Exhibit 10.3

 

EXECUTION VERSION

 

 

 

JONES SODA CO.

 

INVESTOR RIGHTS AGREEMENT

 

dated as of

 

July 11, 2019

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

1.   Definitions 1 2.   Board Representation; Observer 4 2.1   Size of the Board
4 2.2   Investor Designees 4 2.3   Failure to Designate; Vacancies; Removal 4
2.4   Committees; Subsidiaries 5 2.5   Observer 5 2.6   Grant of Proxy 6
2.7   Company Covenant 6 2.8   No Liability 6 2.9   No “Bad Actor” Designees 6
2.10   Expenses and Compensation 7 2.11   Indemnification Agreements 7
3.   Rights to Future Stock Issuances 7 3.1   Right of First Offer 7 3.2   Offer
Notice 7 3.3   Investor Election 7 3.4   Failure to Fully Subscribe 7
3.5   Excluded Securities 8 4.   Lock-Up 8 4.1   Agreement to Lock-Up 8
4.2   Stop Transfer Instructions 9 5.   Registration Rights 9 5.1   Demand
Registration 9 5.2   Company Registration 10 5.3   Underwriting Requirements 10
5.4   Obligations of the Company 11 5.5   Furnish Information 12 5.6   Expenses
of Registration 12 5.7   Indemnification 13 5.8   Reports Under Exchange Act 14
5.9   Limitations on Subsequent Registration Rights 14 5.10   Assignment 14
5.11   Termination of Registration Rights 15 6.   Covenants 15 6.1   D&O
Insurance 15 6.2   QSR Network 15 6.3   Matters Requiring Investor Designee
Approval 15

 

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    6.4   Further Assurances 16 6.5   Right to Conduct Activities 16
7.   Miscellaneous 16 7.1   Successors and Assigns 16 7.2   Counterparts 17
7.3   Titles and Subtitles 17 7.4   Notices 17 7.5   Amendments and Waivers 17
7.6   Severability 17 7.7   Entire Agreement 18 7.8   Specific Performance 18
7.9   Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 18
7.10   Delays or Omissions 19

 

 

SCHEDULES

 

SCHEDULE A          Investor and Shareholder Information

 

 

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INVESTOR RIGHTS AGREEMENT

 

This Investor Rights Agreement (this “Agreement”), dated as of July 11, 2019, is
entered into by and among Jones Soda Co., a Washington corporation (the
“Company”), Heavenly RX Ltd., a British Columbia corporation (“Investor”), and
each of the shareholders listed on Schedule A hereto (collectively, the
“Shareholders”).

 

RECITALS

 

WHEREAS, the Company and Investor are parties to that certain Securities
Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”); and

 

WHEREAS, in order to induce the Company to enter into the Purchase Agreement and
to induce Investor to enter into the Purchase Agreement and invest funds in the
Company pursuant to the Purchase Agreement, Investor, the Company and the
Shareholders hereby agree that this Agreement shall govern certain rights of
Investor and such other matters regarding the Company and the Shareholders as
set forth in this Agreement;

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:

 

1.              Definitions. For purposes of this Agreement:

 

1.1           “Agreement” has the meaning set forth in the Preamble.

 

1.2           “Affiliate” means, with respect to any Person, (i) any Immediate
Family Member, or (ii) any other Person that is directly or indirectly
controlling, controlled by, or under common control with such Person, where
“control” and derivative terms mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.

 

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

 

1.4           “Business Day” means any day except Saturday, Sunday or any other
day on which commercial banks located in either Toronto, Canada or Seattle,
Washington are authorized or required by Law to be closed for business.

 

1.5           “Common Stock” means shares of the Company’s common stock, no par
value per share.

 

1.6           “Company” has the meaning set forth in the Preamble.

 

1.7           “Change of Control Transaction” means the occurrence of one of the
following events: (i) the sale, transfer, assignment, license or lease of all or
a material portion of all of the assets (measured by value) of the Company and
its subsidairies, taken as a whole, to a Person in a single transaction or a
series of related transactions; or (ii) the sale, assignment, transfer or other
disposition, directly or indirectly, either through the issuance of equity
securities by the Company or the sale of equity securities by shareholders of
the Company, of more than a majority of either the outstanding equity interests
or voting power of the Company, in a single transaction or a series of related
transactions, whether by merger, exchange, combination, joint venture,
consolidation, unit purchase or otherwise, to any third party.

 

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1.8           “Damages” means any loss, damage, claim or liability (joint or
several) to which a party hereto may become subject under the Securities Act,
the Exchange Act, or other federal or state law, insofar as such loss, damage,
claim or liability (or any action in respect thereof) arises out of or is based
upon: (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement of the Company, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto; (ii) an omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or (iii) any violation or alleged violation by the
indemnifying party (or any of its agents or Affiliates) of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation
promulgated under the Securities Act, the Exchange Act, or any state securities
law.

 

1.9           “Disqualification Event” has the meaning set forth in Section 2.9.

 

1.10        “Disqualified Designee” has the meaning set forth in Section 2.9.

 

1.11        “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

1.12        “Excluded Securities” means (i) securities issued upon the
conversion of any debenture, warrant, option, or other convertible security;
(ii) Common Stock issuable upon a stock split, stock dividend, any subdivision
of, or other distribution on, shares of Common Stock; (iii) shares of Common
Stock (or options to purchase such shares of Common Stock) issued or issuable to
employees or directors of, or consultants to, the Company pursuant to any plan,
agreement or arrangement approved by the Board; (iv) shares of Common Stock,
warrants, options or other convertible securities issued to banks, equipment
lessors or other financial institutions, or to real property lessors, pursuant
to a debt financing, equipment leasing or real property leasing transaction
approved by the Board; (v) shares of Common Stock, warrants, options or other
convertible securities issued to suppliers, vendors or third party service
providers in connection with the provision of goods or services pursuant to
transactions approved by the Board; and (vi) shares of Common Stock, warrants,
options or other convertible securities issued as acquisition consideration
pursuant to the acquisition of another company by the Company; provided that the
issuance of any such securities in (i) through (vi) above are approved by the
Board.

