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.
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.
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.
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
|
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.
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)
.
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]
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]
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)
.
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
(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.
(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
).
(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.
(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:
(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.
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.
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.
(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
|
|
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.
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).
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]
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)
Exhibit 10.3
EXECUTION VERSION
JONES SODA CO.
INVESTOR RIGHTS AGREEMENT
dated as of
July 11, 2019
TABLE OF CONTENTS
Page
1.
Definitions
|
1
|
2.
Board Representation; Observer
|
4
|
2.1 Size of the Board
|
4
|
2.2 Investor Designees
|
4
|
2.3 Failure to Designate; Vacancies; Removal
|
4
|
2.4 Committees; Subsidiaries
|
5
|
2.5 Observer
|
5
|
2.6 Grant of Proxy
|
6
|
2.7 Company Covenant
|
6
|
2.8 No Liability
|
6
|
2.9 No “Bad Actor” Designees
|
6
|
2.10 Expenses and Compensation
|
7
|
2.11 Indemnification Agreements
|
7
|
3.
Rights to Future Stock Issuances
|
7
|
3.1 Right of First Offer
|
7
|
3.2 Offer Notice
|
7
|
3.3 Investor Election
|
7
|
3.4 Failure to Fully Subscribe
|
7
|
3.5 Excluded Securities
|
8
|
4.
Lock-Up
|
8
|
4.1 Agreement to Lock-Up
|
8
|
4.2 Stop Transfer Instructions
|
9
|
5.
Registration Rights
|
9
|
5.1 Demand Registration
|
9
|
5.2 Company Registration
|
10
|
5.3 Underwriting Requirements
|
10
|
5.4 Obligations of the Company
|
11
|
5.5 Furnish Information
|
12
|
5.6 Expenses of Registration
|
12
|
5.7 Indemnification
|
13
|
5.8 Reports Under Exchange Act
|
14
|
5.9 Limitations on Subsequent Registration Rights
|
14
|
5.10 Assignment
|
14
|
5.11 Termination of Registration Rights
|
15
|
6.
Covenants
|
15
|
6.1 D&O Insurance
|
15
|
6.2 QSR Network
|
15
|
6.3 Matters Requiring Investor Designee Approval
|
15
|
|
|
6.4 Further Assurances
|
16
|
6.5 Right to Conduct Activities
|
16
|
7.
Miscellaneous
|
16
|
7.1 Successors and Assigns
|
16
|
7.2 Counterparts
|
17
|
7.3 Titles and Subtitles
|
17
|
7.4 Notices
|
17
|
7.5 Amendments and Waivers
|
17
|
7.6 Severability
|
17
|
7.7 Entire Agreement
|
18
|
7.8 Specific Performance
|
18
|
7.9 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
|
18
|
7.10 Delays or Omissions
|
19
|
SCHEDULES
SCHEDULE A Investor
and Shareholder Information
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this “
Agreement
”),
dated as of July 11, 2019, is entered into by and among Jones Soda Co., a Washington corporation (the “
Company
”),
Heavenly RX Ltd., a British Columbia corporation (“
Investor
”), and each of the shareholders listed on
Schedule
A
hereto (collectively, the “
Shareholders
”).
RECITALS
WHEREAS
, the Company and Investor are
parties to that certain Securities Purchase Agreement, dated as of the date hereof (the “
Purchase Agreement
”);
and
WHEREAS
, in order to induce the Company
to enter into the Purchase Agreement and to induce Investor to enter into the Purchase Agreement and invest funds in the Company
pursuant to the Purchase Agreement, Investor, the Company and the Shareholders hereby agree that this Agreement shall govern certain
rights of Investor and such other matters regarding the Company and the Shareholders as set forth in this Agreement;
NOW, THEREFORE
, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement, intending to be legally bound, hereby
agree as follows:
1.
Definitions
. For purposes of this Agreement:
1.1
“
Agreement
” has the meaning set forth in the Preamble.
1.2
“
Affiliate
” means, with respect to any Person, (i) any Immediate Family Member, or (ii) any other Person
that is directly or indirectly controlling, controlled by, or under common control with such Person, where “control”
and derivative terms mean the possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
1.3
“
Board
” means the board of directors of the Company.
1.4
“
Business Day
” means any day except Saturday, Sunday or any other day on which commercial banks located
in either Toronto, Canada or Seattle, Washington are authorized or required by Law to be closed for business.
1.5
“
Common Stock
” means shares of the Company’s common stock, no par value per share.
1.6
“
Company
” has the meaning set forth in the Preamble.
1.7
“
Change of Control Transaction
” means the occurrence of one of the following events: (i) the sale, transfer,
assignment, license or lease of all or a material portion of all of the assets (measured by value) of the Company and its subsidairies,
taken as a whole, to a Person in a single transaction or a series of related transactions; or (ii) the sale, assignment, transfer
or other disposition, directly or indirectly, either through the issuance of equity securities by the Company or the sale of equity
securities by shareholders of the Company, of more than a majority of either the outstanding equity interests or voting power of
the Company, in a single transaction or a series of related transactions, whether by merger, exchange, combination, joint venture,
consolidation, unit purchase or otherwise, to any third party.
1.8
“
Damages
” means any loss, damage, claim or liability (joint or several) to which a party hereto may become
subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability
(or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by
the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law,
or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.
1.9
“
Disqualification Event
” has the meaning set forth in
Section 2.9
.
1.10
“
Disqualified Designee
” has the meaning set forth in
Section 2.9
.
