Exhibit 10.2

 

 

WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS
(I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND
IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT
AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND
(III) IF THE COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE COMPANY TO SUCH
EFFECT HAS BEEN RENDERED BY COUNSEL.

 

THIS WARRANT (AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT) IS
SUBJECT TO AN INVESTOR RIGHTS AGREEMENT, DATED AS OF THE DATE HEREOF, BY AND
AMONG JONES SODA CO. (THE “COMPANY”), CERTAIN SHAREHOLDERS OF THE COMPANY, AND
THE ORIGINAL HOLDER HEREOF (AS AMENDED FROM TIME TO TIME, THE “RIGHTS
AGREEMENT”). NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH RIGHTS AGREEMENT.

 

Original Issue Date: July 11, 2019

 

For value received, Jones Soda Co., a Washington corporation (the “Company”),
hereby certifies that Heavenly RX Ltd., a British Columbia corporation, or its
registered assigns (the “Holder”) is entitled to purchase from the Company
15,000,000 duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock at a purchase price per share of $0.78 (subject to adjustment as
provided herein, the “Exercise Price”), all subject to the terms, conditions and
adjustments set forth below in this Warrant. Certain capitalized terms used
herein are defined in Section 1 hereof.

 

This Warrant has been issued pursuant to the terms of the Securities Purchase
Agreement, dated as of the date hereof (the “Purchase Agreement”), between the
Company and the Holder.

 

1.                   Definitions. As used in this Warrant, the following terms
have the respective meanings set forth below:

 

“Aggregate Exercise Price” means an amount equal to the product of (a) the
number of Warrant Shares in respect of which this Warrant is then being
exercised pursuant to Section 3 hereof, multiplied by (b) the Exercise Price in
effect as of the Exercise Date in accordance with the terms of this Warrant.

 

“Board” means the board of directors of the Company.

 

 

 

“Business Day” means any day, except a Saturday, Sunday or legal holiday, on
which banking institutions in either Toronto, Canada or Seattle, Washington are
authorized or obligated by law or executive order to close.

 

“Common Stock” means the common stock, no par value per share, of the Company,
and any capital stock into which such Common Stock shall have been converted,
exchanged or reclassified following the date hereof.

 

“Company” has the meaning set forth in the preamble.

 

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock, but excluding Options.

 

“Excluded Securities” has the meaning set forth in the Rights Agreement.

 

“Exercise Date” means, for any given exercise of this Warrant, the date on which
the Warrant is exercised in accordance with Section 3.

 

“Exercise Agreement” has the meaning set forth in Section 3(a).

 

“Exercise Period” has the meaning set forth in Section 2.

 

“Exercise Price” has the meaning set forth in the preamble.

 

“Holder” has the meaning set forth in the preamble.

 

“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

“Original Issue Date” means July 11, 2019

 

“Person” means any individual, corporation, limited or general partnership,
limited liability company, limited liability partnership, trust, association,
joint venture, governmental entity, or other entity.

 

“Purchase Agreement” has the meaning set forth in the preamble.

 

“Rights Agreement” has the meaning set forth in the preamble.

 

“Warrant” means this Warrant and all warrants issued upon division or
combination of, or in substitution for, this Warrant.

 

“Warrant Shares” means the shares of Common Stock or other capital stock of the
Company then purchasable upon exercise of this Warrant in accordance with the
terms of this Warrant.

 

2.                  Term of Warrant. Subject to the terms and conditions hereof,
at any time or from time to time after the date hereof and prior to 5:00 p.m.,
Seattle, Washington time, on July 11, 2020, or if such day is not a Business
Day, on the next preceding Business Day (the “Exercise Period”), (a) the Holder
of this Warrant may exercise this Warrant for all or any part of the Warrant
Shares purchasable hereunder (subject to adjustment as provided herein) in
accordance with Section 3(a) or (b) this Warrant shall automatically be
exercised in accordance with Section  3(b).

 

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3.                  Exercise of Warrant. 

 

(a)                 Exercise by Holder. This Warrant may be exercised by the
Holder from time to time on any Business Day during the Exercise Period, for all
or any part of the unexercised Warrant Shares. In the event of such voluntary
exercise, the Holder shall (A) surrender this Warrant to the Company at its then
principal executive offices (or an indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction), together with an
Exercise Agreement in the form attached hereto as Exhibit A (each, an “Exercise
Agreement”), duly completed (including specifying the number of Warrant Shares
to be purchased) and executed; and (B) pay to the Company of the Aggregate
Exercise Price in accordance with Section 3(c).