 

1.13        “Form S-1” means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC.

 

1.14        “Form S-3” means such form under the Securities Act as in effect on
the date hereof or any registration form under the Securities Act subsequently
adopted by the SEC that permits forward incorporation of substantial information
by reference to other documents filed by the Company with the SEC.

 

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1.15        “GAAP” means generally accepted accounting principles in the United
States as in effect from time to time.

 

1.16        “Immediate Family Member” means a child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including,
adoptive relationships, of a natural person referred to herein.

 

1.17        “Investor” has the meaning set forth in the Preamble.

 

1.18        “Investor’s Counsel” has the meaning set forth in Section 5.6.

 

1.19        “Lock-Up Period” has the meaning set forth in Section 4.1(a).

 

1.20        “New Securities” means, collectively, equity securities of the
Company or any subsidiary of the Company, whether or not currently authorized,
as well as rights, options, or warrants to purchase such equity securities, or
securities of any type whatsoever that are, or may become, convertible or
exchangeable into or exercisable for such equity securities, provided, however,
that “New Securities” does not include any Excluded Securities.

 

1.21        “Observer” has the meaning set forth in Section 2.5.

 

1.22        “Offer Notice” has the meaning set forth in Section 3.2.

 

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

 

1.24        “Purchase Agreement” has the meaning set forth in the Recitals.

 

1.25        “QSR” has the meaning set forth in Section 6.2.

 

1.26        “Registrable Securities” means (a) (i) the 15,000,000 shares of
Common Stock to be issued to Investor pursuant to the Purchase Agreement and
(ii) any shares of Common Stock issued or issuable upon exercise of the Warrant;
and (b) any shares of Common Stock or other securities of the Company issued or
issuable with respect to any shares described in subsection (a) by way of a
stock dividend or stock split or in exchange for or upon conversion of such
shares or otherwise in connection with a combination of shares, distribution,
recapitalization, merger, consolidation, other reorganization or other similar
event with respect to the Common Stock.

 

1.27        “Rule 144” means Rule 144 promulgated by the SEC under the
Securities Act.

 

1.28        “SEC” means the U.S. Securities and Exchange Commission.

 

1.29        “Securities Act” means the Securities Act of 1933, as amended.

 

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1.30        “Selling Expenses” means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of Registrable
Securities, and fees and disbursements of counsel for any Holder, except for the
fees and disbursements of the Selling Holder Counsel borne and paid by the
Company as provided in Section 5.6.

 

1.31        “Shares” means and includes any securities of the Company that the
holders of which are entitled to vote for members of the Board, including
without limitation, all shares of Common Stock, by whatever name called, now
owned or subsequently acquired by a Shareholder, however acquired, whether
through stock splits, stock dividends, reclassifications, recapitalizations,
similar events or otherwise.

 

1.32        “Shareholders” has the meaning set forth in the Preamble.

 

1.33        “SOL” means SOL Global Investments Corp., an Ontario corporation and
the parent company of Investor.

 

1.34        “Warrant” means the Warrant for the purchase of Common Stock issued
to Investor pursuant to the Purchase Agreement.

 

2.              Board Representation; Observer.

 

2.1           Size of the Board. Each Shareholder agrees to cause, including in
its capacity as a member of the Board, if applicable, and including by voting or
causing to be voted all Shares owned by such Shareholder, or over which such
Shareholder has voting control (whether at a meeting or by executing a written
consent, as applicable), from time to time and at all times, the size of the
Board to be established at and to remain at seven directors.

 

2.2           Investor Designees. For so long as Investor and its Affiliates
continue to own beneficially at least 25% of the shares of Common Stock that
Investor purchased under the Purchase Agreement (disregarding any shares of
Common Stock issuable upon exercise of the Warrant, but including any
adjustments to give effect to reclassifications, recapitalizations, reverse
stock splits, or similar events of such original shares of Common Stock), each
Shareholder agrees to cause, including in its capacity as a member of the Board,
if applicable, and including by voting or causing to be voted all Shares owned
by such Shareholder, or over which such Shareholder has voting control (whether
at a meeting or by executing a written consent, as applicable), from time to
time and at all times, two individuals designated from time to time by Investor
(the “Investor Designees”) to be members of the Board, whether by election or
re-election or, in the case of a vacancy, by appointment by the Board. The
initial Investor Designees shall be Paul Norman and one other individual to be
named at a later time, which Investor Designees shall be appointed to the Board
as soon as practicable following the date of this Agreement to fill the two
vacancies on the Board existing at such time.

 

2.3           Failure to Designate; Vacancies; Removal. Each Shareholder agrees
to vote, or cause to be voted (whether at a meeting or by executing a written
consent, as applicable), all Shares owned by such Shareholder, or over which
such Shareholder has voting control, from time to time and at all times, in
whatever manner as shall be necessary to ensure that:

 

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(a)            In the absence of any designation from Investor as specified in
Section 2.2, the Investor Designee previously designated by Investor and then
serving shall be reelected if still eligible and willing to serve as provided
herein (and otherwise, such Board seat shall remain vacant);.

 

(b)           no Investor Designee shall be removed from the Board unless
requested by Investor or if Investor is no longer entitled to designate such
director pursuant to Section 2.2;

 

(c)            any vacancies created by the resignation, removal or death of an
Investor Designee shall be filled by an individual named by Investor; and

 

(d)           upon the request of Investor to remove an Investor Designee as a
director, such Investor Designee shall be so removed.