1.11
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
1.12
“
Excluded Securities
” means (i) securities issued upon the conversion of any debenture, warrant,
option, or other convertible security; (ii) Common Stock issuable upon a stock split, stock dividend, any subdivision of, or other
distribution on, shares of Common Stock; (iii) shares of Common Stock (or options to purchase such shares of Common Stock)
issued or issuable to employees or directors of, or consultants to, the Company pursuant to any plan, agreement or arrangement
approved by the Board; (iv) shares of Common Stock, warrants, options or other convertible securities issued to banks, equipment
lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property
leasing transaction approved by the Board; (v) shares of Common Stock, warrants, options or other convertible securities issued
to suppliers, vendors or third party service providers in connection with the provision of goods or services pursuant to transactions
approved by the Board; and (vi) shares of Common Stock, warrants, options or other convertible securities issued as acquisition
consideration pursuant to the acquisition of another company by the Company;
provided that
the issuance of any such securities
in (i) through (vi) above are approved by the Board.
1.13
“Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC.
1.14
“
Form S-3
” means such form under the Securities Act as in effect on the date hereof or any registration
form under the Securities Act subsequently adopted by the SEC that permits forward incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
1.15
“
GAAP
” means generally accepted accounting principles in the United States as in effect from time to
time.
1.16
“Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including, adoptive relationships,
of a natural person referred to herein.
1.17
“
Investor
” has the meaning set forth in the Preamble.
1.18
“
Investor’s Counsel
” has the meaning set forth in
Section 5.6
.
1.19
“
Lock-Up Period
” has the meaning set forth in
Section 4.1(a)
.
1.20
“
New Securities
” means, collectively, equity securities of the Company or any subsidiary of the Company,
whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities
of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities,
provided,
however,
that “New Securities” does not include any Excluded Securities.
1.21
“
Observer
” has the meaning set forth in
Section 2.5
.
1.22
“
Offer Notice
” has the meaning set forth in
Section 3.2
.
1.23
“
Person
” means any individual, corporation, limited or general partnership, limited liability company,
limited liability partnership, trust, association, joint venture, governmental entity, or other entity.
1.24
“
Purchase Agreement
” has the meaning set forth in the Recitals.
1.25
“
QSR
” has the meaning set forth in
Section 6.2
.
1.26
“
Registrable Securities
” means (a) (i) the 15,000,000 shares of Common Stock to be issued to Investor
pursuant to the Purchase Agreement and (ii) any shares of Common Stock issued or issuable upon exercise of the Warrant; and
(b)
any shares of Common Stock or other securities of the Company issued or issuable with respect to any shares described in subsection
(a) by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with
a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with
respect to the Common Stock.
1.27
“
Rule 144
” means Rule 144 promulgated by the SEC under the Securities Act.
1.28
“
SEC
” means the U.S. Securities and Exchange Commission.
1.29
“
Securities Act
” means the Securities Act of 1933, as amended.
1.30
“
Selling Expenses
” means all underwriting discounts, selling commissions, and stock transfer taxes
applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and
disbursements of the Selling Holder Counsel borne and paid by the Company as provided in
Section 5.6
.
1.31
“
Shares
” means and includes any securities of the Company that the holders of which are entitled to vote
for members of the Board, including without limitation, all shares of Common Stock, by whatever name called, now owned or subsequently
acquired by a Shareholder, however acquired, whether through stock splits, stock dividends, reclassifications, recapitalizations,
similar events or otherwise.
1.32
“
Shareholders
” has the meaning set forth in the Preamble.
1.33
“
SOL
” means SOL Global Investments Corp., an Ontario corporation and the parent company of Investor.
1.34
“
Warrant
” means the Warrant for the purchase of Common Stock issued to Investor pursuant to the
Purchase Agreement.
2.
Board Representation; Observer
.
2.1
Size of the Board
. Each Shareholder agrees to cause, including in its capacity as a member of the Board, if applicable,
and including by voting or causing to be voted all Shares owned by such Shareholder, or over which such Shareholder has voting
control (whether at a meeting or by executing a written consent, as applicable), from time to time and at all times, the size of
the Board to be established at and to remain at seven directors.
2.2
Investor Designees
. For so long as Investor and its Affiliates continue to own beneficially at least 25% of the shares
of Common Stock that Investor purchased under the Purchase Agreement (disregarding any shares of Common Stock issuable upon exercise
of the Warrant, but including any adjustments to give effect to reclassifications, recapitalizations, reverse stock splits, or
similar events of such original shares of Common Stock), each Shareholder agrees to cause, including in its capacity as a member
of the Board, if applicable, and including by voting or causing to be voted all Shares owned by such Shareholder, or over which
such Shareholder has voting control (whether at a meeting or by executing a written consent, as applicable), from time to time
and at all times, two individuals designated from time to time by Investor (the “
Investor Designees
”) to be
members of the Board, whether by election or re-election or, in the case of a vacancy, by appointment by the Board. The initial
Investor Designees shall be Paul Norman and one other individual to be named at a later time, which Investor Designees shall be
appointed to the Board as soon as practicable following the date of this Agreement to fill the two vacancies on the Board existing
at such time.
2.3
Failure to Designate; Vacancies; Removal
. Each Shareholder agrees to vote, or cause to be voted (whether at a meeting
or by executing a written consent, as applicable), all Shares owned by such Shareholder, or over which such Shareholder has voting
control, from time to time and at all times, in whatever manner as shall be necessary to ensure that:
(a)
In the absence of any designation from Investor as specified in
Section 2.2
, the Investor Designee previously designated
by Investor and then serving shall be reelected if still eligible and willing to serve as provided herein (and otherwise, such
Board seat shall remain vacant);.
(b)
no Investor Designee shall be removed from the Board unless requested by Investor or if Investor is no longer entitled to
designate such director pursuant to
Section 2.2
;
(c)
any vacancies created by the resignation, removal or death of an Investor Designee shall be filled by an individual named
by Investor; and
(d)
upon the request of Investor to remove an Investor Designee as a director, such Investor Designee shall be so removed.
