Document:

EdgarFiling

Exhibit 10.1

 

 

EXECUTION VERSION

 

 

 

 

 

 

SECURITIES PURCHASE AGREEMENT

 

between

 

JONES SODA CO.

 

and

 

HEAVENLY RX LTD.

 

dated as of

 

July 11, 2019

 

 

 

 

 

 

     

     

    

 

TABLE OF CONTENTS

 

	ARTICLE I DEFINITIONS	1
	ARTICLE II PURCHASE AND SALE	6
	Section 2.01 Purchase and Sale.	6
	Section 2.02 Closing.	7
	Section 2.03 Transactions Effected at the Closing.	7
	Section 2.04 Use of Proceeds.	8
	Section 2.05 Further Assurances.	8
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY	8
	Section 3.01 Organization, Qualification and Authority of the Company.	8
	Section 3.02 Capitalization.	9
	Section 3.03 Subsidiaries.	10
	Section 3.04 No Conflicts; Consents.	10
	Section 3.05 SEC Filings; Financial Statements.	11
	Section 3.06 Undisclosed Liabilities.	12
	Section 3.07 Absence of Certain Changes, Events and Conditions.	12
	Section 3.08 Material Contracts.	12
	Section 3.09 Title to Assets; Real Property.	13
	Section 3.10 Intellectual Property.	14
	Section 3.11 Insurance.	15
	Section 3.12 Legal Proceedings; Governmental Orders.	16
	Section 3.13 Compliance With Laws; Permits; Anti-Corruption.	16
	Section 3.14 Environmental Matters.	16
	Section 3.15 Employee Benefit Matters.	17
	Section 3.16 Employment Matters.	18
	Section 3.17 Taxes.	18
	Section 3.18 Brokers.	19

 

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	Section 3.19 Transactions With Related Persons.	19
	Section 3.20 Product Liability; Regulatory Compliance.	19
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF INVESTOR	20
	Section 4.01 Organization and Authority of Investor.	20
	Section 4.02 No Conflicts; Consents.	21
	Section 4.03 Investment Purpose; Accredited Investor.	21
	Section 4.04 Brokers.	21
	Section 4.05 Sufficiency of Funds.	21
	Section 4.06 Legal Proceedings.	21
	Section 4.07 Agreement to Comply with the Securities Act; Legend.	22
	ARTICLE V INDEMNIFICATION	22
	Section 5.01 Survival.	22
	Section 5.02 Indemnification By Company.	22
	Section 5.03 Certain Limitations.	23
	Section 5.04 Payments.	23
	Section 5.05 Tax Treatment of Indemnification Payments.	23
	Section 5.06 Effect of Investigation.	23
	Section 5.07 Exclusive Monetary Remedy.	24
	ARTICLE VI MISCELLANEOUS	24
	Section 6.01 Confidentiality; Public Announcements.	24
	Section 6.02 Expenses.	24
	Section 6.03 Notices.	24
	Section 6.04 Interpretation.	25
	Section 6.05 Headings.	26
	Section 6.06 Severability.	26
	Section 6.07 Entire Agreement.	26
	Section 6.08 Successors and Assigns.	26
	Section 6.09 No Third-Party Beneficiaries.	26
	Section 6.10 Amendment and Modification; Waiver.	26

 

    iii 

     

    

 

	Section 6.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.	27
	Section 6.12 Specific Performance.	27
	Section 6.13 Counterparts.	28

 

 

EXHIBITS

 

	Exhibit
A	Form of Investor Rights Agreement
	 	 
	Exhibit B	Form of Warrant 
	 	 
	Exhibit C-1	Form of Heavenly Standstill
Agreement
	 	 
	Exhibit C-2 	Form of SOL Standstill
Agreement
	 	 
	Exhibit D	Form of D&O Indemnification
Agreement
	 	 
	Exhibit E	Budget 

 

 

 

 

 

 

    iv 

     

    

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”),
dated as of July 11, 2019, is entered into by and between Jones Soda Co., a Washington corporation (the “Company”),
and Heavenly RX Ltd., a British Columbia corporation (“Investor”).

 

Recitals

 

WHEREAS, the Company wishes to sell to Investor,
and Investor wishes to purchase from the Company, 15,000,000 shares of common stock of the Company, and simultaneously therewith,
the Company shall issue to Investor a warrant to purchase up to 15,000,000 shares of common stock of the Company, subject to the
terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE
I

Definitions

 

The following terms have the meanings specified
or referred to in this ARTICLE I:

 

“Action” means any claim,
action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

 

“Affiliate” means, with respect
to any Person, 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.

 

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

 

“Audited Balance Sheet” has
the meaning set forth in Section 3.06.

 

“Audited Balance Sheet Date”
has the meaning set forth in Section 3.06.

 

“Basket” has the meaning
set forth in Section 5.03(a).

 

“Benefit Plan” has the meaning
set forth in Section 3.15(a).

 

“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.

 

“Cap” has the meaning set
forth in Section 5.03(a).

 

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“CERCLA” means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act
of 1986, 42 U.S.C. §§ 9601 et seq.

 

“Closing” has the meaning
set forth in Section 2.02.

 

“Closing Date” has the meaning
set forth in Section 2.02.

 

“Code” means the Internal
Revenue Code of 1986, as amended.

 

“Common Stock” has the meaning
set forth in Section 2.01(a).

 

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

 

“Company Board Approval”
has the meaning set forth in Section 3.04(b).

 

“Company Fundamental Representations”
has the meaning set forth in Section 5.01.

 

“Company Insurance Policies”
has the meaning set forth in Section 3.11.

 

“Company Intellectual Property”
has the meaning set forth in Section 3.10(a).

 

“Company SEC Documents” has
the meaning set forth in Section 3.05(a).

 

“Contracts” means all contracts,
leases, deeds, mortgages, licenses, instruments, notes, loans, commitments, undertakings, indentures, joint ventures and all other
agreements, commitments and legally binding arrangements, whether written or oral.

 

“D&O Indemnification Agreement”
has the meaning set forth in Section 2.03(b).

 

“Derivative Securities” has
the meaning set forth in Section 3.02(c).

 

“Disclosure Schedules” means
the Disclosure Schedules delivered by the Company and Investor concurrently with the execution and delivery of this Agreement.

 

“Dollars or $” means the
lawful currency of the United States.

 

“EDGAR” has the meaning set
forth in Section 3.05(a).

 

“Encumbrance” means any charge,
claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest,
mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

“Environmental Claim” means
any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any
Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries,
medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from:
(a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental
Law or term or condition of any Environmental Permit.

 

    2

     

    

 

“Environmental Law” means
any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution
(or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the
environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of,
exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge,
transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law”
includes the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§
9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the
Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972,
as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended,
15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001
et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and
the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

 

“Environmental Notice” means
any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged
non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

 

“Environmental Permit” means
any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted,
given, authorized by or made pursuant to Environmental Law.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

 

“ERISA Affiliate” means,
with respect to any Person, any other Person that, together with such first Person, would be treated as a single employer within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as in effect from time to time.

 

“FDA” has the meaning set
forth in Section 3.20(b).