 

2.4           Committees; Subsidiaries.

 

(a)            Each Investor Designee shall have the right, but not the
obligation, to be appointed to each committee of the Board, if any, and each
committee of each subsidiary of the Company, if any, and to attend and serve as
an observer at all meetings of each such committee. Notwithstanding the
foregoing, the Company reserves the right to withhold any information, to
exclude each Investor Designee from any such committee or any such committee
meeting (or portion thereof), if access to such information, participation on
such committee or attendance at such meeting (or portion thereof) could (i)
adversely affect the attorney-client privilege between the Company or any
subsidiary of the Company and their respective counsel, (ii) result in a
conflict of interest, or (iii) violate or contravene any applicable director
independence requirements of (A) the SEC, (B) the Securities Act (and the
regulations promulgated thereunder), (C) the securities exchange or trading
market on which the Common Stock is then listed, or (D) the Company’s Board
committee charters then in effect.

 

(b)           The Company and each Shareholder shall take such actions as may
reasonably required to ensure that the board of directors (or equivalent body)
of each subsidiary of the Company includes both Investor Designees.

 

(c)            To the extent any subsidiary of the Company is a member-managed
limited liability company, any action or consent requiring consent of the member
shall require approval by the Board.

 

(d)           The provisions of this Section 2.4 shall survive for so long as
any Investor Designee serves on the Board.

 

2.5           Observer. In addition to the Investor Designees, for so long as
Investor owns any Shares, the Company shall invite an individual designated by
Investor, to serve as a representative of Investor, to attend in a nonvoting
observer capacity all meetings of the Board or the board of directors (or
equivalent body) of any subsidiary of the Company or at any committee meetings
of any of the foregoing (the “Observer”). The Company shall give the Observer
copies of all notices, minutes, consents, and other materials that it provides
to its directors at the same time and in the same manner as provided to such
directors; provided, however, that the Observer shall agree to hold in
confidence and trust and to act in a fiduciary manner with respect to all
information so provided; and provided further, that the Company reserves the
right to withhold any information and to exclude the Observer from any meeting
or portion thereof if access to such information or attendance at such meeting
could adversely affect the attorney-client privilege between the Company and its
counsel or result in a conflict of interest. The initial Observer shall be
Andrew DeFrancesco.

 

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2.6           Grant of Proxy. Upon the failure of any Shareholder to vote such
Shareholders’ Shares in accordance with the terms of this Section 2 following
reasonable prior notice of such required vote, such Shareholder hereby grants to
Investor (or at Investor’s option, an individual designated by the Board) a
proxy coupled with an interest in all Shares owned by such Shareholder to vote
all such Shares in the manner provided in this Section 2 with respect to the
matter for which such Shareholder failed to vote. Such proxy shall be
irrevocable for so long as Investor is entitled to designate individuals to
serve on the Board pursuant to Section 2.2.

 

2.7           Company Covenant. The Company agrees to use its best efforts,
within the requirements of applicable law, to ensure that the rights granted
under this Agreement are effective and that the parties enjoy the benefits of
this Agreement. Such actions include, without limitation, the use of the
Company’s best efforts to cause the nomination and election of the directors as
provided in this Agreement. Without limiting the generality of the foregoing,
the Company shall use best efforts (a) to establish the size of the Board at
seven directors on the date of this Agreement, and maintain such size during the
term of this Agreement; (b) to appoint the initial Investor Designees, as named
in Section 2.2, to fill the newly-created vacancies on the Board; (c) to include
all Investor Designees as nominees for election in the Company’s proxy
materials, as applicable, along with the Board’s recommendation that the
Company’s shareholders vote to elect such Investor Designees to serve on the
Board; and (d) at the request of Investor, to call a special meeting of, or
solicit execution of a written consent by, the Company’s shareholders for the
purpose of electing Investor Designees in accordance with this Section 2.

 

2.8           No Liability. Neither Investor, nor any Affiliate of Investor,
shall have any liability as a result of designating an Investor Designee for
election as a director for any act or omission by such Investor Designee in his
or her capacity as a director of the Company. No Shareholder shall have any
liability as a result of voting for any Investor Designee in accordance with the
provisions of this Agreement.

 

2.9           No “Bad Actor” Designees. Investor hereby represents and warrants
to the Company that, to such Investor’s knowledge, none of the “bad actor”
disqualifying events described in Rule 506(d)(1)(i)-(viii) under the Securities
Act (each, a “Disqualification Event”), is applicable to the initial Investor
Designees named in Section 2.2 (except for a Disqualification Event as to which
Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable). Any director designee to
whom any Disqualification Event is applicable (except for a Disqualification
Event to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable) is
hereinafter referred to as a “Disqualified Designee.” Investor hereby covenants
and agrees (a) not to designate or participate in the designation of any
director designee who, to Investor’s knowledge, is a Disqualified Designee, and
(b) that if Investor becomes aware that any individual previously designated by
Investor is or has become a Disqualified Designee, Investor shall as promptly as
practicable take such actions as are necessary to remove such Disqualified
Designee from the Board and designate a replacement designee who is not a
Disqualified Designee.

 

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2.10        Expenses and Compensation. The Company shall reimburse each Investor
Designee and Observer for his or her reasonable out-of-pocket expenses
(including travel) incurred in connection incurred in connection with attendance
of meetings of the Board or the board of directors (or equivalent body) of any
subsidiary of the Company or at any committee meetings of any of the foregoing.
Without duplication of the foregoing, each Investor Designee shall be entitled
to all compensation and reimbursement rights that are generally available to
non-employee directors of the Company.

 

2.11        Indemnification Agreements. Contemporaneously with the appointment
of each Investor Designee to serve on the Board, the Company will enter into an
Indemnification Agreement, in the form attached to the Purchase Agreement as
Exhibit D, with respect to such Investor Designee.