 

(b)                Automatic Exercise. This Warrant shall be automatically
exercised on any Business Day during the Exercise Period in which the conditions
set forth in this Section 3(b) are satisfied. In the event of such automatic
exercise, the Holder shall (A) be deemed to have (i) exercised this Warrant
(such that the Warrant shall be deemed to have been automatically amended such
that it shall only be exercisable for the remainder of the Warrant that was not
subject to automatic exercise and the Holder shall be issued a new Warrant
pursuant to Section 3(f) below reflecting such amendment) and (ii) completed the
Exercise Agreement as to that portion of the Warrant for which it has been
automatically exercised; and (B) pay to the Company of the Aggregate Exercise
Price in accordance with this Section 3(b) and Section 3(c).

 

(i)                  If the Company’s closing share price as reported on the
OTCQB Marketplace, or its then primary trading market, is equal to or greater
than $1.78 for at least five (5) consecutive trading days, this Warrant shall be
automatically exercised with respect to 25% of the total number of Warrant
Shares, with funds payable to the Company within ten (10) Business Days of the
Company’s notice to the Holder of such automatic exercise;

 

(ii)                If the Company’s closing share price as reported on the
OTCQB Marketplace, or its then primary trading market, is equal to or greater
than $2.12 for at least five (5) consecutive trading days, this Warrant shall be
automatically exercised with respect to 25% of the total number of Warrant
Shares (including any Warrant Shares automatically exercised pursuant to Section
3(b)(i)), with funds payable to the Company within ten (10) Business Days of the
Company’s notice to the Holder of such automatic exercise;

 

(iii)              If the Company’s closing share price as reported on the OTCQB
Marketplace, or its then primary trading market, is equal to or greater than
$2.36 for at least five (5) consecutive trading days, this Warrant shall be
automatically exercised with respect to 25% of the total number of Warrant
Shares (including any Warrant Shares automatically exercised pursuant to Section
3(b)(i) or 3(b)(ii)), with funds payable to the Company within ten (10) Business
Days of the Company’s notice to the Holder of such automatic exercise; and

 

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(iv)               If the Company’s closing share price as reported on the OTCQB
Marketplace, or its then primary trading market, is equal to or greater than
$2.60 for at least five (5) consecutive trading days, this Warrant shall be
automatically exercised with respect to the remaining number of Warrant Shares,
with funds payable to the Company within ten (10) Business Days of the Company’s
notice to the Holder of such automatic exercise.

 

If an automatic exercise of the Warrant is triggered pursuant to this Section
3(b) and the Holder fails to pay the Aggregate Exercise Price as required under
this Section 3(b), this Warrant shall terminate in its entirety with respect to
the Warrant Shares not yet issued pursuant to this Warrant. Notwithstanding
anything to the contrary in this Warrant, the parties acknowledge and agree that
the termination of this Warrant shall constitute the sole and exclusive remedy
of the Company with respect to the failure of the Holder to pay the Aggregate
Exercise Price in the event of an automatic exercise. If the Company (A)
subdivides (by any stock split, recapitalization or otherwise) its outstanding
shares of Common Stock into a greater number of shares or (B) combines (by
combination, reverse stock split or otherwise) its outstanding shares of Common
Stock into a smaller number of shares, the applicable trading price of the
Common Stock for purposes of this Section 3(b) shall be proportionately
adjusted.

 

(c)                 Payment of the Aggregate Exercise Price. Upon exercise of
the Warrant pursuant to Section 3(a) or 3(b), payment of the Aggregate Exercise
Price shall be made by wire transfer of immediately available funds to an
account designated in writing by the Company, in the amount of such Aggregate
Exercise Price.

 

(d)                Delivery of Shares via Book Entry. Upon receipt by the
Company of the Exercise Agreement, surrender of this Warrant and payment of the
Aggregate Exercise Price (in accordance with Section 3(a) or 3(b) hereof, as
applicable), the Company shall, as promptly as practicable, and in any event
within two (2) Business Days thereafter, deliver to the Holder the Warrant
Shares issuable upon such exercise via book entry with the Company’s transfer
agent. The Warrant Shares so delivered shall be registered in the name of the
Holder or, subject to compliance with Section 7 below, such other Person's name
as shall be designated in the Exercise Agreement. This Warrant shall be deemed
to have been exercised and such Warrant Shares shall be deemed to have been
issued, and the Holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares for all
purposes, as of the Exercise Date.