2.4
Committees; Subsidiaries
.
(a)
Each Investor Designee shall have the right, but not the obligation, to be appointed to each committee of the Board, if
any, and each committee of each subsidiary of the Company, if any, and to attend and serve as an observer at all meetings of each
such committee. Notwithstanding the foregoing, the Company reserves the right to withhold any information, to exclude each Investor
Designee from any such committee or any such committee meeting (or portion thereof), if access to such information, participation
on such committee or attendance at such meeting (or portion thereof) could (i) adversely affect the attorney-client privilege between
the Company or any subsidiary of the Company and their respective counsel, (ii) result in a conflict of interest, or (iii) violate
or contravene any applicable director independence requirements of (A) the SEC, (B) the Securities Act (and the regulations promulgated
thereunder), (C) the securities exchange or trading market on which the Common Stock is then listed, or (D) the Company’s
Board committee charters then in effect.
(b)
The Company and each Shareholder shall take such actions as may reasonably required to ensure that the board of directors
(or equivalent body) of each subsidiary of the Company includes both Investor Designees.
(c)
To the extent any subsidiary of the Company is a member-managed limited liability company, any action or consent requiring
consent of the member shall require approval by the Board.
(d)
The provisions of this
Section 2.4
shall survive for so long as any Investor Designee serves on the Board.
2.5
Observer
. In addition to the Investor Designees, for so long as Investor owns any Shares, the Company shall invite
an individual designated by Investor, to serve as a representative of Investor, to attend in a nonvoting observer capacity all
meetings of the Board or the board of directors (or equivalent body) of any subsidiary of the Company or at any committee meetings
of any of the foregoing (the “
Observer
”). The Company shall give the Observer copies of all notices, minutes,
consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors;
provided, however
, that the Observer shall agree to hold in confidence and trust and to act in a fiduciary manner with respect
to all information so provided; and
provided further
, that the Company reserves the right to withhold any information and
to exclude the Observer from any meeting or portion thereof if access to such information or attendance at such meeting could adversely
affect the attorney-client privilege between the Company and its counsel or result in a conflict of interest. The initial Observer
shall be Andrew DeFrancesco.
2.6
Grant of Proxy
. Upon the failure of any Shareholder to vote such Shareholders’ Shares in accordance with the
terms of this
Section 2
following reasonable prior notice of such required vote, such Shareholder hereby grants to Investor
(or at Investor’s option, an individual designated by the Board) a proxy coupled with an interest in all Shares owned by
such Shareholder to vote all such Shares in the manner provided in this
Section 2
with respect to the matter for which such
Shareholder failed to vote. Such proxy shall be irrevocable for so long as Investor is entitled to designate individuals to serve
on the Board pursuant to
Section 2.2
.
2.7
Company Covenant
. The Company agrees to use its best efforts, within the requirements of applicable law, to ensure
that the rights granted under this Agreement are effective and that the parties enjoy the benefits of this Agreement. Such actions
include, without limitation, the use of the Company’s best efforts to cause the nomination and election of the directors
as provided in this Agreement. Without limiting the generality of the foregoing, the Company shall use best efforts (a) to establish
the size of the Board at seven directors on the date of this Agreement, and maintain such size during the term of this Agreement;
(b) to appoint the initial Investor Designees, as named in
Section 2.2
, to fill the newly-created vacancies on the Board;
(c) to include all Investor Designees as nominees for election in the Company’s proxy materials, as applicable, along with
the Board’s recommendation that the Company’s shareholders vote to elect such Investor Designees to serve on the Board;
and (d) at the request of Investor, to call a special meeting of, or solicit execution of a written consent by, the Company’s
shareholders for the purpose of electing Investor Designees in accordance with this
Section 2
.
2.8
No Liability
. Neither Investor, nor any Affiliate of Investor, shall have any liability as a result of designating
an Investor Designee for election as a director for any act or omission by such Investor Designee in his or her capacity as a director
of the Company. No Shareholder shall have any liability as a result of voting for any Investor Designee in accordance with the
provisions of this Agreement.
2.9
No “Bad Actor” Designees
. Investor hereby represents and warrants to the Company that, to such Investor’s
knowledge, none of the “bad actor” disqualifying events described in Rule 506(d)(1)(i)-(viii) under the Securities
Act (each, a “
Disqualification Event
”), is applicable to the initial Investor Designees named in
Section
2.2
(except for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable). Any director designee
to whom any Disqualification Event is applicable (except for a Disqualification Event to which Rule 506(d)(2)(ii) or (iii) or (d)(3)
is applicable) is hereinafter referred to as a “
Disqualified Designee
.” Investor hereby covenants and agrees
(a) not to designate or participate in the designation of any director designee who, to Investor’s knowledge, is a Disqualified
Designee, and (b) that if Investor becomes aware that any individual previously designated by Investor is or has become a Disqualified
Designee, Investor shall as promptly as practicable take such actions as are necessary to remove such Disqualified Designee from
the Board and designate a replacement designee who is not a Disqualified Designee.
2.10
Expenses and Compensation
. The Company shall reimburse each Investor Designee and Observer for his or her reasonable
out-of-pocket expenses (including travel) incurred in connection incurred in connection with attendance of meetings of the Board
or the board of directors (or equivalent body) of any subsidiary of the Company or at any committee meetings of any of the foregoing.
Without duplication of the foregoing, each Investor Designee shall be entitled to all compensation and reimbursement rights that
are generally available to non-employee directors of the Company.
2.11
Indemnification Agreements
. Contemporaneously with the appointment of each Investor Designee to serve on the Board,
the Company will enter into an Indemnification Agreement, in the form attached to the Purchase Agreement as Exhibit D, with respect
to such Investor Designee.