 

“Financial Statements” has
the meaning set forth in Section 3.05(b).

 

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

 

“Governmental Authority”
means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental
authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any
arbitrator, court or tribunal of competent jurisdiction.

 

“Governmental Order” means
any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

“Hazardous Materials” means:
(a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case,
whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory
effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos
in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

 

“Intellectual Property” has
the meaning set forth in Section 3.10(a).

 

“Intellectual Property Registrations”
has the meaning set forth in Section 3.10(b).

 

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

 

“Investor Indemnitees” has
the meaning set forth in Section 5.02.

 

“Investor Org. Chart” has
the meaning set forth in Section 4.01.

 

“Investor Rights Agreement”
means the Investor Rights Agreement, in the form attached to this Agreement as Exhibit A, dated as of the Closing
Date, by and among the Company, Investor and certain other existing shareholders of the Company signatories thereto, as such agreement
may be amended, restated or modified from time to time.

 

“Knowledge of the Company”
or “the Company’s Knowledge” or any other similar knowledge qualification, means the actual or constructive
knowledge of Jennifer Cue, Eric Chastain, Joe Culp, Steve Gress, and Michael Fleming, after due inquiry.

 

“Law” means any statute,
law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.

 

“Leased Real Property” has
the meaning set forth in Section 3.09(a).

 

“Liabilities” has the meaning
set forth in Section 3.06.

 

“Licensed Intellectual Property”
has the meaning set forth in Section 3.10(a).

 

    4

     

    

 

“Losses” means losses, damages,
liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including
reasonable attorneys’ fees and the cost of enforcing any right to indemnification under this Agreement and the cost of pursuing
any insurance providers; provided, that “Losses” shall not include speculative or punitive damages, except
in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

 

“Material Adverse Effect”
means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the
aggregate, materially adverse to the business, results of operations, prospects, financial condition or assets of the Company and
the Subsidiaries, taken as a whole, provided, however, that “Material Adverse Effect”
shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to:
(i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Company operates;
(iii) any changes in financial or securities markets in general, including, without limitation, changes to the credit or equity
markets in general, such as changes in interest rates or the availability of financing; (iv) acts of war (whether or not declared),
armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement;
(vi) any changes in applicable Laws or accounting rules, including GAAP; (vii) the public announcement, pendency or completion
of the transactions contemplated by this Agreement; (viii) acts of god, such as fires, hurricanes, tornadoes, floods, earthquakes,
or other natural disasters; or (ix) changes requested or consented to by the Investor or its Representatives, regardless of whether
required under this Agreement, except, however, in the case of the foregoing clauses (i) through (ix), if any such event,
occurrence, fact, condition or change has had a disproportionate effect on
the Company and the Subsidiaries as compared to other participants in the industries in which the Company and the Subsidiaries
participate.

 

“Material Contracts” has
the meaning set forth in Section 3.08.

 

“NDA” has the meaning set
forth in Section 6.01(a).

 

“Permits” means all permits,
licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.

 

“Permitted Encumbrances”
has the meaning set forth in Section 3.09(b).

 

“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 Price” has the
meaning set forth in Section 2.01(b).

 

“Release” means any actual
or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping,
abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor),
surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

 

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“Representative” means, as
to any Person, such Person’s Affiliates, and its and their respective directors, officers, employees, managing members, general
partners, agents and consultants (including attorneys, financial advisors and accountants).

 

“SEC” means the United States
Securities and Exchange Commission.

 

“Securities Act” means the
Securities Act of 1933, as in effect from time to time.

 

“Shares” has the meaning
set forth in Section 2.01(a).

 

“Standstill Agreement” has
the meaning set forth in Section 2.03(a).

 

“Subsidiaries” has the meaning
set forth in Section 3.03(a).

 

“Taxes” means all federal,
state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental,
stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes,
fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and
any interest in respect of such additions or penalties.

 

“Tax Return” means any return,
declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.

 

“Transaction Documents” means
this Agreement, the Warrant, the Investor Rights Agreement, the Standstill Agreement and the D&O Indemnification Agreements.

 

“Union” has the meaning set
forth in Section 3.16.

 

“WARN Act” means the federal
Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings,
relocations, mass layoffs and employment losses.

 

“Warrant” has the meaning
set forth in Section 2.01(a).

 

ARTICLE
II

Purchase and Sale

 

Section 2.01      
Purchase and Sale.

 

(a)              
Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall sell to Investor, and
Investor shall purchase from the Company, (i) 15,000,000 shares (the “Shares”) of common stock of the Company,
no par value (“Common Stock”), and (ii) a warrant in the form attached to this Agreement as Exhibit B
(the “Warrant”) representing the right to acquire up to 15,000,000 shares of Common Stock, subject to adjustment
as set forth in the Warrant.

 

    6

     

    

 

(b)              
The aggregate purchase price for the Shares and the Warrant is an aggregate amount of $9,000,000 (the “Purchase
Price”) in cash, which shall be paid by wire transfer of immediately available funds.

 

Section 2.02      
Closing. Subject to the terms and conditions of this Agreement,
the purchase and sale of the Shares and the Warrant shall take place at a closing (the “Closing”) to be held
on the date of this Agreement (the “Closing Date”), remotely by electronic exchange and overnight delivery of
signatures and documents, or by such other method as the Company and Investor may mutually agree upon in writing.

 

Section
2.03       Transactions Effected at the Closing. 

 

(a)              
At the Closing, Investor shall deliver to the Company:

 

(i)                
the Purchase Price by wire transfer of immediately available funds to an account of the Company designated in writing by
the Company to Investor prior to the Closing;

 

(ii)             
the Warrant, duly executed by an authorized officer of Investor;

 

(iii)           
the Investor Rights Agreement, duly executed by an authorized officer of Investor; and

 

(iv)            
the Standstill Agreement, in the form attached to this Agreement as Exhibit C-1 (the “Heavenly Standstill
Agreement”), duly executed by an authorized officer of Investor, and the Standstill Agreement, in the form attached to
this Agreement as Exhibit C-2 (the “SOL Standstill Agreement”), duly executed by an authorized
officer of SOL Global Investments Corp., an Ontario corporation (“SOL”).

 

(b)              
At the Closing, the Company shall deliver to Investor:

 

(i)                
the Shares via book entry with the Company’s transfer agent;

 

(ii)             
the Warrant, duly executed by an authorized officer of the Company;

 

(iii)           
the Investor Rights Agreement, duly executed by an authorized officer of the Company and the shareholders of the Company
signatories thereto;

 

(iv)            
an Indemnification Agreement, in the form attached to this Agreement as Exhibit D (the “D&O Indemnification
Agreements”), for each of Investor’s representatives designated to the board of directors of the Company pursuant
to the terms of the Investor Rights Agreement, duly executed by an authorized officer of the Company;

 

(v)              
a good standing certificate (or its equivalent) for the Company and each Subsidiary from the secretary of state or similar
Governmental Authority of the jurisdiction under the Laws in which the Company or such Subsidiary is organized; and

 

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(vi)            
a certificate of the Secretary (or equivalent officer) of the Company certifying:

 

(A)            
that attached thereto is a true and complete copy of the resolutions or consent(s) containing the Company Board Approval,
and that such resolutions or consent(s) are in full force and effect as of the Closing and are all the resolutions or consent(s)
adopted in connection with the transactions contemplated by this Agreement or the other Transaction Documents;

 

(B)             
that the articles of incorporation and by-laws of the Company, as filed with the SEC Documents, are true and correct and
in full force and effect as of the Closing; and

 

(C)             
the names and signatures of the officers of the Company authorized to sign this Agreement, the Transaction Documents and
the other documents to be delivered hereunder and thereunder.