 

(e)                 No Fractional Shares. As to any fraction of a Warrant Share
that the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall round up and deliver a whole Warrant Share to the Holder.

 

(f)                  Delivery of New Warrant. Unless the purchase rights
represented by this Warrant shall have expired or shall have been fully
exercised, the Company shall, at the time of delivery of the Warrant Shares
being issued via book entry with the Company’s transfer agent in accordance with
Section 3(d) hereof, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unexpired and unexercised Warrant Shares called
for by this Warrant. Such new Warrant shall in all other respects be identical
to this Warrant.

 

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(g)                Valid Issuance of Warrant and Warrant Shares; Payment of
Taxes. With respect to the exercise of this warrant, the Company hereby
represents, covenants and agrees:

 

(i)                  This Warrant is, and any Warrant issued in substitution for
or replacement of this Warrant shall be, upon issuance, duly authorized and
validly issued.

 

(ii)                All Warrant Shares issuable upon the exercise of this
Warrant pursuant to the terms hereof shall be, upon issuance, and the Company
shall take all such actions as may be necessary or appropriate in order that
such Warrant Shares are, validly issued, fully paid and non-assessable, issued
without violation of any preemptive or similar rights of any shareholder of the
Company and free and clear of all taxes, liens and charges.

 

(iii)              The Company shall take all such actions as may be necessary
to ensure that all such Warrant Shares are issued without violation by the
Company of any applicable law or governmental regulation or any requirements of
any domestic securities exchange or trading market upon which shares of Common
Stock or other securities constituting Warrant Shares may be listed at the time
of such exercise (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance).

 

(iv)               The Company shall use its best efforts to cause the Warrant
Shares, immediately upon such exercise, to be listed on any domestic securities
exchange or trading market upon which shares of Common Stock or other securities
constituting Warrant Shares are listed at the time of such exercise.

 

(v)                The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with respect to,
the issuance or delivery of Warrant Shares upon exercise of this Warrant;
provided, that the Company shall not be required to pay any tax or governmental
charge that may be imposed with respect to any applicable withholding or the
issuance or delivery of the Warrant Shares to any Person other than the Holder,
and no such issuance or delivery shall be made unless and until the Person
requesting such issuance has paid to the Company the amount of any such tax, or
has established to the satisfaction of the Company that such tax has been paid.

 

4.                  Adjustment to Exercise Price and Number of Warrant Shares.
In order to prevent dilution of the purchase rights granted under this Warrant,
the Exercise Price and the number of Warrant Shares issuable upon exercise of
this Warrant shall be subject to adjustment from time to time as provided in
this Section 4 (in each case, after taking into consideration any prior
adjustments pursuant to this Section 4).

 

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(a)                 Adjustment to Exercise Price and Warrant Shares Upon
Dividend, Subdivision or Combination of Common Stock. If the Company shall, at
any time or from time to time after the Original Issue Date, (i) pay a dividend
or make any other distribution upon the Common Stock or any other capital stock
of the Company payable in shares of Common Stock or in Options or Convertible
Securities, or (ii) subdivide (by any stock split, recapitalization or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to any such dividend,
distribution or subdivision shall be proportionately reduced and the number of
Warrant Shares issuable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by combination, reverse stock
split or otherwise) its outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of Warrant Shares issuable
upon exercise of this Warrant shall be proportionately decreased. Any adjustment
under this Section 4(a) shall become effective at the close of business on the
date the dividend, subdivision or combination becomes effective.

 

