. Mr. Grace joined them in person on September 19 and another shareholder, David Robinov, joined via telephone on
both September 19 & 20. The conclusion of this meeting was that both groups would work quickly to develop their group’s
slate of candidates. Then the two groups would sit down and pick the best candidates from both slates. They talked about getting
board members that had specific expertise in sales and marketing, finance, operations and governance. Mr. Reed knew very little
about Mr. Lozano and requested that Mr. Lozano provide him with employment references and a resume with a work history, including
verification of his work history with Pepsi and Miller. To this date, Mr. Reed has never received any of the requested employment
verification and references from Mr. Lozano. To this date, Reed’s Inc. has not received from Mr. Lozano any of the items
that were requested.
|
|
|
11.
|
On
September 24
th
, Mr. Lozano sent out a new press release announcing that it had formally nominated five independent
candidates for election to the Reed’s, Inc. board of directors at the Company’s upcoming 2016 annual meeting.
Mr. Lozano’s group wanted Reed’s new board slate finished by September 26
th
. On the same day, Mr. Reed
continued to ask for the due diligence info on Mr. Lozano. Still it was not provided.
|
|
|
12.
|
On
October 11
th
, Mr. Lozano put out another press release stating that efforts to work on a single combined slate
of directors had failed.
|
PROPOSAL
1
ELECT
CHRISTOPHER REED, JOHN BELLO, STEFAN FREEMAN, LEWIS JAFFE AND CHARLESCARGILE TO SERVE AS DIRECTORS UNTIL THE 2017 ANNUAL MEETING,
OR UNTIL EACH DIRECTOR’S SUCCESSOR IS ELECTED AND QUALIFIED
Our
Bylaws provide that the number of directors on the board shall be not less than one or more than seven. The board is empowered
to fix the number of directors from time to time and is currently set at five. Christopher J. Reed, Judy Holloway Reed, Mark Harris,
and Michael Fischman were elected to our board at the 2015 Annual Meeting. Daniel S.J. Muffoletto was not re-elected and has not
resigned. Mark Harris resigned his position on June 1, 2016. Lewis Jaffe was appointed to the board on October 19, 2016 to replace
Mark Harris. Proxies cannot be voted for a greater number of persons than the number of nominees named.
The
board has nominated and approved the nominations of five persons to serve as directors until the 2017 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 board to fill any vacancy. Additionally, the board may elect additional members of
the board to fill any additional vacancies.
Nominees
for Election as Directors
The
nominees are as follows:
Name
|
|
Age
|
|
Current
Position with the Company
|
Christopher
Reed
|
|
58
|
|
President,
Chief Executive Officer
|
John
Bello
|
|
70
|
|
None
|
Stefan
Freeman
|
|
55
|
|
None
|
Lewis
Jaffe
|
|
58
|
|
Independent
Director and sub-committee member
|
Charles
Cargile
|
|
52
|
|
None
|
Business
Experience of Nominees
Christopher
J. Reed
founded our company in 1987 and has served as our Chairman, President and Chief Executive Officer since our incorporation
in 1991. 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.
Mr.
Reed has served as our Chairman, President and Chief Executive Officer since our incorporation in 1991. 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.
John
Bello
will be Reed’s Board Chairman and sales and marketing expert. 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 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,
Bello spent 14 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 Pepsico
Inc. and in product management roles for General Foods Corporation in the Sanka and Maxwell House brands. Mr. Bello has also worked
with IZZE and Firefighter brands in brand building, marketing and strategic planning capacities.
Mr.
Bello earned his BA from Tufts University, cum laude, and received his MBA from the Tuck School of Business 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. Mr. Bello also serves
on the board of Boathouse Sports and is executive director of Luminesce Eye Therapies.
We
believe that Mr. Bello brings a vision for innovation and strategic marketing to Reed’s Inc. that will create possibilities
for market penetration and expansion. If elected, Mr. Bello will serve as the Non-Executive Chairman/Lead Independent Director.
Lewis
Jaffe
will be our Board’s Governance expert. 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 Board for FitLife Brands Inc (FTLF:OTCBB) and serves on its audit, compensation and governance committees.
Since 2006 he has served on the board of Director 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.
Jaffe is a graduate of the Stanford Business School Executive Program, holds a Bachelor of Science from LaSalle University and
holds a Masters Professional Director Certification from the American College of Corporate Directors, a public company director
education and credentialing program.
We
believe Mr. Jaffe will be an invaluable asset to the strategic and board governance side of Reed’s Inc. and a catalyst for
our next level of expansion.
Stefan
Freeman
will be our Operations expert. 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 companies in the world and was promoted within each company. From 2011 through 2014, Mr. Freeman was
the Regional Vice President of Manufacturing for Coca-Cola Refreshments, managing eight manufacturing plants located throughout
Southern California, Arizona and Hawaii. These plants produced 231 million cases with revenues in excess of $500 million annually.
In 2014 Mr. Freeman was promoted from within Coca-Cola Refreshments to Vice President of Fleet Operations in Atlanta, Georgia
where he managed one of the five largest fleet operations in North America through April 2016. Prior to working for Coca-Cola,
Mr. Freeman was Director of Supply Chain for Dean Foods’ Pacific Coast Group, managing nine production facilities with responsibility
for 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 Bachelors of Science in mechanical engineering from Tuskegee University and is an active member of the Cisco Systems
Global Manufacturing Advisory Board.
We
believe that Reed’s Inc. will receive great benefit from Mr. Freeman’s valuable insights and stewardship of our company’s
supply chain management and operations. Mr. Freeman currently resides in Los Angeles.
Charles
Cargile
will be our financial expert. Mr.
Cargile
has a distinguished career as a financial and strategic
management executive. Most recently, Mr. Cargile was Senior Vice President, Chief Financial Officer and Treasurer of NASDAQ listed
Newport Corporation from 2000 to 2016. He successfully oversaw the acquisition of Newport by MKS Instruments in April, 2016 for
$980 million; an acquisition price 11 times 2015 EBITDA and at a 53% premium to the share price. Prior to his time at Newport
Corporation, from 1998 to 2000 Mr. Cargile was Vice President of Finance and Corporate Development at York International Corporation
(now part of Johnson Controls). From 1992 to 1998 Mr. Cargile was Corporate Controller and Chief Accounting Officer at BW/IP,
Inc. (now Flowserve Corporation). Currently, Mr. Cargile is head of Cargile Financial and Advisory Services based in Newport Coast,
CA. He is the lead independent director at Netlist and serves as a director at Sunworks.
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.
We
recognize Mr. Cargile as an invaluable and insightful advisor for a wide range of financial and executive decisions and transactions
and we look forward to welcoming him to our board.
Director
Independence
The
board of directors has determined that four of our nominees, John Bello, Lewis Jaffe, Stefan Freeman, and Charles Cargile, do
not have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of
a director and that each of these nominees is an “independent director” as defined under Section 803 of the of the
NYSE MKT Company Guide.
Vote
Required
In
accordance with applicable law and our Bylaws, the election of directors shall be by the affirmative vote of the majority of the
votes cast. For the purposes of election of directors, although abstentions will count toward the presence of a quorum, they will
not be counted as votes cast and will have no effect on the result of the vote. Brokers who hold shares in street name may not
vote on behalf of beneficial owners with respect to Proposal 1 if they do not receive voting instructions from the beneficial
owners. Unless a stockholder indicates otherwise, each signed proxy will be voted
FOR
the election of these nominees.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
EACH OF CHRISTOPHER J. REED, JOHN BELLO, STEFAN FREEMAN, LEWIS JAFFE AND CHARLES
F CARGILE
TO SERVE AS A DIRECTOR
PROPOSAL
2
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
board’s Audit Committee has appointed Weinberg & Company, P.A. (“Weinberg”) as the Company’s independent
registered public accountants. The board requests that stockholders ratify its selection of Weinberg as our independent registered
public accountants for the 2017 fiscal year. If the stockholders do not ratify the selection of Weinberg, the board will select
another firm of accountants. Representatives of Weinberg may not be present at the 2016 Annual Meeting.
Weinberg
has been our independent registered public accounting firm for a number of fiscal years.