 

Section 2.04      
Use of Proceeds. The proceeds from the issuance of the Shares
and the Warrant (including any proceeds from any exercise of the Warrant) shall be used by the Company for the purposes set forth
in the budget attached to this Agreement as Exhibit E.

 

Section 2.05      
Further Assurances. Following the Closing, each of the parties
hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances
and assurances and take such further actions as may be reasonably required to carry out the provisions of this Agreement and give
effect to the transactions contemplated by this Agreement.

 

ARTICLE
III

Representations and Warranties of the Company

 

The Company represents and warrants to Investor
that the statements contained in this ARTICLE III are true and correct as of the Closing.

 

Section
3.01       Organization, Qualification and Authority of the
Company. The Company is a corporation duly organized and validly existing under the Laws of the state of Washington
and has full corporate power and authority (a) to enter into this Agreement and the other Transaction Documents to which the Company
is a party, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby,
and (b) to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as
it has been and is currently conducted. The Company is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing
or qualification necessary. The execution and delivery by the Company of this Agreement and any other Transaction Document to which
the Company is a party, the performance by the Company of its obligations hereunder and thereunder and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the
part of the Company. This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution
and delivery by Investor) this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except for laws affecting creditors’ rights generally and general principles of equity.
When each other Transaction Document to which the Company is or will be a party has been duly executed and delivered by the Company
(assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal
and binding obligation of the Company enforceable against it in accordance with its terms, except for laws affecting creditors’
rights generally and general principles of equity.

 

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Section
3.02       Capitalization.

 

(a)              
The authorized and outstanding capital stock of the Company, as of the Closing after giving effect to the transactions contemplated
by this Agreement, is as set forth on Section 3.02(a) of the Disclosure Schedules.

 

(b)              
All of the issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid
and non-assessable and were issued in compliance with all applicable federal and state securities Laws. None of the issued and
outstanding shares of capital stock of the Company were issued in violation of any agreement, arrangement or commitment to which
the Company or any of its Affiliates (including any Subsidiary) is a party or is subject to or in violation of any preemptive or
similar rights of any Person. At the Closing, the Shares will be duly authorized, validly issued, fully paid and non-assessable,
and Investor will own all of such Shares, free and clear of all Encumbrances. The shares of Common Stock issuable upon exercise
of the Warrant have been duly reserved for issuance, and upon issuance in accordance with the terms of the Warrant, will be duly
authorized, validly issued, fully paid and non-assessable, and Investor will own all of such shares, free and clear of all Encumbrances.
None of the Shares, the Warrant or the shares of Common Stock issuable upon exercise of the Warrant shares will be issued in violation
of any agreement, arrangement or commitment to which the Company or any of its Affiliates (including any Subsidiary) is a party
or is subject to or in violation of any preemptive or similar rights of any Person.

 

(c)              
Section 3.02(c) of the Disclosure Schedules sets forth, as of the Closing after giving effect to the transactions
contemplated by this Agreement, all outstanding (i) stock options and restricted stock awards under the Jones Soda Co. 2011
Incentive Plan and (ii) warrants, convertible securities or other rights, agreements, arrangements or commitments of any character
relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or any
other interest in, the Company ((i) and (ii), collectively, “Derivative Securities”), in each case, including
the number and kind of securities reserved for issuance on exercise or conversion of any such securities or other rights. The Company
does not have outstanding, authorized, or in effect any stock appreciation, phantom stock, profit participation or similar rights.
There are no voting trusts, shareholder agreements, proxies or other agreements, understandings or obligations in effect with respect
to the voting, transfer or sale (including any rights of first refusal, rights of first offer or drag-along rights), issuance (including
any pre-emptive or anti-dilution rights), redemption or repurchase (including any put or call or buy-sell rights), or registration
(including any related lock-up or market standoff agreements) of any shares of capital stock or other securities of the Company.

 

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Section 3.03      
 Subsidiaries.

 

(a)              
The Company owns 100% of the outstanding capital stock of each of Jones Soda Co. (USA) Inc., a Washington corporation, and
Jones Soda (Canada) Inc., a British Columbia corporation (each, a “Subsidiary,” and collectively, the “Subsidiaries”).
Section 3.03(a) of the Disclosure Schedules sets forth the authorized capital stock of each Subsidiary and the issued and
outstanding shares of each Subsidiary. Other than the Company’s ownership of the Subsidiaries, neither the Company nor any
Subsidiary, directly or indirectly, owns, controls or has any capital stock or other ownership interest in any other Person.

 

(b)              
Each Subsidiary is a corporation duly organized, validly existing and in good standing under the Laws of the state or province
of its formation and has full corporate power and authority to own, operate or lease the properties and assets now owned, operated
or leased by it and to carry on its business as it has been and is currently conducted. Each Subsidiary is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its
business as currently conducted makes such licensing or qualification necessary.

 

(c)              
There are no Derivative Securities relating to the capital stock of either Subsidiary or obligating either Subsidiary
to issue or sell any shares of capital stock of, or any other interest in, such Subsidiary. Neither Subsidiary has outstanding,
authorized, or in effect any stock appreciation, phantom stock, profit participation or similar rights. There are no voting trusts,
shareholder agreements, proxies or other agreements, understandings or obligations in effect with respect to the voting, transfer
or sale (including any rights of first refusal, rights of first offer or drag-along rights), issuance (including any pre-emptive
or anti-dilution rights), redemption or repurchase (including any put or call or buy-sell rights), or registration (including any
related lock-up or market standoff agreements) of any shares of capital stock or other securities of either Subsidiary.

 

Section 3.04      
No Conflicts; Consents.

 

(a)              
The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it
is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or
result in a violation or breach of, or default under, any provision of the articles of incorporation, by-laws or other organizational
documents of the Company or any Subsidiary; (b) conflict with or result in a violation or breach of any provision of any Law or
Governmental Order applicable to the Company or any Subsidiary; (c) (i) require the consent or waiver of, notice to or other action
by any Person under, (ii) conflict with, result in a violation or breach of, constitute a default or an event that, with or without
notice or lapse of time or both, would constitute a default under, or (iii) result in the acceleration of or create in any party
the right to accelerate, terminate, modify or cancel (including the creation or acceleration of any payment obligation) (A) any
Contract to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any of
its properties and assets are subject (including any Material Contract) or (B) any Permit affecting the properties, assets or business
of the Company or any Subsidiary; or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances
on any properties or assets of the Company or any Subsidiary. No consent, approval, Permit, Governmental Order, declaration or
filing with, or notice to, any Governmental Authority is required by or with respect to the Company or any Subsidiary in connection
with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.