3.
Rights to Future Stock Issuances
.
3.1
Right of First Offer
. Subject to the terms and conditions of this
Section 3.1
and applicable securities laws,
if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to Investor. Investor
shall be entitled to apportion such right of first offer in such proportions, as it deems appropriate, among itself and its Affiliates;
provided
that, to be eligible for such apportionment, each such Affiliate must execute a joinder to this Agreement, thereby
agreeing to be bound by the terms of this Agreement, in customary form and substance reasonably satisfactory to the Company.
3.2
Offer Notice
. The Company shall give notice (the “
Offer Notice
”) to Investor, stating (a) its
bona fide intention to offer such New Securities, (b) the number of such New Securities to be offered, and (c) the price and terms
upon which it proposes to offer such New Securities.
3.3
Investor Election
. By notification to the Company within 20 days after the Offer Notice is received, Investor may
elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, all or any portion of such
New Securities. The consummation of any sale and purchase pursuant to this
Section 3.3
shall occur within 90 days of the
later of the date that the Offer Notice is received by Investor and the date of the initial sale of New Securities, if any, pursuant
to
Section 3.4
.
3.4
Failure to Fully Subscribe
. If all New Securities referred to in the Offer Notice are not elected to be purchased
by Investor pursuant to
Section 3.3
, the Company may, during the 90-day period following the expiration of the 20-day period
referenced in
Section 3.3
, offer and sell the unsubscribed portion of such New Securities to any Person or Persons at a
price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company
does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated
within 30 days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall
not be offered unless first re-offered to Investor in accordance with this
Section 3
.
3.5
Excluded Securities
. For the avoidance of doubt, the right of first offer in
Section 3.1
shall not be applicable
to Excluded Securities.
4.
Lock-Up
.
4.1
Agreement to Lock-Up
.
(a)
Investor, each transferee of Investor’s shares of Common Stock as permitted under
Section 4.1(b)
and each Shareholder
will not, during the period commencing on the date of this Agreement and ending on the one-year anniversary of the date of this
Agreement (the “
Lock-Up Period
”): (a) lend, offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or other securities of the Company; or (b) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock
or other securities of the Company, whether any such transaction described in clause (a) or (b) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise. As of the date of this Agreement, Investor and each Shareholder
owns the securities of the Company set forth next to his, her or its name on
Schedule A
hereto.
(b)
The provisions of
Section 4.1(a)
shall not apply to:
(i)
with respect to each Shareholder, transfers of shares of Common Stock (A) by will, other testamentary document or
intestate succession to the legal representative, heir, beneficiary or an Immediate Family Member of such Shareholder; or (B) by
operation of law, such as pursuant to a qualified domestic order or as required by a divorce settlement (
provided, however
,
that the transferee agrees to be bound in writing by the terms of this Agreement prior to such transfer, and such transfer shall
not involve a disposition for value);
(ii)
with respect to each Shareholder, the establishment of a trading plan pursuant to Rule 10b5-1 promulgated under the
Exchange Act, provided that such plan does not provide for the transfer of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock during the Lock-Up Period;
(iii)
with respect to each Shareholder, transfers to the Company in connection with the “net” or “cashless”
exercise of options or other rights to purchase shares of Common Stock granted pursuant to an equity incentive plan, stock purchase
plan or similar arrangement approved by the Board in satisfaction of any tax withholding obligations through cashless surrender
or otherwise,
provided
,
however
, that any shares of Common Stock issued upon exercise of such option or other rights
shall remain subject to the terms of this Lock-Up Agreement; or
(iv)
with respect to Investor and each Shareholder that is a corporation, limited liability company, partnership, trust or other
entity, transfers to its shareholders, members, partners or trust beneficiaries as part of a distribution, or to any corporation,
partnership or other entity that is its Affiliate (
provided, however
, that the transferee agrees to be bound in writing
by the terms of this Agreement prior to such transfer, and such transfer shall not involve a disposition for value).
4.2
Stop Transfer Instructions; Legend
. In order to enforce the foregoing covenant, the Company may (a) impose stop-transfer
instructions with respect to the shares of Common Stock or other securities of the Company of Investor and each Shareholder (and
permitted transferees and assignees thereof) until the end of such restricted period and (b) stamp, imprint or notate the shares
of Common Stock or other securities of the Company of Investor and each Shareholder (and permitted transferees and assignees thereof)
with the following legend:
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE, INCLUDING A LOCK-UP PERIOD, ALL AS SET FORTH IN CERTAIN AGREEMENTS BETWEEN THE RECORD OWNER OF THESE
SHARES AND THE COMPANY, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”
5.
Registration Rights
. The Company covenants and agrees as follows:
5.1
Demand Registration
.
(a)
Following the expiration of the Lock-Up Period, if the Company receives a request from Investor that the Company
file a registration statement with respect to outstanding Registrable Securities having an anticipated aggregate offering price
of at least $1 million, then the Company shall, as soon as practicable, and in any event within 45 days after the date such request
is given by Investor, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested
to be included in such registration by Investor, subject to the limitations of
Sections 5.1(b)
and
5.3
. If at the
time of Investor’s request the Company is not eligible to use a Form S-3 registration statement, the Company will instead
file a registration statement on Form S-1 or such other form as available and appropriate to effectuate the offering.
(b)
Notwithstanding
Section 5.1(a)
, if the Company furnishes to Investor a certificate signed by the Company’s
chief executive officer stating that, in the good faith judgment of the Board, it would be materially detrimental to the Company
and its shareholders for such requested registration statement to either become effective or remain effective for as long as such
registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with
a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature
disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render
the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right
to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall
be tolled correspondingly, for a period of not more than 60 days after the request of Investor is given;
provided
,
however
,
that the Company may not invoke this right more than twice in any 12-month period.