Audit
Fees and Related Fees
The
aggregate fees billed for each of the last two fiscal years for professional services rendered by Weinberg for the audit of annual
financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings
or engagements for those fiscal years were:
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, 2015 and 2014.
|
|
2015
|
|
|
2014
|
|
Audit
Fees
|
|
$
|
142,000
|
|
|
$
|
89,000
|
|
Audit-Related
Fees
|
|
|
|
|
|
|
30,000
|
|
Tax
Fees
|
|
|
24,000
|
|
|
|
20,000
|
|
All
Other Fees
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
166,000
|
|
|
$
|
139,000
|
|
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 10K, as amended, 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.”
Our
Audit Committee’s pre-approval policies and procedures, pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X,
require the audit committee to pre-approve all accounting related activities prior to the performance of any services by any accountant
or auditor. In the year ended December 31, 2015, 100% of audit fees were pre-approved by the audit committee.
The
percentage of hours expended on the principal accountant’s engagement to audit our 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 was 0%.
Vote
Required
Ratification
of the independent auditor requires the affirmative vote of a majority of the votes cast. For purposes of the vote on Proposal
2, abstentions and broker non-votes will not be counted as votes cast and thus will have no effect on the result of the vote although
they will count towards the presence of a quorum for Proposal 2. Unless a stockholder indicates otherwise, each signed proxy will
be voted
FOR
the ratification of the selection of Weinberg as the Company’s independent registered public accountants.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE SELECTION OF WEINBERG & COMPANY, P.A. AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS FOR THE 2017 FISCAL YEAR
PROPOSAL
3
ADVISORY
VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
The
Dodd-Frank Wall Street Reform and Consumer Protection Act added Section 14A to the Securities Exchange Act of 1934. As required
pursuant to Section 14A of the Exchange Act, Proposal 3 is a non-binding, advisory proposal on the compensation that we paid to
our Named Executive Officers for the fiscal year ended December 31, 2015. The board is providing stockholders with the opportunity
to cast an advisory vote on the compensation of our Named Executive Officers. This proposal, commonly known as a “say-on-pay”
proposal, gives you, as a stockholder, the opportunity to endorse or not endorse our fiscal 2015 executive compensation programs
and policies and the compensation paid to our Named Executive Officers for the fiscal year ended December 31, 2015.
We
believe in the power of open disclosure and know the only way to build and strengthen our reputation and our Company is through
honesty and trust. In connection with that belief and as required by SEC rules, we are asking our stockholders to approve, on
an advisory basis, the compensation that we paid to our Named Executive Officers for the fiscal year ended December 31, 2015.
As
discussed in under the heading “Compensation Overview” in this Proxy Statement, 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. The board is asking stockholders to support this proposal based on the disclosure set forth in
these sections of this Proxy Statement, which, among other things, demonstrates:
|
●
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our
commitment to ensuring executive compensation is aligned with our corporate strategies and business objectives and competitive
with those of other companies in our industry;
|
|
|
|
|
●
|
the
design of our compensation programs is intended to reward our Named Executive Officers for the achievement of key strategic
and financial performance measures by linking short- and long-term cash and equity incentives to the achievement of measurable
corporate and individual performance goals; and
|
|
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●
|
our
strong emphasis on the alignment of the incentives of our Named Executive Officers with the creation of increased stockholder
value.
|
The
board is asking stockholders to cast a non-binding, advisory vote “FOR” the compensation paid to our Named Executive
Officers for the fiscal year ended December 31, 2015 as disclosed pursuant to the compensation disclosure rules of the SEC, including
the compensation tables and accompanying narrative disclosure under the heading “Executive Compensation” included
in this Proxy Statement. Accordingly, we are asking our stockholders to approve the following advisory resolution at our 2016
Annual Meeting:
“RESOLVED,
that the Company’s stockholders, hereby approve, on an advisory basis, the compensation paid to the Company’s named
executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and accompanying narrative
disclosure under the heading “Executive Compensation” contained in the Company’s 2016 Proxy Statement for the
2016 Annual Meeting of Stockholders, for the fiscal year ended December 31, 2015.”
Although
the say-on-pay vote we are asking you to cast is non-binding, the board and the Compensation Committee value the views of our
stockholders and will consider the outcome of the vote when determining future compensation arrangements for our Named Executive
Officers.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS.
PROPOSAL 4
Approve management proposal
to re-price previously issued stock options
Both
the 2007 Incentive Stock Award Plan and 2015
Incentive and Non-statutory Stock Option
plans
do not require shareholder approval to re-price the outstanding options to a different price. The Institutional Shareholder Services
organization has recommended that corporate stock option repricing be subject to shareholder approval. The current board believes
that in order to comply with the spirit of Institutional Shareholder Services’ recommendation it has placed the re-pricing
of options to the date the action was considered. On June 10, 2016 the board approved, subject to shareholder approval the price
of $2.65.
With Shareholder approval,
484,500 options held by the non-management employees will be repriced These options have multiple expiration dates beginning in
2018 and ending in 2020.
In order to retain critical employees during
this time we offered to reprice their options contingent on shareholder approval. Many of these employees had no control over the
supply chain issues and lost considerable compensation as a result. To retain these employees without having to come up with a
large cash outlay we offered to reprice options. The company will have lower option expenses on these options going forward which
will improve the financials
The board is asking stockholders to cast a
vote “FOR” the re-pricing of previously issued stock options to a price of $2.65.
“RESOLVED, that the Company’s stockholders,
hereby approve, the re-pricing of all outstanding unexercised stock options grants for the 2015 Plan priced above $2.65 grant the
new strike price will be $2.65. No other terms or conditions will change. For 2007 Plan grants, the original grants will be cancelled
and reissued at the $2.65 strike price and no other terms or conditions will change.
THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE
FOR
THE Re-pricing of Stock Options
PROPOSAL
5
AMENDMENT TO OUR AMENDED AND RESTATED BYLAWS TO AMEND THE ADVANCE NOTICE PROVISIONS OF THE AMENDED AND RESTATED
BYLAWS
Because
the Company is incorporated in Delaware, the board has approved amendments to our Corporate Governance Guidelines to add a director
resignation policy consistent with the Company’s majority voting standard. Under the General Corporation Law of the State
of Delaware, even if an incumbent director does not receive the vote required for re-election, that director will continue to
serve as a “holdover director” until a successor is elected and qualified. The amended Corporate Governance Guidelines
will require each incumbent nominee to submit an irrevocable contingent resignation letter. If the nominee does not receive more
votes cast “For” than “Against” their election, our Nominating and Governance Committee will recommend
to the board that it accept the nominee’s contingent resignation, unless it determines that acceptance of the resignation
would not be in the best interests of the Company and its stockholders. The board will decide whether to accept or reject the
contingent resignation offer at its next regularly scheduled meeting, but in no event later than 120 days following certification
of the election results. The board’s decision and its reasons will be promptly disclosed in a periodic or current report
filed with the SEC.
The
proposed amendment to the amended and restated bylaws would amend the advance notice provisions of the amended and restated bylaws
by requiring that any stockholder providing advance notice of its nomination of a director for election to the board at a meeting
of stockholders must deliver a statement whether such person, if elected, intends to tender, promptly following such person’s
election or re-election, an irrevocable resignation effective upon such person’s failure to receive the required vote for
re-election at the next meeting at which such person would stand for re-election and upon acceptance of such resignation by the
board, in accordance with any policies and procedures adopted by the board for such purpose.
The
text of the proposed amendment to the amended and restated is set forth in Appendix B.
Vote
Required
Approval
of the adoption of the amendment to the amended and restated bylaws requires the affirmative vote of the majority of the votes
cast.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE AMENDMENT TO OUR AMENDED AND RESTATED BYLAWS TO AMEND THE
ADVANCE NOTICE PROVISIONS OF THE AMENDED AND RESTATED BYLAWS
PROPOSAL
5
SHAREHOLDER
PROPOSAL ENTITLED INDEPENDENT BOARD CHAIRMAN
The
Company received notice of the intention of a shareholder to present a proposal for voting at 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 directed to the Company’s Secretary.
As
explained below, the board recommends that you vote “
AGAINST
” the shareholder proposal.
The
board of directors of Reed’s Inc. does not support the adoption of the resolution proposed below and asks shareholders to
consider management’s response, which follows the shareholder proposal.