 

    10

     

    

 

(b)              
The board of directors of the Company, by unanimous written consent or by resolutions duly adopted by a unanimous vote at
a meeting of all directors of the Company duly called and held, in each case which approval has not been rescinded or modified
in any way, has: (i) determined that this Agreement and the other Transaction Documents and the transactions contemplated hereby
and thereby, upon the terms and subject to the conditions set forth herein and therein, are fair to, and in the best interests
of, the Company and its shareholders; (ii) approved and declared advisable this Agreement and the other Transaction Documents,
including the execution, delivery, and performance hereof and thereof, and the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents, upon the terms and subject to the conditions set forth herein and therein;
and (iii) approved Investor becoming an “acquiring person” in compliance with Revised Code of Washington 23B.19.040(1)(a)(ii)
(collectively, the “Company Board Approval”). No vote of the Company’s shareholders is required in connection
with the transactions contemplated by this Agreement or the other Transaction Documents.

 

Section 3.05      
 SEC Filings; Financial Statements.

 

(a)              
The Company has timely filed with or furnished to, as applicable, the SEC all registration statements, prospectuses, reports
(including any Current Report on Form 8-K), schedules, forms, statements, and other documents (including exhibits and all other
information incorporated by reference) required to be filed or furnished by it with the SEC (the “Company SEC Documents”).
True, correct, and complete copies of all Company SEC Documents are publicly available in the Electronic Data Gathering, Analysis,
and Retrieval database of the SEC (“EDGAR”). As of their respective filing dates or, if amended or superseded
by a subsequent filing prior to the date of this Agreement, as of the date of the last such amendment or superseding filing (and,
in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings,
respectively), each of the Company SEC Documents complied as to form in all material respects with the applicable requirements
of the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act of 2002, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents. None of the Company SEC Documents, including any financial statements, schedules, or
exhibits included or incorporated by reference therein at the time they were filed (or, if amended or superseded by a subsequent
filing prior to the date of this Agreement, as of the date of the last such amendment or superseding filing), contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. To the Knowledge of the Company,
none of the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC investigation and there are no outstanding
or unresolved comments received from the SEC with respect to any of the Company SEC Documents. None of the Subsidiaries is required
to file or furnish any forms, reports, or other documents with the SEC.

 

    11

     

    

 

(b)              
Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in or
incorporated by reference into the Company SEC Documents (the “Financial Statements”): (i) complied as to form
in all material respects with the published rules and regulations of the SEC with respect thereto as of their respective dates;
(ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto and, in the case of unaudited interim financial statements, as may be permitted by the SEC for Quarterly Reports
on Form 10-Q); and (iii) fairly presented in all material respects the consolidated financial position and the results of operations,
changes in shareholders’ equity, and cash flows of the Company and its consolidated Subsidiaries as of the respective dates
of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements,
to normal and year-end audit adjustments as permitted by GAAP and the applicable rules and regulations of the SEC (but only if
the effect of such adjustments would not, individually or in the aggregate, be material).

 

Section
3.06       Undisclosed Liabilities. The audited consolidated
balance sheet of the Company dated as of December 31, 2018 (the “Audited Balance Sheet Date”) contained in the
Company SEC Documents is hereinafter referred to as the “Audited Balance Sheet.” Neither the Company nor any
Subsidiary has any liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown,
absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except (a)
those which are adequately reflected or reserved against in the Audited Balance Sheet as of the Audited Balance Sheet Date, (b)
those which have been incurred in the ordinary course of business consistent with past practice since the Audited Balance Sheet
Date and which are not, individually or in the aggregate, material in amount, (c) those which are reflected on the consolidated
balance sheet of the Company dated as of March 31, 2019, as filed with the Company’s Quarterly Report on Form 10-Q for the
period ended March 31, 2019, and (d) that which are set forth on Section 3.06 of the Disclosure Schedules.

 

Section 3.07      
Absence of Certain Changes, Events and Conditions. Except
as set forth on Section 3.07(a) of the Disclosure Schedules, since the Audited Balance Sheet Date, (a) the Company and each
Subsidiary has conducted its business only in the ordinary course, and (b) there has not occurred any Material Adverse Effect or
any event, occurrence or development that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect in the foreseeable future.

 

    12

     

    

 

Section 3.08      
Material Contracts. The Company’s Annual Report on
Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”), and subsequent reports filed by the Company
with the SEC under the Exchange Act, collectively include every “material contract” (as
such term is defined in Item 601(b)(10) of Regulation S-K of the Securities Act) of the Company and the Subsidiaries required
to be filed as an exhibit to such reports (the “Material Contracts”). Each Material Contract is valid and binding
on the Company or the respective Subsidiary, as applicable, in accordance with its terms and is in full force and effect. Neither
the Company nor any Subsidiary nor, to the Company’s Knowledge, any other party thereto is in breach of or default under
(or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any
Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event
of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes
of any right or obligation or the loss of any benefit thereunder.

 

Section
3.09       Title to Assets; Real Property. 

 

(a)              
Neither the Company nor any Subsidiary owns any real property. With respect to each parcel of real property leased or subleased
by the Company or any Subsidiary (including any buildings, structures and facilities located thereon, the “Leased Real
Property”), the disclosure under Item 2 of the 2018 Form 10-K is true and correct as of the Closing.

 

(b)              
The Company or a Subsidiary has good and valid title to, or a valid leasehold interest in, all Leased Real Property and
all personal property and other assets reflected in the Audited Balance Sheet or acquired after the Audited Balance Sheet Date,
other than properties and assets sold or otherwise disposed of in the ordinary course of business consistent with past practice
since the Audited Balance Sheet Date. All such Leased Real Property, properties and assets are free and clear of Encumbrances,
except for the following (collectively referred to as “Permitted Encumbrances”):

 

(i)                
liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures and for which there are
adequate accruals or reserves on the Audited Balance Sheet;

 

(ii)             
mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course
of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate,
material to the business of the Company and the Subsidiaries, as a whole;

 

(iii)           
easements, rights of way, zoning ordinances and other similar encumbrances affecting the Leased Real Property which are
not, individually or in the aggregate, material to the business of the Company and the Subsidiaries, as a whole; or

 

(iv)            
liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered
into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material
to the business of the Company and the Subsidiaries, as a whole; and

 

    13

     

    

 

(v)              
those Encumbrances set forth in Section 3.09(b) of the Disclosure Schedules.

 

(c)              
The use and operation of the Leased Real Property in the conduct of the business of the Company and the Subsidiaries do
not violate in any material respect any Law, covenant, condition, restriction, license, permit or agreement to which the Company
is a party or, to the Company’s Knowledge, to which any third party is a party. There are no Actions pending nor, to the
Company’s Knowledge, threatened against or affecting the Leased Real Property or any portion thereof or interest therein
in the nature of, or in lieu of, condemnation or eminent domain proceedings.

 

Section
3.10       Intellectual Property. 