(b)                Adjustment to Exercise Price and Warrant Shares Upon
Reorganization, Reclassification, Consolidation or Merger. In the event of any
(i) capital reorganization of the Company, (ii) reclassification of the stock of
the Company (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), (iii) consolidation or merger
of the Company with or into another Person, (iv) sale of all or substantially
all of the Company's assets to another Person or (v) other similar transaction
(other than any such transaction covered by Section 4(a)), in each case which
entitles the holders of Common Stock to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock, each Warrant shall, immediately after such
reorganization, reclassification, consolidation, merger, sale or similar
transaction, remain outstanding and shall thereafter, in lieu of or in addition
to (as the case may be) the number of Warrant Shares then exercisable under this
Warrant, be exercisable for the kind and number of shares of stock or other
securities or assets of the Company or of the successor Person resulting from
such transaction to which the Holder would have been entitled upon such
reorganization, reclassification, consolidation, merger, sale or similar
transaction if the Holder had exercised this Warrant in full immediately prior
to the time of such reorganization, reclassification, consolidation, merger,
sale or similar transaction and acquired the applicable number of Warrant Shares
then issuable hereunder as a result of such exercise (without taking into
account any limitations or restrictions on the exercisability of this Warrant);
and, in such case, appropriate adjustment (in form and substance satisfactory to
the Holder) shall be made with respect to the Holder's rights under this Warrant
to insure that the provisions of this Section 4 hereof shall thereafter be
applicable, as nearly as possible, to this Warrant in relation to any shares of
stock, securities or assets thereafter acquirable upon exercise of this Warrant
(including, in the case of any consolidation, merger, sale or similar
transaction in which the successor or purchasing Person is other than the
Company, an immediate adjustment in the Exercise Price to the value per share
for the Common Stock reflected by the terms of such consolidation, merger, sale
or similar transaction, and a corresponding immediate adjustment to the number
of Warrant Shares acquirable upon exercise of this Warrant without regard to any
limitations or restrictions on exercise, if the value so reflected is less than
the Exercise Price in effect immediately prior to such consolidation, merger,
sale or similar transaction). The provisions of this Section 4(b) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or similar transactions. The Company shall not
effect any such reorganization, reclassification, consolidation, merger, sale or
similar transaction unless, prior to the consummation thereof, the successor
Person (if other than the Company) resulting from such reorganization,
reclassification, consolidation, merger, sale or similar transaction, shall
assume, by written instrument substantially similar in form and substance to
this Warrant and satisfactory to the Holder, the obligation to deliver to the
Holder such shares of stock, securities or assets which, in accordance with the
foregoing provisions, such Holder shall be entitled to receive upon exercise of
this Warrant. Notwithstanding anything to the contrary contained herein, with
respect to any corporate event or other transaction contemplated by the
provisions of this Section 4(b), the Holder shall have the right to elect prior
to the consummation of such event or transaction, to give effect to the exercise
rights contained in Section 2 instead of giving effect to the provisions
contained in this Section 4(b) with respect to this Warrant.

 

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(c)                 Certain Events. If any event of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features) occurs, then the
Board shall make an appropriate adjustment in the Exercise Price and the number
of Warrant Shares issuable upon exercise of this Warrant so as to protect the
rights of the Holder in a manner consistent with the provisions of this Section
4; provided, that no such adjustment pursuant to this Section 4(c) shall
increase the Exercise Price or decrease the number of Warrant Shares issuable as
otherwise determined pursuant to this Section 4.

 

(d)                Certificate as to Adjustment.

 

(i)                  As promptly as reasonably practicable following any
adjustment of the Exercise Price, but in any event not later than two Business
Days thereafter, the Company shall furnish to the Holder a certificate of an
executive officer setting forth in reasonable detail such adjustment and the
facts upon which it is based and certifying the calculation thereof.

 

(ii)                As promptly as reasonably practicable following the receipt
by the Company of a written request by the Holder, but in any event not later
than five Business Days thereafter, the Company shall furnish to the Holder a
certificate of an executive officer certifying the Exercise Price then in effect
and the number of Warrant Shares or the amount, if any, of other shares of
stock, securities or assets then issuable upon exercise of the Warrant.

 

(e)                 Notices. In the event:

 

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(i)                  that the Company takes a record of the holders of its
Common Stock (or other capital stock or securities at the time issuable upon
exercise of the Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, to vote at a meeting (or by written
consent), to receive any right to subscribe for or purchase any shares of
capital stock of any class or any other securities, or to receive any other
security;

 

(ii)                of any capital reorganization of the Company, any
reclassification of the Common Stock of the Company, any consolidation or merger
of the Company with or into another Person, or sale of all or substantially all
of the Company's assets to another Person; or

 

(iii)              of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

 

then, and in each such case, the Company shall send or cause to be sent to the
Holder at least ten (10) Business Days prior to the applicable record date or
the applicable expected effective date, as the case may be, for the event, a
written notice specifying, as the case may be, (A) the record date for such
dividend, distribution, meeting or consent or other right or action, and a
description of such dividend, distribution or other right or action to be taken
at such meeting or by written consent, or (B) the effective date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up is proposed to take place, and the date, if any is to
be fixed, as of which the books of the Company shall close or a record shall be
taken with respect to which the holders of record of Common Stock (or such other
capital stock or securities at the time issuable upon exercise of the Warrant)
shall be entitled to exchange their shares of Common Stock (or such other
capital stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and the amount per share and character of such
exchange applicable to the Warrant and the Warrant Shares.