 

3.              Rights to Future Stock Issuances.

 

3.1           Right of First Offer. Subject to the terms and conditions of this
Section 3.1 and applicable securities laws, if the Company proposes to offer or
sell any New Securities, the Company shall first offer such New Securities to
Investor. Investor shall be entitled to apportion such right of first offer in
such proportions, as it deems appropriate, among itself and its Affiliates;
provided that, to be eligible for such apportionment, each such Affiliate must
execute a joinder to this Agreement, thereby agreeing to be bound by the terms
of this Agreement, in customary form and substance reasonably satisfactory to
the Company.

 

3.2           Offer Notice. The Company shall give notice (the “Offer Notice”)
to Investor, stating (a) its bona fide intention to offer such New Securities,
(b) the number of such New Securities to be offered, and (c) the price and terms
upon which it proposes to offer such New Securities.

 

3.3           Investor Election. By notification to the Company within 20 days
after the Offer Notice is received, Investor may elect to purchase or otherwise
acquire, at the price and on the terms specified in the Offer Notice, all or any
portion of such New Securities. The consummation of any sale and purchase
pursuant to this Section 3.3 shall occur within 90 days of the later of the date
that the Offer Notice is received by Investor and the date of the initial sale
of New Securities, if any, pursuant to Section 3.4.

 

3.4           Failure to Fully Subscribe. If all New Securities referred to in
the Offer Notice are not elected to be purchased by Investor pursuant to Section
3.3, the Company may, during the 90-day period following the expiration of the
20-day period referenced in Section 3.3, offer and sell the unsubscribed portion
of such New Securities to any Person or Persons at a price not less than, and
upon terms no more favorable to the offeree than, those specified in the Offer
Notice. If the Company does not enter into an agreement for the sale of the New
Securities within such period, or if such agreement is not consummated within 30
days of the execution thereof, the right provided hereunder shall be deemed to
be revived and such New Securities shall not be offered unless first re-offered
to Investor in accordance with this Section 3.

 

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3.5           Excluded Securities. For the avoidance of doubt, the right of
first offer in Section 3.1 shall not be applicable to Excluded Securities.

 

4.              Lock-Up.

 

4.1           Agreement to Lock-Up.

 

(a)            Investor, each transferee of Investor’s shares of Common Stock as
permitted under Section 4.1(b) and each Shareholder will not, during the period
commencing on the date of this Agreement and ending on the one-year anniversary
of the date of this Agreement (the “Lock-Up Period”): (a) lend, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or other securities of the Company; or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock or other securities of the Company,
whether any such transaction described in clause (a) or (b) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise.
As of the date of this Agreement, Investor and each Shareholder owns the
securities of the Company set forth next to his, her or its name on Schedule A
hereto.

 

(b)           The provisions of Section 4.1(a) shall not apply to:

 

(i)             with respect to each Shareholder, transfers of shares of Common
Stock (A) by will, other testamentary document or intestate succession to the
legal representative, heir, beneficiary or an Immediate Family Member of such
Shareholder; or (B) by operation of law, such as pursuant to a qualified
domestic order or as required by a divorce settlement (provided, however, that
the transferee agrees to be bound in writing by the terms of this Agreement
prior to such transfer, and such transfer shall not involve a disposition for
value);

 

(ii)           with respect to each Shareholder, the establishment of a trading
plan pursuant to Rule 10b5-1 promulgated under the Exchange Act, provided that
such plan does not provide for the transfer of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock during the
Lock-Up Period;

 

(iii)         with respect to each Shareholder, transfers to the Company in
connection with the “net” or “cashless” exercise of options or other rights to
purchase shares of Common Stock granted pursuant to an equity incentive plan,
stock purchase plan or similar arrangement approved by the Board in satisfaction
of any tax withholding obligations through cashless surrender or otherwise,
provided, however, that any shares of Common Stock issued upon exercise of such
option or other rights shall remain subject to the terms of this Lock-Up
Agreement; or

 

(iv)          with respect to Investor and each Shareholder that is a
corporation, limited liability company, partnership, trust or other entity,
transfers to its shareholders, members, partners or trust beneficiaries as part
of a distribution, or to any corporation, partnership or other entity that is
its Affiliate (provided, however, that the transferee agrees to be bound in
writing by the terms of this Agreement prior to such transfer, and such transfer
shall not involve a disposition for value).

 

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4.2           Stop Transfer Instructions; Legend. In order to enforce the
foregoing covenant, the Company may (a) impose stop-transfer instructions with
respect to the shares of Common Stock or other securities of the Company of
Investor and each Shareholder (and permitted transferees and assignees thereof)
until the end of such restricted period and (b) stamp, imprint or notate the
shares of Common Stock or other securities of the Company of Investor and each
Shareholder (and permitted transferees and assignees thereof) with the following
legend:

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD, ALL AS SET FORTH IN
CERTAIN AGREEMENTS BETWEEN THE RECORD OWNER OF THESE SHARES AND THE COMPANY,
COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

 

5.              Registration Rights. The Company covenants and agrees as
follows:

 

5.1           Demand Registration.

 

(a)            Following the expiration of the Lock-Up Period, if the Company
receives a request from Investor that the Company file a registration statement
with respect to outstanding Registrable Securities having an anticipated
aggregate offering price of at least $1 million, then the Company shall, as soon
as practicable, and in any event within 45 days after the date such request is
given by Investor, file a Form S-3 registration statement under the Securities
Act covering all Registrable Securities requested to be included in such
registration by Investor, subject to the limitations of Sections 5.1(b) and 5.3.
If at the time of Investor’s request the Company is not eligible to use a Form
S-3 registration statement, the Company will instead file a registration
statement on Form S-1 or such other form as available and appropriate to
effectuate the offering.