(c)
The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to
Section 5.1(a)
(i) during the period that is 30 days before the Company’s good faith estimate of the date of filing of, and ending on a
date that is 60 days after the effective date of, a Company-initiated registration,
provided
that the Company is actively
employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the
Company has effected two registrations pursuant to
Section 5.1(a)
within the 12-month period immediately preceding the date
of such request. A registration shall not be counted as “effected” for purposes of this
Section 5.1(c)
until
such time as the applicable registration statement has been declared effective by the SEC, unless Investor withdraws its request
for such registration, elects not to pay the registration expenses therefor, and forfeit its right to one demand registration statement
pursuant to
Section 5.6
, in which case such withdrawn registration statement shall be counted as “effected”
for purposes of this
Section 5.1(c)
;
provided
,
however
, that if such withdrawal is during a period the Company
has deferred taking action pursuant to
Section 5.1(b)
, then the Investors may withdraw their request for registration and
such registration will not be counted as “effected” for purposes of this
Section 5.1(c)
.
5.2
Company Registration
. Following the expiration of the Lock-Up Period, if the Company proposes to register (including,
for this purpose, a registration effected by the Company for shareholders other than Investor) any of its Common Stock or other
securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in connection
with the issuance of any Excluded Securities), the Company shall, at such time, promptly give Investor notice of such registration.
Upon the request of Investor given within 20 days after such notice is given by the Company, the Company shall, subject to the
provisions of
Section 5.3
, cause to be registered all of the Registrable Securities that Investor has requested to be included
in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this
Section
5.2
before the effective date of such registration, whether or not Investor has elected to include Registrable Securities in
such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance
with
Section 5.6
.
5.3
Underwriting Requirements
.
(a)
If Investor intends to distribute the Registrable Securities covered by its request pursuant to
Section 5.1
by means
of an underwriting, Investor shall so advise the Company as a part of such request. The underwriter (or underwriters) will be selected
by Investor, subject only to the reasonable approval of the Board. Investor shall (together with the Company as provided in
Section
5.4(e)
) enter into an underwriting agreement in customary form with the underwriter selected for such underwriting. Notwithstanding
any other provision of this
Section 5.3
, if the underwriter advises Investor in writing that marketing factors require a
limitation on the number of shares to be underwritten, then the Registrable Securities of Investor that otherwise would be underwritten
will be reduced accordingly;
provided
,
however
, that the number of Registrable Securities of Investor to be included
in such underwriting shall not be reduced unless all other securities of other selling shareholders are first entirely excluded
from the underwriting.
(b)
In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to
Section
5.2
, the Company shall not be required to include any of Investor’s Registrable Securities in such underwriting unless
Investor accepts the terms of the underwriting as agreed upon between the Company and its underwriters. If the Company and the
underwriters, in their reasonable discretion, determine that less than all of Investor’s Registrable Securities requested
to be registered can be included in such offering due to marketing factors (and advise Investor of such determination in writing),
then the Registrable Securities of Investor that otherwise would be underwritten will be reduced accordingly. Notwithstanding the
foregoing, (i) in no event shall the number of Registrable Securities of Investor to be included in the offering be reduced unless
all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, and (ii)
in no event shall the number of Registrable Securities of Investor to be included in the offering be reduced below 30% of the total
number of securities included in such offering.
(c)
For purposes of
Section 5.1
, a registration shall not be counted as “effected” if, as a result of an
exercise of the underwriter’s cutback provisions in
Section 5.3(a)
, fewer than 80% of the total number of Registrable
Securities that Investor has requested to be included in such registration statement are actually included.
5.4
Obligations of the Company
. Whenever required to effect a registration under this
Section 5
, the Company shall,
as expeditiously as reasonably possible:
(a)
prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially
reasonable efforts to cause such registration statement to become effective and, upon the request of Investor, keep such registration
statement effective for a period of up to 120 days or, if earlier, until the distribution contemplated in the registration statement
has been completed;
provided
,
however
, that (i) such 120-day period shall be extended for a period of time equal
to the period Investor refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling
any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that
are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such 120-day period
shall be extended for up to 365 days, if necessary, to keep the registration statement effective until all such Registrable Securities
are sold;
(b)
prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in
connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition
of all securities covered by such registration statement;
(c)
furnish to Investor such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities
Act, and such other documents as Investor may reasonably request in order to facilitate the disposition of its Registrable Securities;
(d)
use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under
such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by Investor;
provided
that
the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states
or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities
Act;
(e)
in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the underwriter of such offering;
(f)
use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement
to be listed on each securities exchange or trading system (e.g., OTC), if any, on which similar securities of the Company are
then listed;
(g)
provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide
a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h)
promptly make available for inspection by Investor any underwriter participating in any disposition pursuant to such registration
statement, and any attorney or accountant or other agent retained by any such underwriter or selected by Investor, all financial
and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors,
employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney,
accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement
and to conduct appropriate due diligence in connection therewith;
(i)
notify Investor, promptly after the Company receives notice thereof, of the time when such registration statement has been
declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and
(j)
after such registration statement becomes effective, notify Investor of any request by the SEC that the Company amend or
supplement such registration statement or prospectus.
In addition, the Company shall ensure that, at
all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall
have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program
under Rule 10b5-1 of the Exchange Act.
5.5
Furnish Information
. It shall be a condition precedent to the obligations of the Company to take any action pursuant
to this
Section 5
with respect to the Registrable Securities of Investor that Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities
as is reasonably required to effect the registration of Investor’s Registrable Securities.