 

(a)              
“Intellectual Property” means all of the following and similar intangible property and related proprietary
rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world, including such
property that is owned by the Company or any Subsidiary (“Company Intellectual Property”) and that in which
the Company or any Subsidiary holds exclusive or non-exclusive rights or interests granted by license from other Persons, including
the Company or any Subsidiary (“Licensed Intellectual Property”):

 

(i)                
trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services,
whether registered or unregistered, and all registrations and applications for registration of such trademarks, including intent-to-use
applications, all issuances, extensions and renewals of such registrations and applications and the goodwill connected with the
use of and symbolized by any of the foregoing;

 

(ii)             
internet domain names, whether or not trademarks;

 

(iii)           
social media accounts, including registration information, if applicable;

 

(iv)            
original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered or
unregistered), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals
of such registrations and applications;

 

(v)              
confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods,
processes, compositions and other trade secrets, whether or not patentable; and

 

(vi)            
patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending
patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues,
extensions, reexaminations and renewals of such patents and applications.

 

    14

     

    

 

(b)              
Section 3.10(b) of the Disclosure Schedules lists all trademarks, patents and copyrights constituting Company Intellectual
Property that are either (i) subject to any issuance, registration, application or other filing by, to or with any Governmental
Authority or authorized private registrar in any jurisdiction (collectively, “Intellectual Property Registrations”),
including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the
foregoing; or (ii) used in or necessary for the current or planned business or operations of the Company or any Subsidiary. All
required filings and fees related to the Intellectual Property Registrations have been timely filed with and paid to the relevant
Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing.

 

(c)              
Except as set forth in Section 3.10(c) of the Disclosure Schedules, the Company or a Subsidiary owns, exclusively
or jointly with other Persons, all right, title and interest in and to the Company Intellectual Property, free and clear of Encumbrances.
The Company and the Subsidiaries are in material compliance with all legal requirements applicable to the Company Intellectual
Property and the ownership and use thereof by the Company or any Subsidiary.

 

(d)              
With respect to each license, sublicense or other agreement whereby the Company or any Subsidiary
is granted rights, interests or authority (whether on an exclusive or non-exclusive basis) with respect to any Licensed Intellectual
Property that is used in or necessary for the current or planned business or operations of the Company or any Subsidiary, all such
agreements are valid, binding and enforceable between the Company or such Subsidiary, on the one hand, and the other parties thereto,
on the other hand. The Company or such Subsidiary and such other parties are in material compliance with the terms and conditions
of such agreements.

 

(e)              
The Company Intellectual Property and Licensed Intellectual Property as currently owned, licensed or used, or proposed to
be used, by the Company or any Subsidiary, and the conduct of the business of the Company and the Subsidiaries as currently and
formerly conducted and proposed to be conducted have not, do not and will not infringe, violate or misappropriate the Intellectual
Property of any Person. Neither the Company nor any Subsidiary has received any communication, and no Action has been instituted,
settled or, to the Company’s Knowledge, threatened that alleges any such infringement, violation or misappropriation, and
none of the Company Intellectual Property are subject to any outstanding Governmental Order.

 

(f)               
To the Knowledge of the Company, no Person has infringed, violated or misappropriated, or is infringing, violating or misappropriating,
any Company Intellectual Property.

 

    15

     

    

 

Section
3.11       Insurance. The Company and the Subsidiaries
maintain insurance (including the D&O Policy, the “Company Insurance Policies”) of the type and in the amounts
customarily carried by Persons conducting a business similar to the Company and the Subsidiaries. The Company Insurance Policies
are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated
by this Agreement. The Company Insurance Policies are sufficient for compliance with all applicable Laws and Contracts to which
the Company or any Subsidiary is a party or by which it is bound. There are no claims related to the business of the Company and
the Subsidiaries pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect
of which there is an outstanding reservation of rights. Section 3.11 of the Disclosure Schedules sets forth the Company’s
directors’ and officers’ liability insurance policy, including the general terms, coverage amounts and covered individuals
(the “D&O Policy”).

 

Section
3.12       Legal Proceedings; Governmental Orders. 

 

(a)              
Except as set forth in Section 3.12(a) of the Disclosure Schedules, there are no Actions pending or, to the Company’s
Knowledge, threatened against or by the Company or any Affiliate (including any Subsidiary) affecting any of the properties or
assets of the Company or any Subsidiary, or that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated
by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

 

(b)              
Except as set forth in Section 3.12(b) of the Disclosure Schedules, there are no outstanding Governmental Orders
and no unsatisfied judgments, penalties or awards against or affecting the Company or any Subsidiary or any of their respective
properties or assets. The Company and each Subsidiary is in compliance with the terms of each Governmental Order set forth in Section
3.12(b) of the Disclosure Schedules. To the Company’s Knowledge, no event has occurred or circumstances exist that may
constitute or result in (with or without notice or lapse of time) a violation of any such Governmental Order.

 

Section
3.13       Compliance With Laws; Permits; Anti-Corruption. 

 

(a)              
Except as set forth in Section 3.13(a) of the Disclosure Schedules, the Company and each Subsidiary has complied,
and is now complying, in all material respects, with all Laws applicable to it or its business, properties or assets.

 

(b)              
All Permits required for the Company or any Subsidiary to conduct its business have been obtained by it and are valid and
in full force and effect. All fees and charges with respect to such Permits as of the date of this Agreement have been paid in
full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the
revocation, suspension, lapse or limitation of any such Permit.

 

(c)              
Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, any Representative or other person associated
with or acting on behalf of the Company or any Subsidiary, has violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977, the Corruption of Foreign Public Officials Act (Canada) or any other applicable anti-corruption or anti-bribery
law, including any rules or regulations promulgated thereunder.

 

    16

     

    

 

Section 3.14      
Environmental Matters. The Company and each Subsidiary is
currently and has been in material compliance with all Environmental Laws, and neither the Company nor any Subsidiary has received
from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental
Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements. The Company
and each Subsidiary has obtained and is in material compliance with all Environmental Permits necessary for the ownership, lease,
operation or use of the business or assets of the Company and such Subsidiary. To the Company’s Knowledge, there is no condition,
event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business
or assets of the Company or any Subsidiary as currently carried out. To the Knowledge of the Company, no real property currently
or formerly owned, operated or leased by the Company or any Subsidiary is listed on, or has been proposed for listing on, the National
Priorities List (or CERCLIS) under CERCLA, or any similar state list. There has been no Release of Hazardous Materials in contravention
of Environmental Law with respect to the business or assets of the Company or any Subsidiary or any real property currently owned,
operated or leased by the Company or any Subsidiary or, to the Knowledge of the Company, formerly owned, operated or leased by
the Company or any Subsidiary.

 

Section
3.15       Employee Benefit Matters. 

 

(a)              
Section 3.15(a) of the Disclosure Schedules contains a true and complete list of each
“employee benefit plan” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (as amended,
and including the regulations thereunder, “ERISA”), whether or not written and whether or not subject to ERISA,
and each supplemental retirement, compensation, employment, consulting, profit-sharing, deferred compensation, incentive, bonus,
equity, change in control, retention, severance, salary continuation, and other similar agreement, plan, policy, program, practice,
or arrangement which is or has been established, maintained, sponsored, or contributed to by the Company or any Subsidiary or under
which the Company or any Subsidiary has or may have any Liability (each, a “Benefit Plan”).