 

(b)           Notwithstanding Section 5.1(a), if the Company furnishes to
Investor a certificate signed by the Company’s chief executive officer stating
that, in the good faith judgment of the Board, it would be materially
detrimental to the Company and its shareholders for such requested registration
statement to either become effective or remain effective for as long as such
registration statement otherwise would be required to remain effective, because
such action would (i) materially interfere with a significant acquisition,
corporate reorganization, or other similar transaction involving the Company;
(ii) require premature disclosure of material information that the Company has a
bona fide business purpose for preserving as confidential; or (iii) render the
Company unable to comply with requirements under the Securities Act or Exchange
Act, then the Company shall have the right to defer taking action with respect
to such filing, and any time periods with respect to filing or effectiveness
thereof shall be tolled correspondingly, for a period of not more than 60 days
after the request of Investor is given; provided, however, that the Company may
not invoke this right more than twice in any 12-month period.

 

(c)            The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to Section 5.1(a) (i) during the
period that is 30 days before the Company’s good faith estimate of the date of
filing of, and ending on a date that is 60 days after the effective date of, a
Company-initiated registration, provided that the Company is actively employing
in good faith commercially reasonable efforts to cause such registration
statement to become effective; or (ii) if the Company has effected two
registrations pursuant to Section 5.1(a) within the 12-month period immediately
preceding the date of such request. A registration shall not be counted as
“effected” for purposes of this Section 5.1(c) until such time as the applicable
registration statement has been declared effective by the SEC, unless Investor
withdraws its request for such registration, elects not to pay the registration
expenses therefor, and forfeit its right to one demand registration statement
pursuant to Section 5.6, in which case such withdrawn registration statement
shall be counted as “effected” for purposes of this Section 5.1(c); provided,
however, that if such withdrawal is during a period the Company has deferred
taking action pursuant to Section 5.1(b), then the Investors may withdraw their
request for registration and such registration will not be counted as “effected”
for purposes of this Section 5.1(c).

 

9

 

 

5.2           Company Registration. Following the expiration of the Lock-Up
Period, if the Company proposes to register (including, for this purpose, a
registration effected by the Company for shareholders other than Investor) any
of its Common Stock or other securities under the Securities Act in connection
with the public offering of such securities solely for cash (other than in
connection with the issuance of any Excluded Securities), the Company shall, at
such time, promptly give Investor notice of such registration. Upon the request
of Investor given within 20 days after such notice is given by the Company, the
Company shall, subject to the provisions of Section 5.3, cause to be registered
all of the Registrable Securities that Investor has requested to be included in
such registration. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 5.2 before the effective date of
such registration, whether or not Investor has elected to include Registrable
Securities in such registration. The expenses (other than Selling Expenses) of
such withdrawn registration shall be borne by the Company in accordance with
Section 5.6.

 

5.3           Underwriting Requirements.

 

(a)            If Investor intends to distribute the Registrable Securities
covered by its request pursuant to Section 5.1 by means of an underwriting,
Investor shall so advise the Company as a part of such request. The underwriter
(or underwriters) will be selected by Investor, subject only to the reasonable
approval of the Board. Investor shall (together with the Company as provided in
Section 5.4(e)) enter into an underwriting agreement in customary form with the
underwriter selected for such underwriting. Notwithstanding any other provision
of this Section 5.3, if the underwriter advises Investor in writing that
marketing factors require a limitation on the number of shares to be
underwritten, then the Registrable Securities of Investor that otherwise would
be underwritten will be reduced accordingly; provided, however, that the number
of Registrable Securities of Investor to be included in such underwriting shall
not be reduced unless all other securities of other selling shareholders are
first entirely excluded from the underwriting.

 

(b)           In connection with any offering involving an underwriting of
shares of the Company’s capital stock pursuant to Section 5.2, the Company shall
not be required to include any of Investor’s Registrable Securities in such
underwriting unless Investor accepts the terms of the underwriting as agreed
upon between the Company and its underwriters. If the Company and the
underwriters, in their reasonable discretion, determine that less than all of
Investor’s Registrable Securities requested to be registered can be included in
such offering due to marketing factors (and advise Investor of such
determination in writing), then the Registrable Securities of Investor that
otherwise would be underwritten will be reduced accordingly. Notwithstanding the
foregoing, (i) in no event shall the number of Registrable Securities of
Investor to be included in the offering be reduced unless all other securities
(other than securities to be sold by the Company) are first entirely excluded
from the offering, and (ii) in no event shall the number of Registrable
Securities of Investor to be included in the offering be reduced below 30% of
the total number of securities included in such offering.

 

10

 

 

(c)            For purposes of Section 5.1, a registration shall not be counted
as “effected” if, as a result of an exercise of the underwriter’s cutback
provisions in Section 5.3(a), fewer than 80% of the total number of Registrable
Securities that Investor has requested to be included in such registration
statement are actually included.

 

5.4           Obligations of the Company. Whenever required to effect a
registration under this Section 5, the Company shall, as expeditiously as
reasonably possible:

 

(a)            prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective and, upon the
request of Investor, keep such registration statement effective for a period of
up to 120 days or, if earlier, until the distribution contemplated in the
registration statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period
Investor refrains, at the request of an underwriter of Common Stock (or other
securities) of the Company, from selling any securities included in such
registration, and (ii) in the case of any registration of Registrable Securities
on Form S-3 that are intended to be offered on a continuous or delayed basis,
subject to compliance with applicable SEC rules, such 120-day period shall be
extended for up to 365 days, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold;

 

(b)           prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the Securities Act in
order to enable the disposition of all securities covered by such registration
statement;

 

(c)            furnish to Investor such numbers of copies of a prospectus,
including a preliminary prospectus, as required by the Securities Act, and such
other documents as Investor may reasonably request in order to facilitate the
disposition of its Registrable Securities;

 

(d)           use its commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue-sky laws of such jurisdictions as shall be reasonably
requested by Investor; provided that the Company shall not be required to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions, unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

11

 

 

(e)            in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the underwriter of such offering;

 