5.6
Expenses of Registration
. All expenses (other than Selling Expenses) incurred in connection with registrations, filings,
or qualifications pursuant to this
Section 5
, including all registration, filing, and qualification fees; printers’
and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel
for Investor (“Investor’s Counsel”), shall be borne and paid by the Company;
provided
,
however
,
that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to
Section 5.1
if the registration request is subsequently withdrawn at the request of Investor (in which case Investor shall bear such expenses),
unless Investor agrees to forfeit its right to one registration pursuant to
Section 5.1
. All Selling Expenses relating to
Registrable Securities registered pursuant to this
Section 5
shall be borne and paid by Investor.
5.7
Indemnification
. If any Registrable Securities are included in a registration statement under this
Section 5
:
(a)
To the extent permitted by law, the Company will indemnify and hold harmless (i) Investor, (ii) the officers, directors,
and shareholders of Investor, (iii) legal counsel and accountants for Investor, (iv) any underwriter (as defined in the Securities
Act) for Investor, and (v) each Person, if any, who controls Investor or such underwriter within the meaning of the Securities
Act or the Exchange Act, against any Damages, and the Company will pay to Investor and each such other aforementioned Person any
legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from
which Damages may result, as such Damages are incurred;
provided
,
however
, that the indemnity agreement contained
in this
Section 5.7(a)
shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement
is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable
for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity
with written information furnished by or on behalf of Investor or any such other aforementioned Person expressly for use in connection
with such registration.
(b)
To the extent permitted by law, Investor will indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who has signed the registration statement, (iv) each Person, if any, who controls the Company within the meaning
of the Securities Act, (v) legal counsel and accountants for the Company, (vi) any underwriter (as defined in the Securities Act),
(vii) any other shareholder selling securities in such registration statement, and (viii) any controlling Person of any such underwriter
or other shareholder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions
or omissions made in reliance upon and in conformity with written information furnished by or on behalf of Investor expressly for
use in connection with such registration, and Investor will pay to the Company and each other aforementioned Person any legal or
other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages
may result, as such Damages are incurred;
provided
,
however
, that the indemnity agreement contained in this
Section
5.7(b)
shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without
the consent of Investor, which consent shall not be unreasonably withheld; and
provided further
that in no event shall the
aggregate amounts payable by Investor by way of indemnity or contribution under this
Section 5.7(b)
exceed the proceeds
from the offering received by Investor (net of any Selling Expenses paid by Investor), except in the case of fraud or willful misconduct
by Investor.
(c)
Promptly after receipt by an indemnified party under this
Section 5.7
of notice of the commencement of any action
(including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party under this
Section 5.7
, give the indemnifying
party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the
extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given,
and to assume the defense thereof with counsel mutually satisfactory to the parties;
provided
,
however
, that an indemnified
party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right
to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel in such action.
(d)
Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control. Unless otherwise superseded by an underwriting agreement entered into in connection
with the underwritten public offering, the obligations of the Company and Investor under this
Section 5.7
shall survive
the completion of any offering of Registrable Securities in a registration under this
Section 5
, and otherwise shall survive
the termination of this Agreement.
5.8
Reports Under Exchange Act
. With a view to making available to Investor the benefits of Rule 144 and any other rule
or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration
or pursuant to a registration on Form S-3, the Company shall: (a) make and keep available adequate current public information,
as those terms are understood and defined in Rule 144; (b) use commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to
Investor, so long as Investor owns Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement
by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act, and the Exchange Act, or that
it qualifies as a registrant whose securities may be resold pursuant to Form S-3, and (ii) such other information as may be reasonably
requested in availing Investor of any rule or regulation of the SEC that permits the selling of any such securities without registration
or pursuant to Form S-3.
5.9
Limitations on Subsequent Registration Rights
. From and after the date of this Agreement, the Company shall not,
without the prior written consent of Investor, which consent shall not be unreasonably withheld, enter into any agreement with
any holder or prospective holder of any securities of the Company that would (i) allow such holder or prospective holder to include
such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the
Registrable Securities of Investor that are included; or (ii) allow such holder or prospective holder to initiate a demand for
registration of any securities held by such holder or prospective holder.
5.10
Assignment
. The rights under this
Section 5
may be assigned by Investor to a transferee of Registrable Securities
that is an Affiliate of Investor;
provided
,
however
, that any such transfer during the Lock-Up Period must comply
with
Section 4.1(b)(iv)
.
5.11
Termination of Registration Rights
. The right to request registration or inclusion of Registrable Securities in any
registration pursuant to
Sections 5.1
or
5.2
shall terminate upon such time when Rule 144 or another similar exemption
under the Securities Act is continuously available during a three-month period for the sale of all Registrable Securities without
limitation and without registration.
6.
Covenants
.
6.1
D&O Insurance
. For so long as any Investor Designee serves on the Board, the Company shall maintain a customary
directors and officers liability insurance policy for each of its directors and officers with aggregate limits reasonably acceptable
to the Board. The Company shall annually, within 120 days after the end of each fiscal year of the Company, deliver to Investor
a certification that such insurance liability insurance policy remains in effect.
6.2
QSR Network
. For so long as any Investor Designee serves on the Board, Investor shall use commercially reasonable
efforts to introduce the Company to Investor’s network of quick service (“
QSR
”) locations. As part of
this process, Investor shall facilitate introductions, participate in meetings, encourage such QSR locations to stock and sell
the Company’s products and take such other actions reasonably requested by the Company from time to time in order to enable
the Company to sell its products through and to this QSR network;
provided, however,
that Investor provides no assurances
as to the volume or certainty of such sales, or whether any sales will be made at all. Within two Business Days after the date
of this Agreement, Investor shall provide the Company’s management and the Board with an informal confidential list of QSR
locations to which Investor reasonably believes it may be able to introduce the Company. The parties understand and agree that
such list is neither a binding obligation to perform nor a guarantee of any contract, but rather an exercise to illustrate to the
Company the potential of the QSR network.