[REED-
Rule 14a-8 Proposal, July 11, 2016]
Proposal
[4*] - Independent Board Chairman
RESOLVED:
Shareholders of Reeds, Inc. (the “Company”) ask the board of directors (the “Board”) to amend governing
documents as necessary to require the Chairman of the Board to be an independent member of the Board. This independence requirement
shall apply prospectively, so as not to violate any contractual obligation at the time this resolution is adopted. Compliance
is waived if no independent director is available and willing to serve as Chair. The requirement should also specify how to select
a new independent chairman if a current chairman ceases to be independent between annual shareholder meetings.
SUPPORTING
STATEMENT
When
our CEO is also our board chairman, this arrangement can hinder our board’s ability to monitor our CEO’s performance
and for shareholders to speak frankly. An independent Chairman is the prevailing practice in many international markets and is
a growing trend at many companies in America.
The
Council of Institutional Investors, whose members invest over $3 trillion, clearly favors an independent chair in the following
policy: “The board should be chaired by an independent director.”
A
2012 report by GMI Ratings. The Costs of a Combined Chair/CEO (See http://origin.library.constantcontact.com/download/get/file/1102561686275-208/GMIRatings·
CEOChairComp 062012.pdf
),
found companies with an independent chair provide investors with five-year shareholder returns
nearly 28 percent higher than those headed by a party of one. The study also found corporations with combined CEO and chair roles
are 86 percent more likely to register as “Aggressive” in their Accounting and Governance Risk (AGR®) model.
Still,
the biggest reason to split the roles is to bring more accountability and oversight to the CEO’s job and to free the board
to truly act as the CEO’s boss.
A
recent EY report (
See http://www.ey.com/US/en/lssues/Govemance-and reporting/EY-lets-talk-qovemance-trends-in-independent-board-leadership-structures
)
found titles matter. Lead directors typically cannot call shareholder or board.meetings. nor to the lead CEO performance evaluations.
According
to a survey by the National Association of Corporate Directors, 72.8% of directors serving on boards with an independent chair
opined that companies greatly benefit, while 6.7% stated they did not. (See
http://web.law.columbia.edu/sites/default/files/microsites/millsteincenter/2009%2003%2030%20Chairing%20The%20Board%20final.pdf
)
According
to a Spencer Stewart survey of board members. 64% agree or strongly agree that splitting the positions results in more independent
thought by directors, while 60% affirm that it leads to more effective CEO evaluations.
(See
http://www.corpgov.deloitte.com/binarv/com.epicentric.contentmanagement.servlet.ContentDelivervServlet/USEng/Documents/Board%20Governance/What%20Directors%20Think%202014
CorporateBoardMember.pdf, page 21.)
Please
vote to protect shareholder value:
Independent
Board Chairman- Proposal [4*]
Board
Recommendation
Our
board recommends a vote “AGAINST” this shareholder proposal
After
careful consideration, we have concluded at this time that the adoption of a policy mandating an independent Chairman would not
be in the best interests of our stockholders. We therefore recommend that you vote AGAINST this proposal for the following reasons:
The
board should retain the flexibility to determine the most effective leadership structure for the Company. We believe that our
stockholders’ interests are best served when the board has the flexibility to choose a leadership structure that can be
tailored to the needs of our Company. This choice should be based on the needs of the Company as they evolve over time and the
nature and qualifications of the individuals serving as Chief Executive Officer and as directors. The proponent’s proposal
mandates a particular leadership structure, limiting the board’s ability to leverage its particular and extensive knowledge
of the Company, its personnel and market conditions to make a determination that best serves our stockholders’ interests.
The members of the board have experience with and knowledge of the challenges and opportunities the Company faces at any given
time, and are therefore in the best position to choose the leadership structure that is most appropriate for the situation. Rigid
application of the proposal would deprive the board of the ability to evaluate the particular needs of Reed’s.
Stockholders
are best served by our current leadership structure. As described further in the “Leadership Structure” section of
this Proxy Statement, we have reviewed our Company’s current board leadership structure and determined that, in light of
the composition of the board, our company’s size, the nature of our business, the regulatory framework under which we operate,
our stockholder base, our peer group and other relevant factors, a combined Chairman/Chief Executive Officer position is currently
the most appropriate board leadership structure for our company. Furthermore, according to the Spencer Stuart board Index 2015,
only 21 of S&P 500 companies (4%) have adopted a formal policy requiring separation of the Chairman and Chief Executive Officer
roles.
The
board regularly seeks and considers feedback from stockholders. The board is open to, and regularly seeks and considers, feedback
from stockholders, including, with respect to governance topics like the Company’s leadership structure. As with other governance
matters, we will continue to consider, as appropriate, our Company’s leadership structure and how the leadership structure
can enhance the effectiveness of our corporate governance practices.
Accordingly,
the board of directors has concluded that this stockholder proposal is not in the best interests of our stockholders, and recommends
that stockholders vote “AGAINST” this proposal.
Vote
Required
The
affirmative vote of a majority of the votes cast is required to adopt the Proxy Access for Shareholders proposal. For purposes
of the vote on Proposal 5, abstentions and broker non-votes will not be counted as votes cast and thus will have no effect on
the result of the vote although they will count towards the presence of a quorum for Proposal 5. Unless a stockholder indicates
otherwise, each signed proxy will be voted
AGAINST
this Independent Board Chairman requirement under Proposal 5.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST
THE ADOPTION OF THIS STOCKHOLDER PROPOSAL ENTITLED PROXY ACCESS
FOR SHAREHOLDERS.
PROPOSAL
6
SHAREHOLDER
PROPOSAL ENTITLED “SHAREHOLDER PROXY ACCESS”
The
Company received notice of the intention of a shareholder to present a proposal for voting at 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 directed to the Company’s Secretary.
As
explained below, the board recommends that you vote “
AGAINST
” the shareholder proposal.
The
board of directors of Reed’s Inc. does not support the adoption of the resolution proposed below and asks shareholders to
consider management’s response, which follows the shareholder proposal.
REED
– Rule 14a-8 Proposal, July 7, 2016] Proposal [4*] - Shareholder Proxy Access
RESOLVED:
Shareholders of Reeds, Inc. (the “Company”) ask the board of directors (the “Board”) to adopt and present
for shareholder approval, a “proxy access” bylaw with
essential elements
for
substantial implementation
as follows:
Require
the Company to include in proxy materials for a shareholder meeting at which directors are to be elected, the name, Disclosure
and Statement (as defined herein) of any person nominated for election to the board by a shareholder or shareholder group (the
“Nominator”) that meets the criteria established below.
The
number of shareholder-nominated candidates appearing in proxy materials shall be
one quarter of directors then serving or two,
whichever is greater
. This bylaw should supplement existing rights under Company bylaws, providing that a Nominator must:
a)
have beneficially owned
3%
or more of the Company’s outstanding common stock, including recallable loaned stock,
continuously for at least
three years
before submitting the nomination and pledges to hold that stock through the annual
meeting;
b)
give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and
Securities and Exchange Commission (SEC) rules about (i) the nominee, including consent to being named in proxy materials and
to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”);
and
c)
certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s
communications with Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws
and regulations if it uses soliciting material other than Company proxy materials; and (iii) to the best of its knowledge, the
required shares were acquired in the ordinary course of business, not to change or influence Company control.
No
limitation shall be placed on the number of shareholders that can aggregate their shares to achieve the 3% stock ownership requirement.
No
limitation shall be imposed on the re-nomination of shareholder nominees based on the number or percentage of votes received in
any election
.
The
Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”).
The board should adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the
Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority given to multiple nominations
exceeding the one-quarter limit.
Supporting
Statement: Long-term shareholders need a meaningful voice in nominating directors. The SEC’s proxy access Rule 14a-11 (https://www.sec.gov/rules/final/2010/33-
9136.pdf) was vacated, in part, for inadequate cost-benefit analysis.
Proxy Access in the United States
(http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n9.1),
a CFA Institute cost- benefit analysis, found proxy access would benefit markets and boardrooms, with “little cost or disruption,”
raising market capitalization by up to $140.3 billion.
Public Versus Private Provision of Governance
(http://ssrn.com/abstract=2635695)
found a 0.5% average shareholder value increase for proxy access targeted firms.