(f)            use its commercially reasonable efforts to cause all such
Registrable Securities covered by such registration statement to be listed on
each securities exchange or trading system (e.g., OTC), if any, on which similar
securities of the Company are then listed;

 

(g)           provide a transfer agent and registrar for all Registrable
Securities registered pursuant to this Agreement and provide a CUSIP number for
all such Registrable Securities, in each case not later than the effective date
of such registration;

 

(h)           promptly make available for inspection by Investor any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney or accountant or other agent retained by any such underwriter or
selected by Investor, all financial and other records, pertinent corporate
documents, and properties of the Company, and cause the Company’s officers,
directors, employees, and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant, or
agent, in each case, as necessary or advisable to verify the accuracy of the
information in such registration statement and to conduct appropriate due
diligence in connection therewith;

 

(i)             notify Investor, promptly after the Company receives notice
thereof, of the time when such registration statement has been declared
effective or a supplement to any prospectus forming a part of such registration
statement has been filed; and

 

(j)             after such registration statement becomes effective, notify
Investor of any request by the SEC that the Company amend or supplement such
registration statement or prospectus.

 

In addition, the Company shall ensure that, at all times after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, its insider trading policy shall
provide that the Company’s directors may implement a trading program under Rule
10b5-1 of the Exchange Act.

 

5.5           Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 5 with
respect to the Registrable Securities of Investor that Investor shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as is
reasonably required to effect the registration of Investor’s Registrable
Securities.

 

5.6           Expenses of Registration. All expenses (other than Selling
Expenses) incurred in connection with registrations, filings, or qualifications
pursuant to this Section 5, including all registration, filing, and
qualification fees; printers’ and accounting fees; fees and disbursements of
counsel for the Company; and the reasonable fees and disbursements of one
counsel for Investor (“Investor’s Counsel”), shall be borne and paid by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 5.1 if the
registration request is subsequently withdrawn at the request of Investor (in
which case Investor shall bear such expenses), unless Investor agrees to forfeit
its right to one registration pursuant to Section 5.1. All Selling Expenses
relating to Registrable Securities registered pursuant to this Section 5 shall
be borne and paid by Investor.

 

12

 

 

5.7           Indemnification. If any Registrable Securities are included in a
registration statement under this Section 5:

 

(a)            To the extent permitted by law, the Company will indemnify and
hold harmless (i) Investor, (ii) the officers, directors, and shareholders of
Investor, (iii) legal counsel and accountants for Investor, (iv) any underwriter
(as defined in the Securities Act) for Investor, and (v) each Person, if any,
who controls Investor or such underwriter within the meaning of the Securities
Act or the Exchange Act, against any Damages, and the Company will pay to
Investor and each such other aforementioned Person any legal or other expenses
reasonably incurred thereby in connection with investigating or defending any
claim or proceeding from which Damages may result, as such Damages are incurred;
provided, however, that the indemnity agreement contained in this Section 5.7(a)
shall not apply to amounts paid in settlement of any such claim or proceeding if
such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld, nor shall the Company be liable for any
Damages to the extent that they arise out of or are based upon actions or
omissions made in reliance upon and in conformity with written information
furnished by or on behalf of Investor or any such other aforementioned Person
expressly for use in connection with such registration.

 

(b)           To the extent permitted by law, Investor will indemnify and hold
harmless (i) the Company, (ii) each of its directors, (iii) each of its officers
who has signed the registration statement, (iv) each Person, if any, who
controls the Company within the meaning of the Securities Act, (v) legal counsel
and accountants for the Company, (vi) any underwriter (as defined in the
Securities Act), (vii) any other shareholder selling securities in such
registration statement, and (viii) any controlling Person of any such
underwriter or other shareholder, against any Damages, in each case only to the
extent that such Damages arise out of or are based upon actions or omissions
made in reliance upon and in conformity with written information furnished by or
on behalf of Investor expressly for use in connection with such registration,
and Investor will pay to the Company and each other aforementioned Person any
legal or other expenses reasonably incurred thereby in connection with
investigating or defending any claim or proceeding from which Damages may
result, as such Damages are incurred; provided, however, that the indemnity
agreement contained in this Section 5.7(b) shall not apply to amounts paid in
settlement of any such claim or proceeding if such settlement is effected
without the consent of Investor, which consent shall not be unreasonably
withheld; and provided further that in no event shall the aggregate amounts
payable by Investor by way of indemnity or contribution under this Section
5.7(b) exceed the proceeds from the offering received by Investor (net of any
Selling Expenses paid by Investor), except in the case of fraud or willful
misconduct by Investor.

 

(c)            Promptly after receipt by an indemnified party under this Section
5.7 of notice of the commencement of any action (including any governmental
action) for which a party may be entitled to indemnification hereunder, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 5.7, give the indemnifying party notice of
the commencement thereof. The indemnifying party shall have the right to
participate in such action and, to the extent the indemnifying party so desires,
participate jointly with any other indemnifying party to which notice has been
given, and to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party (together with all
other indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
action.

 

13

 

 

(d)           Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control. Unless otherwise superseded by an underwriting agreement entered
into in connection with the underwritten public offering, the obligations of the
Company and Investor under this Section 5.7 shall survive the completion of any
offering of Registrable Securities in a registration under this Section 5, and
otherwise shall survive the termination of this Agreement.

 

5.8           Reports Under Exchange Act. With a view to making available to
Investor the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit Investor to sell securities of the Company to the
public without registration or pursuant to a registration on Form S-3, the
Company shall: (a) make and keep available adequate current public information,
as those terms are understood and defined in Rule 144; (b) use commercially
reasonable efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and (c) furnish to Investor, so long as Investor owns Registrable Securities,
forthwith upon request (i) to the extent accurate, a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act, and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, and (ii) such other information
as may be reasonably requested in availing Investor of any rule or regulation of
the SEC that permits the selling of any such securities without registration or
pursuant to Form S-3.