6.3
Matters Requiring Investor Designee Approval
. For so long as any Investor Designee serves on the Board, the Company
hereby covenants and agrees that it shall not, without approval of the Board, which approval must include the affirmative vote
of all Investor Designees then serving on the Board:
(a)
amend, alter, repeal or waive any provision of the articles of incorporation or bylaws or similar governance documents of
the Company or any of the Company’s subsidiaries;
(b)
offer or sell any New Securities;
(c)
(i) create, or authorize the creation of, or issue, authorize the issuance of or change the terms of, any debt security,
(ii) create any lien or security interest or incur debt, or (iii) permit any subsidiary of the Company to take any such action
with respect to any debt security, lien, security interest or debt;
provided, however
, that this
Section 6.3(c)
shall
not apply with respect to (A) any debt security, lien, security interest, debt outstanding or amounts payable under the Loan and
Security Agreement, dated as of December 27, 2013, by and between Jones Soda Co. (USA) Inc., Jones Soda (Canada) Inc. and BFI Business
Finance, as amended, modified or superseded from time to time in accordance with its terms and as approved by the Board (the “
Line
of Credit
”), or (B) any purchase money liens or statutory liens of landlords, mechanics, materialmen, workmen, warehousemen
and other similar Persons arising or incurred in the ordinary course of business that have been approved by the Board;
(d)
effect, authorize or consent to a Change of Control Transaction;
(e)
change the strategy or principal lines of business of the Company or any subsidiary of the Company;
(f)
liquidate or dissolve the Company or acquiesce in the filing of, a petition in bankruptcy or similar proceeding;
(g)
commit to or make any expenditures in excess of $1,000,000 in one or a series of transactions,
except for
any amounts
payable or paid down in connection with the Line of Credit; or
(h)
commit to do any of the foregoing.
6.4
Further Assurances
. At any time or from time to time after the date of this Agreement, the parties agree to cooperate
with each other, and at the request of any other party, to execute and deliver any further instruments or documents and to take
all such further action as the other party may reasonably request in order to carry out the intent of the parties hereunder.
6.5
Right to Conduct Activities
. The Company hereby agrees and acknowledges that Investor (together with its Affiliates,
including SOL) has many investments, and as such reviews the business plans and related proprietary information of many enterprises,
some of which may compete directly or indirectly with the Company’s business (as currently conducted or as currently proposed
to be conducted). The Company hereby agrees that, to the extent permitted under applicable law, Investor (and its Affiliates)
shall not be liable to the Company for any claim arising out of, or based upon (a) the investment by Investor (or its Affiliates)
in any entity competitive with the Company, or (b) actions taken by any partner, officer, employee or other representative of Investor (or
its Affiliates) to assist any such competitive company, whether or not such action was taken as a member of the board of directors
of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company;
provided,
however
, that the foregoing shall not relieve (i) Investor or its Affiliates from liability associated with the unauthorized
disclosure of the Company’s confidential information obtained pursuant to this Agreement or (ii) any director or officer
of the Company from any liability associated with his or her fiduciary duties to the Company.
7.
Miscellaneous
.
7.1
Successors and Assigns
. The terms and conditions of this Agreement inure to the benefit of and are binding upon the
respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly provided herein.
7.2
Counterparts
. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail
or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
7.3
Titles and Subtitles
. The titles and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting this Agreement.
7.4
Notices
. All notices, requests, consents, claims, demands, waivers and other communications under this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient,
and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Any communication to Investor (including to any of
Investor’s Affiliates subject to the terms hereof) or a Shareholder shall be sent to such Person at its email address, facsimile
number or address as set forth on
Schedule A
(or at such other email address, facsimile number or address for such
Person as specified in a notice given in accordance with this
Section 7.4
). Any communication to the Company shall be sent
in accordance with the contact information set forth in the Company’s most recent filings with the SEC, addressed to the
attention of the Chief Executive Officer.
7.5
Amendments and Waivers
. Any term of this Agreement may be amended, modified or terminated and the observance of any
term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively)
only with the written consent of (a) the Company, (b) Investor and (c) the holders of at least a majority of the Shares held by
the Shareholders. Notwithstanding the foregoing, this Agreement may not be amended, modified or terminated, and no provision hereof
may be waived, in each case, in any way which would adversely affect the rights of any Shareholder (or group of Shareholders) hereunder
in a manner disproportionate to any adverse effect such amendment, modification, termination or waiver would have on the rights
of the other Shareholders hereunder, without also the written consent of such Shareholder (or, in the case of an adverse affect
to the rights of a group of Shareholders, the holders of at least a majority of the Shares held by such group of Shareholders).
Notwithstanding the foregoing,
Schedule A
may be amended by the Company from time to time in compliance with the terms of
this Agreement without the consent of the other parties. The Company shall give prompt notice of any amendment, modification or
termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination,
or waiver. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
7.6
Severability
. In case any one or more of the provisions contained in this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid,
legal, and enforceable to the maximum extent permitted by law.
7.7
Entire Agreement
. This Agreement, the Purchase Agreement, the other documents and agreements delivered pursuant to
the Purchase Agreement, and the Mutual Nondisclosure Agreement, dated as of April 22, 2019, between the parent company of Investor
and the Company, constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained
herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect
to such subject matter, including the Term Sheet for Common Stock Financing of Jones Soda Co., dated as of June 7, 2019.
7.8
Specific Performance
. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the
event any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise
breached. Accordingly, it is agreed that each party to this Agreement shall be entitled to an injunction to prevent breaches of
this Agreement, and to specific enforcement of this Agreement and its terms and provisions.