Enhance
shareholder value. Vote for Shareholder Proxy Access – Proposal [4*]
Board
Recommendation
Our
board recommends a vote “AGAINST” this shareholder proposal
The
board is aware of the popularity of proxy access shareholder proposals and the actions by other well-recognized companies in adopting
proxy access. The board is committed to high standards of governance and continually examines its corporate governance practices.
The board believes that its current corporate governance system provides for an appropriate and productive level of corporate
oversight and that the adoption of a “proxy access” bylaw as envisioned by the proponent above would not at this time
be a productive means to provide stockholders greater involvement in the Company’s corporate governance. The board therefore
recommends a vote against this proposal for the following reasons:
We
Have an Established Record of Best Governance Practices and are Responsive to Shareholders.
There
are a number of other key protections currently in place for shareholders of the Company, including:
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Any
shareholder may nominate directors pursuant to the Company’s amended and restated bylaws and solicit proxies for director
nominees under federal proxy rules;
|
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●
|
Any
shareholder may submit proposals for consideration at the Company’s annual meeting and for inclusion in the Company’s
proxy statement, subject to certain conditions and SEC rules and regulations; and
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●
|
Stockholder
may express their views on our executive compensation program through an annual “say-on-pay” vote; and
|
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●
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We
have majority voting.
|
If
implemented, proxy access may prove to be disruptive and not in the best interests of the Company and its shareholders for many
reasons, including the following:
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 of directors.
Increasing
Likelihood of Special Interest Directors.
Proxy access could allow an individual shareholder (or minority group of shareholders)
with narrowly tailored special interests or short term goals, and who are not required to hold their shares for any period of
time following the submission of nominees, to use proxy access to promote an agenda which favors the interests of the minority
rather than the long-term interests of all shareholders. Moreover, proxy-access places no prohibition on nominating shareholders
from separately compensating their director nominees on an ongoing basis, virtually assuring that the primary focus of such nominees
would be to implement the narrowly tailored interests of such shareholder groups.
Expense.
Proxy access sets up a procedure that facilitates proxy contests and contested elections that can be expensive and disruptive,
and creates an uneven playing field in which the Company bears substantial expense while the shareholder and its director nominee
need expend little resources to promote its candidacy. In the absence of proxy access, however, the playing field is leveled,
as the shareholder nominee would similarly need to undertake the expense of soliciting proxies on the nominee’s behalf.
Disruption
.
The board is united by a common purpose to maximize long-term shareholder value and strives to promote corporate policies that
it believes to be in the best interests of the Company and all its shareholders. Proxy access could create a politicized environment
among directors and between management and the board, particularly if shareholder-nominated directors were focused on pursuing
special interests.
Vote
Required
The
affirmative vote of a majority of the votes cast is required to adopt the Proxy Access for Shareholders proposal. For purposes
of the vote on Proposal 6, abstentions and broker non-votes will not be counted as votes cast and thus will have no effect on
the result of the vote although they will count towards the presence of a quorum for Proposal 6. Unless a stockholder indicates
otherwise, each signed proxy will be voted
AGAINST
this Proxy Access for Shareholders Proposal 6.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST
THE ADOPTION OF THIS STOCKHOLDER PROPOSAL ENTITLED PROXY ACCESS
FOR SHAREHOLDERS.
BOARD
AND COMMITTEE MEETINGS
During
the 2015 fiscal year, members of the board of directors met 14 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.
ATTENDANCE
OF BOARD MEMBERS AT ANNUAL STOCKHOLDERS’ MEETING
The
Company does not have a policy for attendance of board members at annual stockholder’s meetings.
BOARD
STRUCTURE AND COMMITTEES
As
of the date of this Proxy Statement, our board of directors has five directors and the following three standing committees: an
Audit Committee, a Compensation Committee and a Governance Committee. These committees were formed in January 2007.
Board
Determination of Independence
Under
applicable NYSE MKT 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 board has determined that John Bello, Stefan Freeman, Lewis Jaffe and Charles F Cargile do not have relationships
that would interfere with the exercise 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 MKT 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 as well.
Committees
The
board has established Audit, Compensation and Governance Committees. The board has adopted a written charter for each of these
three committees and Corporate Governance Guidelines that address the make-up and functioning of the board. The board has also
adopted a Code of Business Conduct and Ethics that applies to all of the Company’s directors, officers and employees. The
committee charters, Corporate Governance Guidelines and Code of Business Conduct and Ethics are posted on our website at
www.reedsinc.com
.
Audit
Committee
.
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:
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selecting,
hiring and terminating our independent auditors;
|
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●
|
evaluating
the qualifications, independence and performance of our independent auditors;
|
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●
|
approving
the audit and non-audit services to be performed by our independent auditors;
|
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●
|
reviewing
the design, implementation, adequacy and effectiveness of our internal controls and critical accounting policies;
|
|
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●
|
overseeing
and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they
relate to financial statements or accounting matters;
|
|
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●
|
reviewing,
with management and our independent auditors, any earnings announcements and other public announcements regarding our results
of operations; and
|
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●
|
preparing
the audit committee report that the “SEC” requires in our annual proxy statement.
|
Our
Audit Committee is comprised of Daniel S.J. Muffoletto, Mr. Jaffe and Michael Fischman. Dr. Muffoletto serves as Chairman of the
Audit Committee. We believe Dr. Muffoletto meets SEC requirements of an “audit committee financial expert” within
the meaning of the Sarbanes Oxley Act of 2002, Section 407(b).
Compensation
Committee
.
Our Compensation Committee assists our board in determining and developing plans for the compensation
of our officers, directors and employees. Our Compensation Committee is comprised of Mr. Jaffe and Mr. Fischman.
Specific
responsibilities include the following:
|
●
|
approving
the compensation and benefits of our executive officers;
|
|
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|
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●
|
reviewing
the performance objectives and actual performance of our officers; and
|
|
|
|
|
●
|
administering
our stock option and other equity compensation plans. .
|
Governance
Committee
.
Our Governance Committee assists the board by identifying and recommending individuals qualified to
become members of our board, reviewing correspondence from our stockholders, and establishing, evaluating and overseeing our corporate
governance guidelines. Our Governance Committee is currently comprised of Mr. Jaffe and Mr. Fischman.
Specific
responsibilities include the following:
|
●
|
evaluating
the composition, size and governance of our board of directors and its committees and making recommendations regarding future
planning and the appointment of directors to our committees;
|
|
|
|
|
●
|
establishing
a policy for considering stockholder nominees for election to our board of directors; and
|
|
|
|
|
●
|
evaluating
and recommending candidates for election to our board of directors.
|
Leadership
Structure
The
business of our Company is managed under the direction of the board of directors, which is elected by the Company’s stockholders.
The basic responsibility of the board is to lead the Company by exercising its business judgment to act in what each director
believes to be in the best interests of the Company and its stockholders. The board’s historical leadership structure combined
the position of Chairman and Chief Executive Officer, and Christopher J. Reed, the Company’s founder, has held that dual
position. The Company believed that the combination of these two positions was, at the time an appropriate and suitable structure
for the board’s function and efficiency, as Mr. Reed serves as the direct link between senior management and the board.
Furthermore, as the Company’s founder, Mr. Reed was in a position to provide critical insight to the board and feedback
to senior management through his long-term relationships and understanding of the Company’s business and prospects.
As
noted earlier, in 2015 your company focused on strengthening the daily management of the team by obtaining the services of industry
experts in their specific fields of operations and finance. It was the intent to begin the process of strengthening the leadership
of the board as funds became available. The resignation of Mark Harris accelerated the timing of the leadership enhancements.
Combined with the return of profitability and the concern of shareholders, your company has accelerated the need to complete the
board transformation. The four new independent directors bring proven, vetted and a camaraderie that will lead the company forward.
Risk
Oversight
The
board is responsible for overseeing management and the business affairs of the Company, which includes the oversight of risk.