 

(b)              
Each Benefit Plan has been established, administered, and maintained in accordance with its
terms and in material compliance with all applicable Laws (including ERISA and the Code).  Except as set forth on Section
3.15(b) of the Disclosure Schedules, nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably
be expected to subject the Company or any Subsidiary to a civil action, penalty, surcharge, or Tax under applicable Law or which
would jeopardize the previously-determined qualified status of any Benefit Plan. All benefits, contributions,
and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable
Laws and accounting principles. Benefits accrued under any unfunded Benefit Plan have been paid, accrued or adequately reserved
for to the extent required by GAAP.

 

    17

     

    

 

(c)              
Except as set forth on Section 3.15(c) of the Disclosure Schedules, neither the Company nor any
Subsidiary has: (i) incurred, nor reasonably expects to incur, any Liability under Title I or Title IV of ERISA or related provisions
of the Code or applicable Law relating to any Benefit Plan; or (ii) incurred, nor reasonably expects to incur, any Liability to
the Pension Benefit Guaranty Corporation. To the Knowledge of the Company, no complete or partial termination of any Benefit Plan
has occurred or is expected to occur.

 

(d)              
Neither the Company nor any Subsidiary has now, or at any time, contributed to, sponsored, or
maintained any: (i) “multiemployer plan” as defined in Section 3(37) of ERISA;
(ii) “single-employer plan” as defined in Section 4001(a)(15) of ERISA; (iii) “multiple employer plan”
as defined in Section 413(c) of the Code; (iv) “multiple employer welfare arrangement” as defined in Section 3(40)
of ERISA; (v) a leveraged employee stock ownership plan described in Section 4975 (e)(7) of the Code; or (vi) any other Benefit
Plan subject to required minimum funding requirements.

 

Section 3.16      
Employment Matters.  All wages, commissions and bonuses,
payable to employees, independent contractors or consultants of the Company or any Subsidiary, for services performed on or prior
to the date of this Agreement have been paid in the ordinary course of business consistent with past practice. Neither the Company
nor any Subsidiary is, nor has been, a party to, bound by, or negotiating any collective bargaining agreement or other Contract
with a union, works council or labor organization (collectively, “Union”). To the Company’s Knowledge,
no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. The Company
and each Subsidiary is and has been in material compliance with the terms of all applicable Laws pertaining to employment and employment
practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment
discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, classification,
wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and
break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance.

 

Section
3.17       Taxes. Except as set forth in Section
3.17 of the Disclosure Schedules:

 

(a)              
The Company (and, if applicable, each Subsidiary) has timely filed all Tax Returns that it was required to file. All such
Tax Returns were complete and correct in all respects. All Taxes due and owing by the Company or any Subsidiary (whether or not
shown on any Tax Return) have been timely paid;

 

(b)              
The Company and each Subsidiary has withheld and paid each Tax required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with
all information reporting and backup withholding provisions of applicable Law;

 

(c)              
No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company
or any Subsidiary;

 

    18

     

    

 

(d)              
All deficiencies asserted, or assessments made, against the Company or any Subsidiary as a result of any examinations by
any taxing authority have been fully paid;

 

(e)              
Neither the Company nor any Subsidiary is a party to any Action by any taxing authority. There are no pending or threatened
Actions by any taxing authority; and

 

(f)               
Neither the Company nor any Subsidiary (i) has been a member of an affiliated, combined, consolidated or unitary Tax group
for Tax purposes or (ii) to the Knowledge of the Company, has Liability for Taxes of any Person (other than the Company) under
Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or foreign Law), as transferee or successor,
by contract or otherwise.

 

Section
3.18       Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated
by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of the Company or any Subsidiary.

 

Section 3.19      
Transactions With Related Persons. Except as set forth on
Section 3.19 of the Disclosure Schedules, the Company’s Definitive Proxy Statement, filed with the SEC on March 26,
2019, discloses every transaction or proposed transaction required to be disclosed under Item 404
of Regulation S-K of the Securities Act. Since January 1, 2019, no transaction has occurred or been proposed that would or will
require disclosure under Item 404 of Regulation S-K of the Securities Act in the Company’s Definitive Proxy Statement to
be filed with respect to the Company’s 2020 annual meeting of shareholders.

 

Section
3.20        Product Liability; Regulatory Compliance.

 

(a)              
The Company and the Subsidiaries do not provide any warranties with respect to their products other than the express warranties
contained in customer agreements set forth on Section 3.20(a) of the Disclosure Schedule. There has been no occurrence which
would give rise to, or form the basis of, any product liability, liability for injuries to individuals or liability for breach
of warranty (whether covered by insurance or not) on the part of the Company or any Subsidiary with respect to products designed,
manufactured, distributed, marketed or sold by the Company or any Subsidiary, in each case, subject to any applicable reserves
of specifically identified in the Audited Balance Sheet.

 

    19

     

    

 

(b)              
Each product manufactured, purchased, produced, distributed, labeled, sold, stored or delivered by the Company or any Subsidiary
(including any finished goods inventory) at the time at which such product was manufactured, purchased, distributed, labeled, sold,
stored or delivered by the Company or any Subsidiary, (i) was in conformity with all applicable contractual requirements, including
any product specifications and any express or implied warranties, (ii) have been manufactured, purchased, distributed, labeled,
sold, stored and delivered (as applicable) in compliance with all Laws, including all food and beverage Laws, including labeling,
(iii) since coming in the possession of the Company or any Subsidiary has been manufactured, purchased, produced, distributed,
labeled, sold, stored and delivered, as applicable, in accordance with appropriate “Good Manufacturing Practices” or
similar practices that may be promulgated under the food and beverage Laws, and (iv) (A) is not, or was not, as applicable
adulterated or misbranded within the meaning of food and beverage Laws, (B) is not, or was not, as applicable, prohibited from
being introduced into interstate commerce under the provisions of any food or beverage Laws, and (C) did not contain, or does not
contain, as applicable, a hazardous substance or a banned substance within the meaning of any of any food or drug Laws. Section
3.20(b) of the Disclosure Schedule sets forth all recalls, withdrawals or suspensions of products manufactured, purchased,
produced, distributed, labeled, sold, stored or delivered by the Company or any Subsidiary. None of the Company or any Subsidiary
has received written notice of or otherwise is aware of, any U.S. Food & Drug Administration (“FDA”) or
other Governmental Authority notices of warning or withholding, suspension or withdrawal of Inspection, seizure, criminal referral
or other similar federal, state or private enforcement actions with respect to any product manufactured, purchased, produced, distributed,
labeled, sold, stored or delivered by the Company or any Subsidiary. To the Company's Knowledge there are no facts, events or conditions
that would reasonably be expected to furnish a basis for an injunction from or an award of damages (other than those that are insured
or immaterial) with respect to, any product of the Company or any Subsidiary; or which would otherwise reasonably be expected to
cause the Company or any Subsidiary to withdraw, recall or suspend or have enjoined any product from any market or to terminate
or suspend distribution of such product. Neither the Company nor any Subsidiary is subject (or has been subject) to any adverse
inspection finding, recall, investigation, penalty assessment, audit or other compliance or enforcement action by the FDA or any
other federal, state, or foreign Governmental Authority having responsibility for the regulation of the current and/or proposed
products of the Company or any Subsidiary. The Company and the Subsidiaries have obtained all necessary approvals and authorizations
from the FDA and other Governmental Authorities for their current and past business activities and validly holds all accreditations
and certifications that are necessary to operate their business and that they are contractually obligated to maintain, including
Global Food Safety Initiative (GFSI) certifications, if contractually mandated. None of the Company nor any Subsidiary has made
any materially false statements or materially false omissions in their applications or other submissions to the FDA or other Governmental
Authority. The Company and the Subsidiaries are in material compliance with all regulations and requirements of the FDA and other
Governmental Authorities. None of the Company or any Subsidiary has received any information or report from the FDA or other Governmental
Authorities indicating or claiming that their products are unsafe or defective or that the applicable authorities will be unwilling
to grant the necessary product approvals.