 

5.                  Purchase Rights. In addition to any adjustments pursuant to
Section 4 above, if at any time the Company grants, issues or sells any shares
of Common Stock, Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of Common
Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder would have acquired if the Holder had held the number of
Warrant Shares acquirable upon complete exercise of this Warrant immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights. Anything herein to the contrary notwithstanding, the
Holder shall not be entitled to the Purchase Rights granted herein with respect
to the issuance of any Excluded Securities.

 

6.                  Investor Rights Agreement. This Warrant and all Warrant
Shares issuable upon exercise of this Warrant are and shall become subject to,
and have the benefit of, the Rights Agreement.

 

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7.                  Transfer of Warrant. Subject to the transfer conditions
referred to in the legend endorsed hereon and the terms and conditions of the
Rights Agreement, this Warrant and all rights hereunder are transferable, in
whole or in part, by the Holder to any Affiliate (as defined in the Purchase
Agreement) of Holder without charge to the Holder, upon surrender of this
Warrant to the Company at its then principal executive offices with a properly
completed and duly executed Assignment in the form attached hereto as Exhibit B.
Upon such compliance, surrender and delivery, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant, if any,
not so assigned and this Warrant shall promptly be cancelled.

 

8.                  Holder Not Deemed a Shareholder; Limitations on Liability.
Except as otherwise explicitly provided herein, prior to the issuance to the
Holder of the Warrant Shares to which the Holder is then entitled to receive
upon the due exercise of this Warrant, the Holder shall not be entitled to vote
or receive dividends or be deemed the holder of shares of capital stock of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, as such, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

 

9.                  Replacement on Loss; Division and Combination.

 

(a)                 Replacement of Warrant on Loss. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and upon delivery of an indemnity reasonably
satisfactory to it (it being understood that a written indemnification agreement
or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case
of mutilation, upon surrender of such Warrant for cancellation to the Company,
the Company at its own expense shall execute and deliver to the Holder, in lieu
hereof, a new Warrant of like tenor and exercisable for an equivalent number of
Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed; provided,
that, in the case of mutilation, no indemnity shall be required if this Warrant
in identifiable form is surrendered to the Company for cancellation.

 

(b)                Division and Combination of Warrant. Subject to compliance
with the applicable provisions of this Warrant and the Rights Agreement as to
any transfer or other assignment which may be involved in such division or
combination, this Warrant may be divided or, following any such division of this
Warrant, subsequently combined with other Warrants, upon the surrender of this
Warrant or Warrants to the Company at its then principal executive offices,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the respective Holders or their agents
or attorneys. Subject to compliance with the applicable provisions of this
Warrant and the Rights Agreement as to any transfer or assignment which may be
involved in such division or combination, the Company shall at its own expense
execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants so surrendered in accordance with such notice. Such new Warrant or
Warrants shall be of like tenor to the surrendered Warrant or Warrants and shall
be exercisable in the aggregate for an equivalent number of Warrant Shares as
the Warrant or Warrants so surrendered in accordance with such notice.

 

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10.              No Impairment. The Company shall not, by amendment of its
Articles of Incorporation or Bylaws, or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed by it hereunder, but shall at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may reasonably be requested by
the Holder in order to protect the exercise rights of the Holder against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant.

 

11.              Compliance with the Securities Act.

 

(a)                 Agreement to Comply with the Securities Act; Legend. The
Holder, by acceptance of this Warrant, agrees to comply in all respects with the
provisions of this Section 11 and the restrictive legend requirements set forth
on the face of this Warrant and further agrees that such Holder shall not offer,
sell or otherwise dispose of this Warrant or any Warrant Shares to be issued
upon exercise hereof except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended (the “Securities Act”). This
Warrant and all Warrant Shares issued upon exercise of this Warrant (unless
registered under the Securities Act) shall be stamped or imprinted with a legend
in substantially the form:

 

“THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR
SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS
(I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND
IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT
AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW.”