In exercising its oversight, the board has 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 board is provided the information and
resources to assess management’s handling of the Company’s approach to risk management. The Audit Committee also has
oversight responsibility for the Company’s financial risk (such as accounting, finance, internal control and tax strategy),
and the Audit Committee or the full board receives and reviews, as appropriate, the reports of the Company’s internal auditors
regarding the results of their annual Company-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’s executive compensation
plans and related laws and policies. The Governance Committee oversees compliance with governance-related laws and policies, including
the Company’s Corporate Governance Guidelines. The board as a whole has responsibility for overseeing management’s
handling of the Company’s strategic and operational risks. Throughout the year, senior management reports to the board the
risks that may be material to the Company, including those disclosed in the Company’s quarterly and annual reports filed
with the SEC. The goal of these processes is to achieve serious and thoughtful board-level attention to the nature of the material
risks faced by the Company and the adequacy of the Company’s risk management process and system. While the board recognizes
that the risks which the Company faces are not static, and that it is not possible to mitigate all risk and uncertainty all of
the time, the board believes that the Company’s approach to managing its risks provides the board with the proper foundation
and oversight perspective with respect to management of the material risks facing the Company.
Executive
Sessions of Non-Management and Independent Directors
During
2016, the Company’s non-management directors, all of whom are considered to be “independent” as defined under
the listing standards of the NYSE MKT and within the meaning of the Sarbanes Oxley Act of 2002, Section 301(3), were provided
with the opportunity to meet in executive sessions of the board in which management directors and other members of management
did not participate. At each audit committee meeting, the independent board members are afforded time to ask questions of the
auditors and/or hold private discussions without the Company management present.
Stockholder
Communications with Our Board of Directors
Our
board has established a process for stockholders to communicate with the board of directors or with individual directors. Stockholders
who wish to communicate with our board or with individual directors should direct written correspondence to our principal executive
offices located at 13000 South Spring Street, Los Angeles, California 90061, attention: Judy Holloway Reed, Secretary. Any such
communication must contain:
|
●
|
a
representation that the stockholder is a holder of record of our capital stock;
|
|
|
|
|
●
|
the
name and address, as they appear on our books, of the stockholder sending such communication; and
|
|
|
|
|
●
|
the
class and number of shares of our capital stock that are beneficially owned by such stockholder.
|
Our
Secretary 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 Secretary
has the authority to discard the communication or to take appropriate legal action regarding such communication.
NOMINATION
OF 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, our Governance Committee will
strive to ensure that at least one director meets the criteria for an “audit committee financial expert” as defined
by SEC rules and that the majority of the directors comprising the board meet the definition of “independent director”
under NYSE MKT rules.
In
addition to the above considerations, the Governance Committee will consider 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. The Governance Committee will consider 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 consider 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 board 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, but 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 board 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. 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 criteria 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 REPORT
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 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 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 Committee has
sole authority to select the Company’s independent registered public accounting firm.
The
Audit 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 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.
All services provided by Weinberg and the related fees in the 2015 fiscal year were approved in accordance with the Audit Committee’s
policy.
Management
is responsible for preparing the Company’s financial statements so that they comply with generally accepted accounting principles
and fairly presents 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’s responsibility is to monitor and oversee these processes.
In
furtherance of its role, the Audit Committee has an annual agenda, which includes periodic reviews of the Company’s internal
controls and of areas of potential exposure for the Company such as litigation matters. The 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 Committee has reviewed and discussed with management (i) the audited financial statements of the Company
for the fiscal year ended December 31, 2015, (ii) the Company’s evaluation of the effectiveness of our internal control
over financial reporting as of December 31, 2015 and (iii) the related opinions by the Company’s independent registered
public accounting firm. The Audit Committee also has discussed with Weinberg & Company, P.A. the matters required to be discussed
by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as currently in effect. The Audit Committee also
has received written disclosures and a letter from Weinberg regarding its independence from the Company as required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Weinberg the independence
of that firm. Based upon 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 Report on Form 10K, as amended, for the fiscal
year ended December 31, 2015.
The
Audit Committee of the Board of Directors
Daniel
S.J. Muffoletto
Michael
Fischman
EXECUTIVE
OFFICERS AND DIRECTORS
The
following table sets forth certain information with respect to our directors and executive officers as of December 31, 2015:
Name
|
|
Position
|
|
Age
|
|
|
|
|
|
Christopher
J. Reed
|
|
President,
Chief Executive Officer and Chairman of the Board
|
|
57
|
Daniel
Miles
|
|
Chief
Financial Officer
|
|
60
|
Mark
Beaton
|
|
Chief
Operations Officer
|
|
52
|
Neal
Cohane
|
|
Senior
Vice President of Sales
|
|
56
|
Judy
Holloway Reed
|
|
Secretary
and Director
|
|
57
|
Mark
Harris
|
|
Director
|
|
61
|
Daniel
S.J. Muffoletto
|
|
Director
|
|
62
|
Michael
Fischman
|
|
Director
|
|
61
|
Business
Experience of Continuing Directors and Executive Officers
Christopher
J. Reed
founded our company in 1987. Mr. Reed has served as our Chairman, President and Chief Executive Officer since
our incorporation in 1991. Mr. Reed previously served as our Chief Financial Officer. 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.
Previously Mr. Reed worked in the oil and gas industry as a gas purification and liquefaction expert at AirProducts. Mr. Reed
received a B.S. in Chemical Engineering in 1980 from Rensselaer Polytechnic Institute in Troy, New York.
Daniel
V. Miles
is a licensed CPA in the State of California who started with Ernst & Young and progressed through financial
managerial roles within the beverage industry and other local business enterprises. Dan managed the financial sector for Coors’
largest distributor that grew 250% in 8 years via acquisitions of companies, brands and through organic growth. Dan and Mark Beaton,
Reed’s Chief Operating Officer, previously worked together at the Pepsi Bottling Group on projects that included the expansion
of existing facilities and the extension of new production sites. In the last five years Dan has held the position of interim
Chief Financial Officer for the Port of Long Beach, Director of Finance for the Central Basin Municipal Water District and multiple
other executive level consulting assignments.
Mark
Beaton
brings over 17 years of experience directing high-volume, multi-site operations for major Fortune 500 CPG companies
including Dr. Pepper/Snapple Group, Pepsi Bottling Group and United Parcel Service. Prior to joining Reed’s, Mark worked
as Vice President of Operations at the Dr. Pepper/Snapple Group from June 2007 through September 2014 where he drove operational
efficiencies and was responsible for leading and directing functions that focused on warehouse and distribution operations, inventory
management, environmental health and safety and a corporate real estate portfolio. While at Dr. Pepper, Mark was responsible for
leadership across the packaged beverage network of 160 distribution facilities that delivered 290 million cases and more than
$5 billion of annual sales. He worked as a beverage manufacturing and distribution consultant from October 2014 – February
2015. Additional positions throughout Mark’s career include the Director of Supply Chain Technology and Warehousing at Cadbury
Schweppes Bottling Group where he was responsible for developing and managing strategies for delivering productivity and process
improvement across 166 distribution centers in North America. Mark also served in Production, Maintenance and Product Availability
Manager Roles with the Pepsi Bottling Group. Mark began his career as a Hub Operations Supervisor at UPS and is a Certified Lean
Six Sigma Green Belt who also served in the United States Army.
Neal
Cohane
has served as Reed’s Senior Vice President of Sales and Marketing since March of 2008 and previously 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.
Judy
Holloway Reed
has been with the Company since 1992 and, as we have grown, has run the accounting, purchasing and shipping
and receiving departments at various times since the 1990s. Ms. Reed has been one of our directors since June 2004, and our Secretary
since October 1996. In the 1980s, Ms. Reed managed media tracking for a Los Angeles Infomercial Media Buying Group and was an
account manager with a Beverly Hills, California stock portfolio management company. She earned a Business Degree from MIU in
1981. Ms. Reed is the wife of Christopher J. Reed, our Chairman, President and Chief Executive Officer. Ms. Reed intends to resign
from the Board with the conclusion of the 2016 election.
Mark
Harris
has been a member of our Board of Directors since April 2005. Mr. Harris is an independent venture capitalist and
has been retired from the work force since 2002. In late 2003, Mr. Harris joined a group of Amgen colleagues in funding NeoStem,
Inc., a company involved in stem-cell storage, archiving, and research to which he is a founding angel investor. From 1991 to
2002, Mr. Harris worked at biotech giant Amgen managing much of the company’s media production for internal use and public
relations. Mr. Harris spent the decade prior working in the aerospace industry at Northrop with similar responsibilities. Mr.