 

5.9           Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of Investor, which consent shall not be unreasonably withheld, enter into any
agreement with any holder or prospective holder of any securities of the Company
that would (i) allow such holder or prospective holder to include such
securities in any registration unless, under the terms of such agreement, such
holder or prospective holder may include such securities in any such
registration only to the extent that the inclusion of such securities will not
reduce the number of the Registrable Securities of Investor that are included;
or (ii) allow such holder or prospective holder to initiate a demand for
registration of any securities held by such holder or prospective holder.

 

5.10        Assignment. The rights under this Section 5 may be assigned by
Investor to a transferee of Registrable Securities that is an Affiliate of
Investor; provided, however, that any such transfer during the Lock-Up Period
must comply with Section 4.1(b)(iv).

 

14

 

 

5.11        Termination of Registration Rights. The right to request
registration or inclusion of Registrable Securities in any registration pursuant
to Sections 5.1 or 5.2 shall terminate upon such time when Rule 144 or another
similar exemption under the Securities Act is continuously available during a
three-month period for the sale of all Registrable Securities without limitation
and without registration.

 

6.              Covenants.

 

6.1           D&O Insurance. For so long as any Investor Designee serves on the
Board, the Company shall maintain a customary directors and officers liability
insurance policy for each of its directors and officers with aggregate limits
reasonably acceptable to the Board. The Company shall annually, within 120 days
after the end of each fiscal year of the Company, deliver to Investor a
certification that such insurance liability insurance policy remains in effect.

 

6.2           QSR Network. For so long as any Investor Designee serves on the
Board, Investor shall use commercially reasonable efforts to introduce the
Company to Investor’s network of quick service (“QSR”) locations. As part of
this process, Investor shall facilitate introductions, participate in meetings,
encourage such QSR locations to stock and sell the Company’s products and take
such other actions reasonably requested by the Company from time to time in
order to enable the Company to sell its products through and to this QSR
network; provided, however, that Investor provides no assurances as to the
volume or certainty of such sales, or whether any sales will be made at all.
Within two Business Days after the date of this Agreement, Investor shall
provide the Company’s management and the Board with an informal confidential
list of QSR locations to which Investor reasonably believes it may be able to
introduce the Company. The parties understand and agree that such list is
neither a binding obligation to perform nor a guarantee of any contract, but
rather an exercise to illustrate to the Company the potential of the QSR
network.

 

6.3           Matters Requiring Investor Designee Approval. For so long as any
Investor Designee serves on the Board, the Company hereby covenants and agrees
that it shall not, without approval of the Board, which approval must include
the affirmative vote of all Investor Designees then serving on the Board:

 

(a)            amend, alter, repeal or waive any provision of the articles of
incorporation or bylaws or similar governance documents of the Company or any of
the Company’s subsidiaries;

 

(b)           offer or sell any New Securities;

 

(c)            (i) create, or authorize the creation of, or issue, authorize the
issuance of or change the terms of, any debt security, (ii) create any lien or
security interest or incur debt, or (iii) permit any subsidiary of the Company
to take any such action with respect to any debt security, lien, security
interest or debt; provided, however, that this Section 6.3(c) shall not apply
with respect to (A) any debt security, lien, security interest, debt outstanding
or amounts payable under the Loan and Security Agreement, dated as of December
27, 2013, by and between Jones Soda Co. (USA) Inc., Jones Soda (Canada) Inc. and
BFI Business Finance, as amended, modified or superseded from time to time in
accordance with its terms and as approved by the Board (the “Line of Credit”),
or (B) any purchase money liens or statutory liens of landlords, mechanics,
materialmen, workmen, warehousemen and other similar Persons arising or incurred
in the ordinary course of business that have been approved by the Board;

 

15

 

 

(d)           effect, authorize or consent to a Change of Control Transaction;

 

(e)            change the strategy or principal lines of business of the Company
or any subsidiary of the Company;

 

(f)            liquidate or dissolve the Company or acquiesce in the filing of,
a petition in bankruptcy or similar proceeding;

 

(g)           commit to or make any expenditures in excess of $1,000,000 in one
or a series of transactions, except for any amounts payable or paid down in
connection with the Line of Credit; or

 

(h)           commit to do any of the foregoing.

 

6.4           Further Assurances. At any time or from time to time after the
date of this Agreement, the parties agree to cooperate with each other, and at
the request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to carry out the intent of the parties hereunder.

 

6.5           Right to Conduct Activities. The Company hereby agrees and
acknowledges that Investor (together with its Affiliates, including SOL) has
many investments, and as such reviews the business plans and related proprietary
information of many enterprises, some of which may compete directly or
indirectly with the Company’s business (as currently conducted or as currently
proposed to be conducted).  The Company hereby agrees that, to the extent
permitted under applicable law, Investor (and its Affiliates) shall not be
liable to the Company for any claim arising out of, or based upon (a) the
investment by Investor (or its Affiliates) in any entity competitive with the
Company, or (b) actions taken by any partner, officer, employee or other
representative of Investor (or its Affiliates) to assist any such competitive
company, whether or not such action was taken as a member of the board of
directors of such competitive company or otherwise, and whether or not such
action has a detrimental effect on the Company; provided, however, that the
foregoing shall not relieve (i) Investor or its Affiliates from liability
associated with the unauthorized disclosure of the Company’s confidential
information obtained pursuant to this Agreement or (ii) any director or officer
of the Company from any liability associated with his or her fiduciary duties to
the Company.

 

7.              Miscellaneous.

 

7.1           Successors and Assigns. The terms and conditions of this Agreement
inure to the benefit of and are binding upon the respective successors and
permitted assignees of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assignees any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.

 

16

 

 

7.2           Counterparts. This Agreement 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 Agreement 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
Agreement.