 

    20

     

    

 

ARTICLE
IV

Representations and Warranties of Investor

 

Investor represents and warrants to the Company
that the statements contained in this ARTICLE IV are true and correct as of the Closing.

 

Section 4.01      
Organization and Authority of Investor. Investor is a corporation
duly organized, validly existing and in good standing under the Laws of the Canadian Province of British Columbia. Investor has
full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Investor is a party,
to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution
and delivery by Investor of this Agreement and any other Transaction Document to which Investor is a party, the performance by
Investor of its obligations hereunder and thereunder and the consummation by Investor of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part of Investor. This Agreement has been duly executed
and delivered by Investor, and (assuming due authorization, execution and delivery by the Company) this Agreement constitutes a
legal, valid and binding obligation of Investor enforceable against Investor in accordance with its terms, except for laws affecting
creditors’ rights generally and general principles of equity. When each other Transaction Document to which Investor is or
will be a party has been duly executed and delivered by Investor (assuming due authorization, execution and delivery by each other
party thereto), such Transaction Document will constitute a legal and binding obligation of Investor enforceable against it in
accordance with its terms, except for laws affecting creditors’ rights generally and general principles of equity. Prior
to the date hereof, the Investor has delivered an organizational chart of Investor and its Affiliates (including, without limitation,
SOL), which contains, for each Person in the organizational chart that is not an individual (a) the name and jurisdiction of incorporation
or formation for each such Person, (b) the names of each officer and director of each Person, and (c) each owner of more than 10%
of the outstanding capital stock or ownership percentages of each Person (the “Investor Org Chart”). The Investor
Org Chart is true and complete as of the date hereof.

 

Section 4.02      
No Conflicts; Consents. The execution, delivery and performance
by Investor of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under,
any provision of the articles of incorporation, by-laws or other organizational documents of Investor; (b) conflict with or result
in a violation or breach of any provision of any Law or Governmental Order applicable to Investor; or (c) except as set forth in
Section 4.02 of the Disclosure Schedules, require the consent, notice or other action by any Person under any Contract to
which Investor is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental
Authority is required by or with respect to Investor in connection with the execution and delivery of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section
4.03       Investment Purpose; Accredited Investor.
Investor is acquiring the Shares and the Warrant solely for its own account for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution thereof. Investor acknowledges that the Shares and the Warrant are not registered
under the Securities Act of 1933, as amended, or any state securities laws, and that the Shares and the Warrant may not be transferred
or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended or pursuant to an applicable exemption
therefrom and subject to state securities laws and regulations, as applicable. Investor is an “accredited investor”
as defined in Section 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.

 

    21

     

    

 

Section 4.04      
Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement
or any other Transaction Document based upon arrangements made by or on behalf of Investor.

 

Section
4.05       Sufficiency of Funds. Buyer has sufficient cash on
hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions
contemplated by this Agreement.

 

Section
4.06       Legal Proceedings. Except as set forth
in Section 4.06 of the Disclosure Schedules, there are no Actions pending or, to the Investor’s knowledge, threatened
against or by the Investor or any of its Affiliates that challenge or seek to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any
such Action. 

 

Section 4.07      
Agreement to Comply with the Securities Act; Legend. Investor,
by acceptance of the Shares, agrees that Investor shall not offer, sell or otherwise dispose of the Shares except under circumstances
that will not result in a violation of the Securities Act. The Shares (unless and until registered under the Securities Act) shall
be stamped, imprinted or notated with a legend in substantially the form:

 

“THESE SECURITIES 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 SECURITIES 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.”

 

ARTICLE
V

Indemnification

 

Section 5.01      
Survival. The representations and warranties contained in
this Agreement shall survive the Closing and shall remain in full force and effect until the date that is 12 months following the
Closing Date; provided, however, that (i) the representations and warranties of the Company contained in Sections 3.01,
3.02, 3.03, 3.04, 3.17 and 3.18 (the “Company Fundamental Representations”)
and the representations and warranties of the Company contained in Section 3.10, and (ii) the representations and warranties
of Investor contained in ARTICLE IV, shall remain in full force and effect until the date that is 24 months following the
Closing Date. The covenants and agreements contained in this Agreement shall survive the Closing and shall remain in full force
and effect indefinitely.

 

    22

     

    

 

Section
5.02       Indemnification By Company. Subject to
the other terms and conditions of this ARTICLE V, the Company and each Subsidiary shall (and the Company shall cause each
Subsidiary to) jointly and severally indemnify and defend and hold harmless each of Investor and its Affiliates and their respective
Representatives (collectively, the “Investor Indemnitees”) against, and shall hold each of them harmless from
and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Investor
Indemnitees based upon, arising out of, with respect to or by reason of:

 

(a)              
any inaccuracy in or breach of any of the representations or warranties of the Company contained in this Agreement or in
any other Transaction Document or in any certificate or instrument delivered by or on behalf of the Company pursuant hereto and
thereto; or

 

(b)              
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Company pursuant to this Agreement
or any other Transaction Document.

 

Section 5.03      
Certain Limitations. 

 

(a)              
Neither the Company nor any Subsidiary shall be liable to the Investor Indemnitees for indemnification under Section
5.02(a) (a) unless and until the aggregate amount of all Losses subject to indemnification under Section 5.02(a) exceeds
$100,000 (the “Basket”), in which case the Company and each Subsidiary shall be liable only to the extent the
aggregate amount of such Losses exceeds the Basket, and (b) to the extent that the aggregate amount of all Losses subject to indemnification
under Section 5.02(a) exceeds the Purchase Price (the “Cap”). Notwithstanding the foregoing, the Basket
and the Cap shall not apply with respect to any Losses based upon, arising out of, with respect to or by reason of any inaccuracy
in or breach of a Company Fundamental Representation or with respect to fraud, criminal activity or willful misconduct on the part
of the Company or any Subsidiary.