Harris resigned June 1, 2016.
Daniel
S.J. Muffoletto, N.D.
has been a member of our Board of Directors from April 2005 to December 2006 and from January 2007
to the present. Dr. Muffoletto has practiced as a Naturopathic Physician since 1986. He has served as chief executive officer
of It’s Your Earth, a natural products marketing company, since June 2004. From 2003 to 2005, Dr. Muffoletto worked as Sales
and Marketing Director for Worthington, Moore & Jacobs, a Commercial Law League member firm serving FedEx, UPS, DHL and Kodak,
among others. From 2001 to 2003, he was the owner-operator of the David St. Michel Art Gallery in Montreal, Québec. From
1991 to 2001, Dr. Muffoletto was the owner/operator of a Naturopathic Apothecary, Herbal Alter*Natives of Seattle, Washington
and Ellicott City, Maryland. The apothecary housed Dr. Muffoletto’s Naturopathic practice. Dr. Muffoletto received a Bachelor
of Arts degree in Government and Communications from the University of Baltimore in 1977 and conducted postgraduate work in the
schools of Public Administration and Publication Design at the University of Baltimore from 1978 to 1979. In 1986, he received
his Doctorate of Naturopathic Medicine from the Santa Fe Academy of Healing, Santa Fe, New Mexico. Dr. Muffoletto was not re-elected
by shareholders at the 2015 Annual Shareholder meeting. He has not been re-nominated for the Board this year.
Michael
Fischman
has been a member of our Board of Directors since April 2005. Since 1998, Mr. Fischman has served as president
and chief executive officer of the APEX course, the corporate training division of the International Association of Human Values.
In addition, Mr. Fischman is a founding member and the director of training for USA at the Art of Living Foundation, a global
non-profit educational and humanitarian organization, at which he has coordinated over 200 personal development instructors since
1997. Mr. Fischman will resign effective the certification of the 2016 election results.
Executive
Compensation
Compensation
Overview
We
qualify as a “smaller reporting company” under the rules promulgated by the Securities and Exchange Commission, and
we have elected to comply with the disclosure requirements applicable to smaller reporting companies. Accordingly, this executive
compensation summary is not intended to meet the “Compensation Discussion and Analysis” disclosure required of larger
reporting companies.
Role
of the Compensation Committee
The
Compensation Committee’s primary functions are to assist the board of directors in meeting its responsibilities in regards
to oversight and determination of executive compensation and to review and make recommendations with respect to our major compensation
plans, policies and programs. All compensation for our Named Executive Officers is determined by the Compensation Committee of
our board of directors, which is composed only of independent directors. The Compensation Committee is charged with responsibility
for reviewing the performance and establishing the total compensation of our Named Executive Officers on an annual basis. The
Compensation Committee often discusses compensation matters as part of regularly scheduled board and committee meetings. The Compensation
Committee administers our equity compensation plans and is responsible for approving grants of equity awards under such plans.
Our Chief Executive Officer annually makes recommendations to the Compensation Committee regarding base salary, non-equity incentive
plan compensation and equity awards for the other Named Executive Officers and other executive officers. Such recommendations
are considered by the Compensation Committee; however, the Compensation Committee retains full discretion and authority over the
final compensation decisions for the Chief Executive Officer and the Named Executive Officers. The Compensation Committee acts
under the authority of a written charter, which is available on our website at
www.reedsinc.com
.
The
Compensation Committee has full authority to engage independent compensation consultants, but has not historically engaged such
a consultant. For the fiscal year 2016, the Compensation Committee did not use any current benchmark data in setting compensation
for the Named Executive Officers.
Compensation
Philosophy and Objectives
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 the stockholders. To do this, we currently offer a competitive total compensation package
consisting of: base salary; non-equity incentive plan compensation opportunities; and employee benefits including group health
insurance.
The
Compensation Committee believes that compensation for the Named Executive Officers should be based on our performance. Due to
the size of our Company, the performance of the Named Executive Officers directly affects all aspects of our results. The Compensation
Committee also considers our industry and geographic location norms in determining the various elements and amounts of compensation
for our Named Executive Officers.
Compensation
Structure
The
Compensation Committee establishes a base salary. Bonuses and stock option grants are discretionary depending on a combination
of the Named Executive Officer’s performance and the performance of the company as it relates to the Named Executive Officer’s
responsibilities. Named Executive Officers have the incentive to achieve above normal financial results for our business and to
be appropriately compensated for successfully achieving such performance. We believe the elements of our executive compensation
program will deliver long-term stockholder value and encourage executive officers to remain employed with our Company.
The
following table summarizes all compensation for fiscal years 2015 and 2014 received 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 and currently are our “Named Executive Officers”.
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
|
|
Chief
Executive Officer
|
|
2014
|
|
|
217,000
|
|
|
|
30,000
|
|
|
|
56,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
308,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
V. Miles
|
|
2015
|
|
|
113,414
|
|
|
|
4,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,800
|
|
|
|
119,214
|
|
Principal
Financial Officer
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
W. Tomsic
|
|
2015
|
|
|
84,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
107,206
|
|
(former
Principal Financial Officer) (6)
|
|
2014
|
|
|
105,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
109,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
J. Williams
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(former
Principal Financial Officer) (3)
|
|
2014
|
|
|
78,367
|
|
|
|
|
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
88,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Linesch,
|
|
2015
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
(former
Principal Financial Officer) (4)
|
|
2014
|
|
|
19,432
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thierry
Foucaut,
|
|
2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(former
Chief Operating Officer) (5)
|
|
2014
|
|
|
21,837
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
Beaton
|
|
2015
|
|
|
109,252
|
|
|
|
40,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,800
|
|
|
|
151,052
|
|
Chief
Operating Officer
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neal
Cohane
|
|
2015
|
|
|
210,000
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,067
|
|
|
|
256,067
|
|
SVP
sales
|
|
2014
|
|
|
190,833
|
|
|
|
30,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,500
|
|
|
|
232,333
|
|
(1)
|
The
amounts represent the fair value for all share-based payment awards, calculated on the date of grant in accordance with Financial
Accounting Standards, excluding any impact of assumed forfeiture rates.
|
|
|
(2)
|
Other
compensation include both cash payments and the estimated value of the use of company assets.
|
|
|
(3)
|
Reed’s
and David J. Williams agreed to a mutual separation on May 22, 2014.
|
|
|
(4)
|
James
Linesch resigned from his position as Chief Financial Officer effective January 30, 2014.
|
|
|
(5)
|
Thierry
Foucaut resigned from his position as Chief Operating Officer effective February 4, 2014.
|
|
|
(6)
|
Reed’s
and Lawrence W. Tomsic agreed to a mutual separation on May 29, 2015 and includes severance of $22,500
|
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, 2015
|
|
|
|
|
Number
of
|
|
|
Equity
Incentive
|
|
|
|
|
|
|
|
|
Number
of
|
|
|
Securities
|
|
|
Plan
Awards:
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Underlying
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Unexercised
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Options
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
Options
(#)
|
|
|
(#)
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Expiration
|
Name
and Position
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Unearned Options
|
|
|
Price
|
|
|
Date
|
Christopher
J. Reed, Chief Executive Officer
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
-
|
|
|
$
|
1.14
|
|
|
12/22/16
|
|
|
|
25,000
|
|
|
|
6,250
|
(1)
|
|
|
|
|
|
$
|
4.00
|
|
|
03/03/18
|
|
|
|
30,000
|
|
|
|
10,000
|
(2)
|
|
|
-
|
|
|
$
|
4.60
|
|
|
4/9/19
|
Daniel
Miles, Chief Financial Officer
|
|
|
33,333
|
|
|
|
66,667
|
(3)
|
|
|
-
|
|
|
$
|
5.01
|
|
|
5/08/20
|
Neal
Cohane, SVP Sales
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
-
|
|
|
$
|
1.14
|
|
|
12/21/16
|
|
|
|
30,000
|
|
|
|
10,000
|
(2)
|
|
|
-
|
|
|
$
|
4.00
|
|
|
03/03/18
|
|
|
|
30,000
|
|
|
|
20,000
|
(2)
|
|
|
-
|
|
|
$
|
4.60
|
|
|
04/09/19
|
|
|
|
40,000
|
|
|
|
30,000
|
(4)
|
|
|
-
|
|
|
$
|
5.01
|
|
|
01/15/20
|
Mark
Beaton, Chief Operating Officer
|
|
|
33,333
|
|
|
|
66,667
|
(3)
|
|
|
-
|
|
|
$
|
5.01
|
|
|
3/16/20
|
Vesting
of Options:
(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.