 

(b)                Representations of the Holder. In connection with the
issuance of this Warrant, the Holder specifically represents, as of the date
hereof, to the Company by acceptance of this Warrant as follows:

 

(i)                  The Holder is an “accredited investor” as defined in Rule
501(a) of Regulation D promulgated under the Securities Act. The Holder is
acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof
for investment for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution of this Warrant or the Warrant
Shares, except pursuant to sales registered or exempted under the Securities
Act.

 

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(ii)                The Holder understands and acknowledges that this Warrant
and the Warrant Shares to be issued upon exercise hereof are “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that, under such laws and applicable regulations, such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. In addition, the Holder represents that it is familiar with Rule
144 under the Securities Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.

 

(iii)              The Holder acknowledges that it can bear the economic and
financial risk of its investment for an indefinite period, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Warrant and the Warrant
Shares. The Holder has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Warrant and the business, properties, prospects and financial condition of the
Company.

 

12.              Notices. All notices, requests, consents, claims, demands,
waivers and other communications under this Warrant shall be in writing and
shall be deemed to have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); (c) on the date
sent by facsimile or e-mail of a PDF document (with confirmation of
transmission) if sent during normal business hours of the recipient, and on the
next Business Day if sent after normal business hours of the recipient; or (d)
on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Any communication to the Holder or the
Company shall be sent in accordance with the contact information set forth below
(or at such other contact information as specified in a notice to the given in
accordance with this Section 12).

 

If to the Company:

Jones Soda Co.

66 S Hanford St., Suite 150

Seattle, WA 98134

Facsimile: (206) 624-6857

E-mail: finance@jonessoda.com

Attention: Chief Executive Officer

 

with a copy (which shall not constitute notice) to:

 

Summit Law Group, PLLC

315 Fifth Avenue S., Suite 1000

Seattle, WA 98104

Facsimile: (206) 676-7001
E-Mail: andys@summitlaw.com and laurab@summitlaw.com
Attention: Andy Shawber and Laura Bertin

 

11

 

If to Holder:

Heavenly RX Ltd.

Address: 1112 North Flagler Dr.

Fort Lauderdale, FL 33304

E-mail: mbeedles@heavenlyrx.com

Attention: Mike Beedles/Steve Avalon

 

with a copy (which shall not constitute notice) to:

 

 

Dorsey & Whitney LLP

TD Canada Trust Tower

Brookfield Place

161 Bay Street, Suite 4310

Toronto, ON, Canada M5J 2S1

Email: Raymer.richard@dorsey.com; van.horn.jonathan@dorsey.com

Attention: Richard Raymer; Jonathan A. Van Horn

 

13.              Entire Agreement. This Warrant, the Rights Agreement, the
Purchase Agreement, the other documents and agreements delivered pursuant to the
Purchase Agreement, and the Mutual Nondisclosure Agreement, dated as of April
22, 2019, between the parent company of the Holder and the Company, constitute
the sole and entire agreement of the parties to this Agreement with respect to
the subject matter contained herein and therein, and supersede all prior and
contemporaneous understandings and agreements, both written and oral, with
respect to such subject matter, including the Term Sheet for Common Stock
Financing of Jones Soda Co., dated as of June 7, 2019.

 

14.              Successor and Assigns. This Warrant and the rights evidenced
hereby shall be binding upon and shall inure to the benefit of the parties
hereto and the successors of the Company and the successors and permitted
assigns of the Holder. Such successors or permitted assigns of the Holder shall
be deemed to be a Holder for all purposes hereunder.

 

15.              No Third-Party Beneficiaries. This Warrant is for the sole
benefit of the Company and the Holder and their respective successors and, in
the case of the Holder, permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other Person any legal or
equitable right, benefit or remedy of any nature whatsoever, under or by reason
of this Warrant.

 

16.              Headings. The headings in this Warrant are for reference only
and shall not affect the interpretation of this Warrant.

 

17.              Amendment and Modification; Waiver. Except as otherwise
provided herein, this Warrant may only be amended, modified or supplemented by
an agreement in writing signed by each party hereto. No waiver by the Company or
the Holder of any of the provisions hereof shall be effective unless explicitly
set forth in writing and signed by the party so waiving. No waiver by any party
shall operate or be construed as a waiver in respect of any failure, breach or
default not expressly identified by such written waiver, whether of a similar or
different character, and whether occurring before or after that waiver. No
failure to exercise, or delay in exercising, any rights, remedy, power or
privilege arising from this Warrant shall operate or be construed as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.