 

(b)              
For purposes of determining (i) any inaccuracy or breach of a representation and warranty, (ii) the breach of any covenants
and agreements and (iii) calculating Losses subject to this ARTICLE V, any “materiality” or “Material
Adverse Effect” qualifications in such representations, warranties, covenants and agreements shall be disregarded.

 

Section 5.04      
Payments. Once a Loss is agreed to by the Company or finally
adjudicated to be payable in accordance with this ARTICLE V, the Company and each Subsidiary shall satisfy its obligations
within thirty (30) Business Days of such agreement or final, non-appealable adjudication by wire transfer of immediately available
funds. The parties hereto agree that should the Company or a Subsidiary not make full payment of any such obligations within such
five-Business Day period, any amount payable shall accrue interest from and including the date of such agreement or such adjudication
to the date such payment has been made at a rate per annum equal to 12%. Such interest shall be calculated on a daily basis from
the date such amounts were required to be paid until (but excluding) the date of actual payment, and on the basis of a 360-day
year.

 

Section 5.05      
Tax Treatment of Indemnification Payments. All indemnification
payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless
otherwise required by Law.

 

    23

     

    

 

Section 5.06      
Effect of Investigation. Neither
the representations, warranties and covenants of the Company, nor the right to indemnification of any Investor Indemnitee making
a claim under this ARTICLE V with respect thereto, shall be affected or deemed waived by reason of any investigation made
by or on behalf of an Investor Indemnitee (including by any of its Representatives) or by reason of the fact that an Investor Indemnitee
or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate,
provided, however, that the Company shall not be liable under this ARTICLE V for any Losses based upon or arising
out of any inaccuracy in or breach of any of the representations or warranties of the Company contained in this Agreement to the
extent such inaccuracy or breach was disclosed by the Company in the Disclosure Schedules.

 

Section 5.07      
Exclusive Monetary Remedy. Subject
to Section 6.12, the parties acknowledge and agree that their sole and exclusive monetary remedy with respect to any and
all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection
with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement
or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement, shall be pursuant to the
indemnification provisions set forth in this ARTICLE V. In furtherance of the foregoing, each party hereby waives, to the
fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty,
covenant, agreement or obligation set forth in this Agreement or otherwise relating to the subject matter of this Agreement it
may have against the other party hereto and its Affiliates and its Representatives arising under or based upon any Law, except
pursuant to the indemnification provisions set forth in this ARTICLE V. Nothing in this Section 5.07 shall limit
any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on
account of any party’s fraudulent, criminal or intentional misconduct.

 

ARTICLE
VI

Miscellaneous

 

Section 6.01      
Confidentiality; Public Announcements.

 

(a)              
The parent company of Investor and the Company have previously executed a Mutual Nondisclosure Agreement, dated as of April
22, 2019 (the “NDA”), which the parties agree shall continue in full force and effect following the Closing
in accordance with its terms.

 

(b)              
No party hereto shall issue any press release or make any other public announcement or disclosure with respect to
this Agreement and the transactions contemplated in this Agreement without the prior written consent of the other party, except
for any press release, public announcement or other public disclosure that is required by applicable listing standards, securities
or other laws or governmental regulations or by order of a court of competent jurisdiction. Prior to making any such required disclosure
the disclosing party shall have given written notice to the non-disclosing party describing in reasonable detail the proposed content
of such disclosure and shall permit the non-disclosing party to review and comment upon the form and substance of such disclosure.

 

    24

     

    

 

Section
6.02       Expenses. Except as otherwise expressly
provided in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred.

 

Section 6.03      
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.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 6.03):

 

	If to the Company:	 	 	Address:	 	 	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 to:	 	 	Address:	 	 	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

 

	If to Investor:	 	 	Address:	 	 	Heavenly RX Ltd.
	 	 	 	 	 	 	1112 North Flagler Drive
	 	 	 	 	 	 	Fort Lauderdale, FL 33304
	 	 	 	E-mail:	 	 	mbeedles@heavenlyrx.com
	 	 	 	Attention:	 	 	Mike Beedles / Steve Avalon

 

	with a copy to:	 	 	Address:	 	 	Dorsey & Whitney
	 	 	 	 	 	 	TD Canada Trust Tower
	 	 	 	 	 	 	Brookfield Place
	 	 	 	 	 	 	161 Bay Street, Suite 4310
	 	 	 	 	 	 	Toronto, ON, Canada M5J 2S1
	 	 	 	Facsimile:	 	 	1 (416) 367-7371
	 	 	 	E-mail:	 	 	raymer.richard@dorsey.com; and
	 	 	 	 	 	 	van.horn.jonathan@dorsey.com
	 	 	 	Attention:	 	 	Richard Raymer and Jonathan A. Van Horn

 

    25

     

    

 

Section
6.04       Interpretation. For purposes of this Agreement,
(a) the words “include,” “includes” and “including” shall be deemed to be followed by the words
“without limitation”; (b) the word “or” is not exclusive; and (c) the words “in this Agreement,”
“hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole.
Unless the context otherwise requires, references in this Agreement: (x) to Articles, Sections, Disclosure Schedules and Exhibits
mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument
or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to
the extent permitted by the provisions thereof; and (z) to a statute means such statute as amended from time to time and includes
any successor legislation thereto and any regulations promulgated thereunder. This Agreement 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. The Disclosure Schedules and Exhibits referred to in this Agreement shall be construed with, and as an integral
part of, this Agreement to the same extent as if they were set forth verbatim in this Agreement.

 

Section
6.05       Headings. The headings in this Agreement
are for reference only and shall not affect the interpretation of this Agreement.

 

Section
6.06       Severability. If any term or provision
of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible
in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

Section
6.07       Entire Agreement. This Agreement, the
other Transaction Documents and the NDA 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.

 

Section
6.08       Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations
under this Agreement.

 

Section
6.09       No Third-Party Beneficiaries. Except as
provided in ARTICLE V, this Agreement is for the sole benefit of the parties hereto and their respective successors and
permitted assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person or entity
any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

    26

     

    

 

Section
6.10       Amendment and Modification; Waiver. This
Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any
party of any of the provisions of this Agreement 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 right, remedy, power or privilege arising from this Agreement shall operate
or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under this
Agreement preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

Section
6.11       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, THE OTHER TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY 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 OR THE OTHER TRANSACTION DOCUMENTS
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, THE OTHER TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 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 8.11(C).

 

    27

     

    

 

Section
6.12       Specific Performance. The parties agree
that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms of this
Agreement and that the parties shall be entitled to specific performance of the terms of this Agreement, in addition to any other
remedy to which they are entitled at law or in equity.

 

Section
6.13       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.

 

[signature page follows]

 

 

 

 

 

 

 

 

    28

     

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

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

 

 

 

 

 

 

[Signature Page to Securities Purchase Agreement]EdgarFiling

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).

 

    2

     

    

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

 

    3

     

    

(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.

 

    4

     

    

(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).

 

    5

     

    

(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.

 

    6

     

    

(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:

 

    7

     

    

(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.

 

    8

     

    

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.

 

    9

     

    

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.

 

    10

     

    

(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)

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