|
Director
Compensation
The
following table summarizes the compensation paid to our directors for the fiscal year ended December 31, 2015
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
Paid
in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive
Plan
|
|
|
All
Other
|
|
|
|
|
Name
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Judy
Holloway Reed
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,800
|
|
Mark
Harris
|
|
$
|
-
|
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,800
|
|
Daniel
S.J. Muffoletto
|
|
$
|
12,629
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
12,629
|
|
Michael
Fischman
|
|
$
|
1,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,200
|
|
(1)
|
Since
November 2007, Dr. Muffoletto receives $833 per month to serve as the Chairman of the Audit Committee.
|
Equity
Compensation Plan Information
The
following table provides information, as of December 31, 2015, with respect to equity securities authorized for issuance under
compensation plans:
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))(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
980,000
|
|
|
$
|
4.52
|
|
|
|
291,834
|
|
Equity
compensation plans not approved by security holders
|
|
|
341,261
|
|
|
$
|
5.17
|
|
|
|
-
|
|
TOTAL
|
|
|
1,321,261
|
|
|
$
|
4.69
|
|
|
|
291,834
|
|
Employment
Agreements
There
are no employment agreements with our executive officers. Mr. Reed is currently paid an annual salary of $227,000. Mr. Cohane
is paid an annual salary of 210,000. Mr. Miles and Mr. Beaton are currently paid an annual salary of $175,000. Any bonuses are
discretionary.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table reflects the beneficial common stock ownership of: (a) each of our directors, (b) each of our current named executive
officers, (c) each person known by us to be a beneficial holder of 5% or more of our common stock, and (d) all of our executive
officers and directors as a group, as of October 24, 2016.
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.
Named
Beneficial Owner
|
|
Number
of Shares
Beneficially Owned
|
|
|
Percentage
of Shares
Beneficially
Owned (1)
|
|
|
|
|
|
|
|
|
Directors
and Named Executive Officers
|
|
|
|
|
|
|
|
|
Christopher
J. Reed (2)
|
|
|
2,464,190
|
|
|
|
17.6
|
|
Judy
Holloway Reed (2)
|
|
|
2,464,190
|
|
|
|
17.6
|
|
Daniel
S.J. Muffoletto, N.D.
|
|
|
17
|
|
|
|
*
|
|
Michael
Fischman
|
|
|
0
|
|
|
|
*
|
|
Lewis
Jaffe
|
|
|
0
|
|
|
|
*
|
|
Daniel
Miles
|
|
|
38,000
|
|
|
|
*
|
|
Neal
Cohane
|
|
|
185,677
|
|
|
|
1.3
|
|
Directors
and executive officers as a group (5 persons)
|
|
|
2,454,038
|
|
|
|
18.9
|
|
Robert
Reed
|
|
|
800,000
|
|
|
|
5.7
|
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options or warrants currently
exercisable or exercisable within 60 days of October 21, 2016 are deemed outstanding for computing the percentage ownership
of the stockholder holding the options or warrants but are not deemed outstanding for computing the percentage ownership of
any other stockholder. Unless otherwise indicated in the footnotes to this table, we believe stockholders named in the table
have sole voting and sole investment power with respect to the shares set forth opposite such stockholder’s name. Percentage
of ownership is based on approximately 2,464,190 shares of common stock outstanding as of October 24, 2016.
|
|
|
(2)
|
Christopher
J. Reed and Judy Holloway Reed are husband and wife. The same number of shares of common stock is shown for each of them,
as they may each be deemed to be the beneficial owner of all of such shares.
|
CERTAIN
RELATIONSHIPS AND RELATED 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. 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. Prior to August 2005, we did not have independent directors
on our board to review and approve related party transactions. The entire board of directors reviewed related party transactions
prior to August 2005. The Governance Committee reviewed and approved all related party transactions entered into after August
2005 and will continue to do so in the future.
Since
the beginning of our fiscal year for the period ended December 31, 2015, we have participated in the following transactions in
which a related person had or will have a direct or indirect material interest:
Judy
Holloway Reed, our Secretary and director, is Christopher J. Reed’s spouse.
In
2005, we added three independent directors to our board. We will maintain at least three independent directors on our board in
the future. The board of directors, inclusive of at least a majority of these independent directors, who did not have an interest
in the transactions and had access, at our expense, to our or independent legal counsel, resolved to reauthorize all material
ongoing and past transactions, arrangements and relationships listed above. In addition, all future material affiliated transactions
and loans: (i) will be made or entered into on terms that are no less favorable to us than those that can be obtained from unaffiliated
third parties, (ii) and any forgiveness of loans must be approved by a majority of our independent directors who do not have an
interest in the transactions and who have access, at our expense, to our or independent legal counsel, and (iii) will comply with
the Sarbanes-Oxley Act and other securities laws and regulations.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers, directors and persons beneficially owning
more than 5% of the outstanding common stock of the Company to file reports of beneficial ownership and changes in beneficial
ownership with the Securities and Exchange Commission (“SEC”). Officers, directors, and greater than 10% beneficial
owners of common stock are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto, Reed’s believes that during the fiscal year ended
December 31, 2015, all of our officers and directors filed timely file reports required by Section 16(a).
Legal
Proceedings
There
are no material proceedings to which any of our directors, officers or affiliates, any owner of record or beneficial owner of
more than 5% of any class of our voting securities, or any associate of any such director, officer, affiliate, or security holder
is a party adverse to Reed’s or has a material interest adverse to Reed’s.
Code
of Ethics
We
have adopted a code of ethics that applies to all our executive officers and employees, including our principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our code of
ethics is posted on our website at
www.reedsgingerbrew.com
.
INVESTOR
INFORMATION
All
reports filed by the Company with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. In addition,
the public may read and copy materials filed by Reed’s with the SEC at the SEC’s public reference room located at
450 Fifth St., N.W., Washington, D.C. 20549. You can obtain information about the operation of the SEC’s Public Reference
Room by calling the SEC at 1-800-SEC-0330. Reed’s also provides copies of its Forms 8-K, 10-K, 10-Q, Proxy, Annual Report
and press releases at no charge to investors upon request and makes electronic copies of such reports and press releases available
through its website at www.reedsgingerbrew.com as soon as is practicable after filing such material with the SEC. Requests should
be sent to Reed’s, 13000 South Spring Street, Los Angeles, California 90061, attention: Judy Holloway Reed, Secretary.
ANNUAL
REPORT
Our
Annual Report on Form 10K for the fiscal year ended December 31, 2015, as amended, (“Annual Report”) has been mailed
to stockholders along with this Proxy Statement. We will, upon written request and without charge, provide to any person solicited
hereunder additional copies of our Annual Report, or exhibits thereto, as filed with the “SEC”. Requests should be
addressed to 13000 South Spring Street, Los Angeles, California 90061, attention: Judy Holloway Reed, Secretary. Also, such report
may be obtained from our Internet homepage at www.reedsgingerbrew.com.
STOCKHOLDER
PROPOSALS
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 2017 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 by no later than 120 calendar days before [ ],
2017- the anniversary date of this Proxy Statement was released to stockholders in connection with the 2016 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 To be determined, 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 2017 Annual Meeting of Stockholders.
Other
stockholder proposals
: A stockholder proposal not included in our proxy statement for the 2017 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 not less than 120 days in advance of the one-year anniversary of the
date of the previous year’s Annual Meeting of Stockholder. To be timely, a stockholder proposal to be included in our proxy
statement for the 2017 Annual Meeting of Stockholders must be received by our Secretary no later than [ ],
2017, 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, attention: Judy Holloway Reed, Secretary.
OTHER
MATTERS
We
are not aware of any business to be presented for consideration at the meeting, other than that specified in this Proxy Statement.