 

12

 

18.              Severability. If any term or provision of this Warrant is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Warrant or invalidate or render unenforceable such term or provision in any
other jurisdiction.

 

19.                Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.

 

(a)                 Governing Law. This Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction).

 

(b)                Submission to Jurisdiction. ANY LEGAL SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR BASED UPON THIS WARRANT OR THE TRANSACTIONS
CONTEMPLATED HEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES
OF AMERICA OR THE COURTS OF THE STATE OF WASHINGTON IN EACH CASE LOCATED IN THE
CITY OF SEATTLE AND COUNTY OF KING, AND EACH PARTY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING.
SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S
ADDRESS SET FORTH IN THIS WARRANT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND
AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)                 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS WARRANT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH PARTY TO THIS WARRANT CERTIFIES AND ACKNOWLEDGES THAT
(I) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER
IN THE EVENT OF A LEGAL ACTION, (II) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (III) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS WARRANT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19(C).

 

13

 

20.              Counterparts. This Warrant may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall be
deemed to be one and the same agreement. A signed copy of this Warrant delivered
by facsimile, e-mail or other means of electronic transmission shall be deemed
to have the same legal effect as delivery of an original signed copy of this
Warrant.

 

21.                No Strict Construction. This Warrant shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting an instrument or causing any
instrument to be drafted.

 

 

 

[signature page follows]

 

 

 

 

 

 

 

 

 

 

 

 

14

 

IN WITNESS WHEREOF, the Company has duly executed this Warrant on the Original
Issue Date.

 

  JONES SODA CO.  

By: _/s/ Jennifer Cue____________________

Name: Jennifer Cue

Title: President and Chief Executive Officer

 

 

Accepted and agreed, HEAVENLY RX LTD.  

By:_/s/ Bradley Morris_______________

Name: Bradley Morris

Title: Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Warrant of Jones Soda Co.]

 

  

 

Exhibit A

 

Form of Exercise Agreement

 

To Jones Soda Co. (Attention: Chief Executive Officer):

 

The undersigned registered Holder of the enclosed Warrant of Jones Soda Co.
(Original Issue Date: July 11, 2019) (the “Warrant”) hereby irrevocably
exercises such Warrant for, and purchases thereunder, __________ shares of
Common Stock, and herewith makes payment of $__________ therefor, and requests
that such shares of Common Stock be issued via book entry with the Company’s
transfer agent in the name of, and delivered to ____________________, whose
address is ______________________________.

 

Dated: ____________________

 

HOLDER:

 

[NAME OF HOLDER]

 

By: ____________________

 

Name: __________________

 

Title: ___________________

 

(Signature must conform in all respects to name of Holder as specified on the
face of Warrant)

 

__________________________________

 

(Street Address)

 

__________________________________

 

(City)                     (State)                 (Zip Code)

 

 

 

  

 

Exhibit B

 

Form of Assignment

 

To Jones Soda Co. (Attention: Chief Executive Officer):

 

For value received, the undersigned registered Holder (the “Transferor”) of the
Warrant of Jones Soda Co. (Original Issue Date: July 11, 2019) (the “Warrant”)
hereby sells, assigns and transfers unto ____________________ (the “Transferee”)
the rights represented by such Warrant to purchase __________ shares of Common
Stock of Jones Soda Co. (the “Company”) to which and such Warrant relates, and
appoints ____________________ as its attorney-in-fact to make such transfer on
the books of the Company maintained for such purpose, with full power of
substitution in the premises. The Transferee consents to, and, to the extent
applicable, agrees to be bound by, the provisions of this Warrant.

 

Dated: ____________________

 

TRANSFEROR:

 

By: ____________________

 

Name: __________________

 

Title: ___________________

 

(Signature must conform in all respects to name of Holder as specified on the
face of Warrant)

 

________________________________________

 

(Street Address)

 

________________________________________

 

(City)                     (State)                     (Zip Code)

 

TRANSFEEE:

 

                                                                                                                 

 

(Signature must conform in all respects to name of Holder as specified on the
face of Warrant)

 

                                                                                                                  

 

(Street Address)

 

                                                                                                                    

 

(City)                     (State)                     (Zip Code)