 

7.3           Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

7.4           Notices. All notices, requests, consents, claims, demands, waivers
and other communications under this Agreement 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 Investor (including to any of
Investor’s Affiliates subject to the terms hereof) or a Shareholder shall be
sent to such Person at its email address, facsimile number or address as set
forth on Schedule A (or at such other email address, facsimile number or address
for such Person as specified in a notice given in accordance with this Section
7.4). Any communication to the Company shall be sent in accordance with the
contact information set forth in the Company’s most recent filings with the SEC,
addressed to the attention of the Chief Executive Officer.

 

7.5           Amendments and Waivers. Any term of this Agreement may be amended,
modified or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance, and either retroactively
or prospectively) only with the written consent of (a) the Company, (b) Investor
and (c) the holders of at least a majority of the Shares held by the
Shareholders. Notwithstanding the foregoing, this Agreement may not be amended,
modified or terminated, and no provision hereof may be waived, in each case, in
any way which would adversely affect the rights of any Shareholder (or group of
Shareholders) hereunder in a manner disproportionate to any adverse effect such
amendment, modification, termination or waiver would have on the rights of the
other Shareholders hereunder, without also the written consent of such
Shareholder (or, in the case of an adverse affect to the rights of a group of
Shareholders, the holders of at least a majority of the Shares held by such
group of Shareholders). Notwithstanding the foregoing, Schedule A may be amended
by the Company from time to time in compliance with the terms of this Agreement
without the consent of the other parties. The Company shall give prompt notice
of any amendment, modification or termination hereof or waiver hereunder to any
party hereto that did not consent in writing to such amendment, modification,
termination, or waiver. No waivers of or exceptions to any term, condition, or
provision of this Agreement, in any one or more instances, shall be deemed to be
or construed as a further or continuing waiver of any such term, condition, or
provision.

 

7.6           Severability. In case any one or more of the provisions contained
in this Agreement is for any reason held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, and such invalid, illegal, or
unenforceable provision shall be reformed and construed so that it will be
valid, legal, and enforceable to the maximum extent permitted by law.

 

17

 

 

7.7           Entire Agreement. This 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 Investor 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.

 

7.8           Specific Performance. Each party acknowledges and agrees that each
party hereto will be irreparably damaged in the event any of the provisions of
this Agreement are not performed by the parties in accordance with their
specific terms or are otherwise breached. Accordingly, it is agreed that each
party to this Agreement shall be entitled to an injunction to prevent breaches
of this Agreement, and to specific enforcement of this Agreement and its terms
and provisions.

 

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

 

(a)            This Agreement 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)           ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT 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 AGREEMENT 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)            EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT 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 AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) 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, (B)
SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.9(C).

 

18

 

 

7.10        Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power, or remedy of such non-breaching or non-defaulting party, nor shall it be
construed to be a waiver of or acquiescence to any such breach or default, or to
any similar breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. All remedies, whether under this Agreement
or by law or otherwise afforded to any party, shall be cumulative and not
alternative.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

 

 

 

 

19

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

    COMPANY:           JONES SODA CO.           By  /s/ Jennifer Cue       Name:
Jennifer Cue     Title: President and Chief Executive Officer          
INVESTOR:           HEAVENLY RX LTD.             By /s/ Bradley Morris     Name:
Bradley Morris     Title: Director           SHAREHOLDERS:           JENNIFER
CUE             By /s/ Jennifer Cue     Name: Jennifer Cue           ERIC
CHASTAIN           By /s/ Eric Chastain     Name: Eric Chastain          
MICHAEL M. FLEMING           By /s/ Michael M. Fleming     Name: Michael M.
Fleming        

 

 

[Signature Page to Investor Rights Agreement]

 

 

SCHEDULE A

 

INVESTOR AND SHAREHOLDER INFORMATION

 

INVESTOR:                    COMPANY SECURITIES OWNED AS OF JULY 11, 2019

 

Heavenly RX Ltd.                    15,000,000

1112 North Flagler Dr.

Fort Lauderdale, FL 33304

Attn: Mike Beedles / Steve Avalon

Email: mbeedles@heavenlyrx.com

 

 

SHAREHOLDERS:

 

Jennifer Cue                    3,069,648 (1)

66 S. Hanford St.

Suite 150

Seattle, WA 98134

(206) 624-3357

 

Eric Chastain                    374,695 (2)

66 S. Hanford St.

Suite 150

Seattle, WA 98134

(206) 624-3357

 

Michael M. Fleming                    408,536

66 S. Hanford St.

Suite 150

Seattle, WA 98134

(206) 624-3357

 

(1)On March 23, 2018, Mrs. Cue purchased a $100,000 convertible subordinated
promissory note of the Company, which accrues interest at a rate of 6.0% per
annum with a four-year team and a conversion rate of $0.32 per share. The
conversion price is subject to anti-dilution adjustment on a broad-based,
weighted average basis if we issue shares or equity-linked instruments at a
conversion price below $0.32 per share.  Ms. Cue may convert all or part of such
convertible note into shares of common stock of the Company at any time on or
prior to the maturity date of the convertible note. As of March 14, 2019, Ms.
Cue has the ability to convert the note into 330,788 shares, which have been
included in the amounts listed above. 

 

 

 

(2)On April 18, 2018, Mr. Chastain purchased a $10,000 convertible subordinated
promissory note of the Company, which accrues interest at a rate of 6.0% per
annum with a four-year team and a conversion rate of $0.32 per share. The
conversion price is subject to anti-dilution adjustment on a broad-based,
weighted average basis if we issue shares or equity-linked instruments at a
conversion price below $0.32 per share.  Mr. Chastain may convert all or part of
such convertible note into shares of common stock of the Company at any time on
or prior to the maturity date of the convertible note. As of March 14, 2019, Mr.
Chastain has the ability to convert the note into 32,945 shares, which have been
included in the amounts listed above.