If any other matters are properly presented at the meeting, it is the intention of the persons named in the enclosed proxy to
vote in accordance with their best judgment.
It
is important that proxies be returned promptly, whether or not you expect to attend the Annual Meeting in person. We request that
you complete, date and sign the enclosed WHITE proxy card and return it promptly in the envelope provided for that purpose. By
returning your proxy promptly you can help us avoid the expense of follow-up mailings to ensure a quorum so that the meeting can
be held. Stockholders who attend the meeting may revoke a prior proxy and vote their proxy in person as set forth in this Proxy
Statement.
|
By
Order of the Board of Directors
|
|
|
|
/s/
Christopher Reed
|
|
Christopher
J. Reed
|
|
Chairman
of the Board
|
|
|
|
Los
Angeles, California
|
APPENDIX
A
Supplemental
Information Concerning Participants in the Company’s Solicitation of Proxies
The
following tables (“Directors and Nominees” and “Executive Officers”) set forth the name and business address
the directors and nominees of the Company and the name, present principal occupation and business address of each of the Company’s
executive officers who, under SEC rules, are considered to be participants in the Company’s solicitation of proxies from
its stockholders in connection with the Annual Meeting (collectively, the “Participants”).
Directors
and Nominees
The
principal occupations of the Company’s directors and nominees are included in the biographies under the section above titled
“Nominees for Election as Directors” and “Executive Officers and Directors”. The names of each director
and nominee are listed below, and the business addresses for all the directors and nominees is c/o Reed’s Inc., 13000 South
Spring Street, Los Angeles, California 90061.
Christopher
J. Reed
John
Bello
Stefan
Freeman
Lewis
Jaffe
Charles
Cargile
Judy
Reed
Michael
Fischman
Daniel
Muffoletto
Executive
Officers
The
executive officers who are considered Participants as well as their positions with the Company, which constitute their respective
principal occupations, are listed below. The business address for each person is c/o Reed’s Inc., 13000 South Spring Street,
Los Angeles, California 90061.
Name
|
|
Title
|
|
|
|
Christopher
J. Reed
|
|
President,
Chief Executive Officer and Chairman of the Board
|
Daniel
Miles
|
|
Chief
Financial Officer
|
Mark
Beaton
|
|
Chief
Operations Officer
|
Neal
Cohane
|
|
Senior
Vice President of Sales
|
Judy
Holloway Reed
|
|
Secretary
and Director
|
Information
Regarding Ownership of Company Securities by Participants
The
number of shares of common stock beneficially held as of October 21, 2016 by the Company’s directors and those executive
officers who are Participants appears in the “Security Ownership of Certain Beneficial Owners and Management” section
of this Proxy Statement. Except as described in this Appendix A or otherwise in this Proxy Statement, none of the persons listed
above in “Directors” and “Executive Officers” owns any debt or equity security issued by the Company of
record that he or she does not also own beneficially.
Transactions
in the Company’s Securities by Participants—Last Two Years
The
following table sets forth information regarding purchases and sales of the Company’s securities by each Participant during
the last two years. Unless otherwise indicated, all transactions were in the public market or pursuant to the Company’s
equity compensation plans, and no part of the purchase price or market value of those shares is represented by funds borrowed
or otherwise obtained for the purpose of acquiring or holding such securities.
Chris
Reed - Chief Executive Officer
Date
|
|
Shares
|
|
12/1/2015
|
|
|
(8,000
|
)
|
5/15/2016
|
|
|
10,000
|
|
8/16/2016
|
|
|
10,000
|
|
10/24/2016
|
|
|
50,000
|
|
Daniel
Miles Chief Financial Officer
Date
|
|
Shares
|
|
5/15/2016
|
|
|
10,000
|
|
8/23/2016
|
|
|
10,000
|
|
9/1/2016
|
|
|
5,000
|
|
9/7/2016
|
|
|
5,000
|
|
9/27/2016
|
|
|
8,000
|
|
Neal
Cohane Senior Vice President of Sales
Date
|
|
Shares
|
|
11/26/14
|
|
|
(100
|
)
|
5/15/2016
|
|
|
10,000
|
|
9/27/2016
|
|
|
13,500
|
|
10/24/2016
|
|
|
12,500
|
|
Miscellaneous
Information Regarding Participants
Except
as described in this Proxy Statement or this Appendix A, to the Company’s knowledge: none of the Participants (i) beneficially
owns (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, any shares or other securities of the
Company or any of the Company’s subsidiaries, (ii) has purchased or sold any of such securities within the past two years,
or (iii) is, or within the past year was, a party to any contract, arrangement or understanding with any person with respect to
any such securities.
Except
as disclosed in this Appendix A or this Proxy Statement, no associates of a “participant” beneficially owns, directly
or indirectly, any of our securities. Other than as disclosed in this Appendix A or this Proxy Statement, neither we nor any of
the “participants” have a substantial interest, direct or indirect, by security holdings or otherwise, in any matter
to be acted upon at the Annual Meeting. In addition, neither the Company nor any of the Participants has been within the past
year party to any contract, arrangement or understanding with any person with respect to any of our securities, including, but
not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division
of losses or profits or the giving or withholding of proxies. No participant has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) during the past ten years.
Other
than as set forth in this Proxy Statement or this Appendix A, none of the Participants or any of their associates have (i) any
arrangements or understandings with any person with respect to any future employment by the Company or the Company’s affiliates
or with respect to any future transactions to which the Company or any of its affiliates will or may be a party or (ii) a direct
or indirect material interest in any transaction or series of similar transactions since the beginning of the Company’s
last fiscal year or any currently proposed transactions, to which the Company or any of its subsidiaries was or is to be a party
in which the amount involved exceeded $120,000.
APPENDIX
B
AMENDMENT
TO THE AMENDED AND RESTATED BYLAWS
ARTICLE
I. MEETINGS OF STOCKHOLDERS
***
SECTION
5. NOMINATION OF DIRECTORS.
***
(b)
Content of Notice. A stockholder’s notice of nominations for a meeting of stockholders shall set forth: (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a director (1) such person’s name, (2) all information
relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (3) such person’s
written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (4) a completed and
signed written questionnaire with respect to the background and qualification of such person and the background of any other person
or entity on whose behalf the nomination is being made (which questionnaire shall be in the form used for other directors of the
Corporation and provided by the Secretary upon written request),
(5) a statement whether such person, if elected, intends to
tender, promptly following such person’s election or re-election, an irrevocable resignation effective upon such person’s
failure to receive the required vote for re-election at the next meeting at which such person would stand for re-election and
upon acceptance of such resignation by the board of directors, in accordance with any policies and procedures adopted by the board
of directors for such purpose and
(6) a written representation and agreement (in such form as shall be provided by the Secretary
upon written request) that such person (A) is not and will not become a party to (i) any agreement, arrangement or understanding
with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of
the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to
the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected
as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become
a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any
direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has
not been disclosed therein, and (C) and in such person’s individual capacity and on behalf of any person or entity on whose
behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with
all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading
policies and guidelines of the Corporation; and (b) as to the stockholder giving the notice (1) the name and address, as they
appear on the Corporation’s books, of such stockholder and any (A) person controlling, directly or indirectly, or acting
in concert with, such stockholder, (B) beneficial owner of shares of stock of the Corporation owned of record or beneficially
by such stockholder or (C) person controlling, controlled by or under common control with a person or beneficial owner identified
by (A) or (B) above (each, a “Stockholder Associated Person”), (2) the class and number of shares of stock of the
Corporation that are held of record or are beneficially owned by such stockholder or any Stockholder Associated Person, (3) a
description of all other securities or contracts, with a value derived in whole or in part from the value of any shares of stock
of the Corporation, held by or to which the stockholder or any Stockholder Associated Person is a party, (4) a description of
any material relationships, including financial transactions and compensation, between the stockholder and the proposed nominee(s),
and (5) a representation and other appropriate evidence that the stockholder is a holder of record of shares of stock of the Corporation
entitled to vote for the election of directors at the meeting, will continue to be a holder of record of shares of stock entitled
to vote for the election of directors through the date of the meeting, and intends to appear in person or by proxy at the meeting
to nominate the person(s) specified in the notice.
***
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