7.9
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
.
(a)
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
(b)
ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF WASHINGTON IN EACH CASE LOCATED
IN THE CITY OF SEATTLE AND COUNTY OF KING, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET
FORTH IN THIS AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT.
THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN
SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.9(C)
.
7.10
Delays or Omissions
. No delay or omission to exercise any right, power, or remedy accruing to any party under this
Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of
such non-breaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default,
or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
|
|
COMPANY:
|
|
|
|
|
|
JONES SODA CO.
|
|
|
|
|
|
By
|
/s/ Jennifer Cue
|
|
|
Name: Jennifer Cue
|
|
|
Title: President and Chief Executive Officer
|
|
|
|
|
|
INVESTOR:
|
|
|
|
|
|
HEAVENLY RX LTD.
|
|
|
|
|
|
|
By
|
/s/ Bradley Morris
|
|
|
Name: Bradley Morris
|
|
|
Title: Director
|
|
|
|
|
|
SHAREHOLDERS:
|
|
|
|
|
|
JENNIFER CUE
|
|
|
|
|
|
|
By
|
/s/ Jennifer Cue
|
|
|
Name: Jennifer Cue
|
|
|
|
|
|
ERIC CHASTAIN
|
|
|
|
|
|
By
|
/s/ Eric Chastain
|
|
|
Name: Eric Chastain
|
|
|
|
|
|
MICHAEL M. FLEMING
|
|
|
|
|
|
By
|
/s/ Michael M. Fleming
|
|
|
Name: Michael M. Fleming
|
|
|
|
|
[Signature Page to Investor Rights Agreement]
SCHEDULE A
INVESTOR AND SHAREHOLDER INFORMATION
INVESTOR: COMPANY
SECURITIES OWNED AS OF JULY 11, 2019
Heavenly RX Ltd. 15,000,000
1112 North Flagler Dr.
Fort Lauderdale, FL 33304
Attn: Mike Beedles / Steve Avalon
Email: mbeedles@heavenlyrx.com
SHAREHOLDERS:
Jennifer Cue 3,069,648
(1)
66 S. Hanford St.
Suite 150
Seattle, WA 98134
(206) 624-3357
Eric Chastain 374,695
(2)
66 S. Hanford St.
Suite 150
Seattle, WA 98134
(206) 624-3357
Michael M. Fleming 408,536
66 S. Hanford St.
Suite 150
Seattle, WA 98134
(206) 624-3357
|
(1)
|
On March 23, 2018, Mrs. Cue purchased a $100,000 convertible subordinated promissory note of the Company, which accrues interest at a rate of 6.0% per annum with a four-year team and a conversion rate of $0.32 per share. The conversion price is subject to anti-dilution adjustment on a broad-based, weighted average basis if we issue shares or equity-linked instruments at a conversion price below $0.32 per share. Ms. Cue may convert all or part of such convertible note into shares of common stock of the Company at any time on or prior to the maturity date of the convertible note. As of March 14, 2019, Ms. Cue has the ability to convert the note into 330,788 shares, which have been included in the amounts listed above.
|
|
(2)
|
On April 18, 2018, Mr. Chastain purchased a $10,000 convertible subordinated promissory note of the Company, which accrues interest at a rate of 6.0% per annum with a four-year team and a conversion rate of $0.32 per share. The conversion price is subject to anti-dilution adjustment on a broad-based, weighted average basis if we issue shares or equity-linked instruments at a conversion price below $0.32 per share. Mr. Chastain may convert all or part of such convertible note into shares of common stock of the Company at any time on or prior to the maturity date of the convertible note. As of March 14, 2019, Mr. Chastain has the ability to convert the note into 32,945 shares, which have been included in the amounts listed above.
|
Exhibit 10.4
STANDSTILL AGREEMENT
(Heavenly RX)
This Standstill 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 and Investor are
parties to that certain Securities Purchase Agreement, dated as of the date hereof (as such agreement may be amended, restated
or modified from time to time, the “
Purchase Agreement
”), pursuant to which Investor will 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 (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;
WHEREAS
, upon the closing of the transactions
contemplated by the Purchase Agreement, Investor will own approximately 24.8% of the outstanding Common Stock; and
WHEREAS
, in order to induce the Company
to enter into the Purchase Agreement, the Company and Investor desire to enter into this Agreement.
NOW, THEREFORE
, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement, intending to be legally
bound, hereby agree as follows:
1.
Definitions
. For purposes of this Agreement:
1.1
“
Agreement
” has the meaning set forth in the Preamble.
1.2
“
Affiliate
” means, with respect to any Person, any other Person that is directly or indirectly controlled
by 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. For the sake of clarity, SOL Global Investments Corp., an Ontario corporation and a minority shareholder of Investor,
shall not be deemed to be an Affiliate of Investor for purposes of this Agreement.
1.3
“
Board
” means the board of directors of the Company.
1.4
“
Common Stock
” has the meaning set forth in the Recitals.
1.5
“
Company
” has the meaning set forth in the Preamble.
1.6
“
Exchange Act
” has the meaning set forth in
Section 2.2
.
1.7
“
Investor
” has the meaning set forth in the Preamble.
1.8
“
Investor Designees
” has the meaning set forth in the Rights Agreement.
1.9
“
Investor Group
” means Investor and its Affiliates.
1.10
“
Person
” means any individual, corporation, limited or general partnership, limited liability company,
limited liability partnership, trust, association, joint venture, governmental entity, or other entity.
1.11
“
Purchase Agreement
” has the meaning set forth in the Recitals.
1.12
“
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), solely in their capacity as representatives acting on the direction of and on behalf of such Person.
1.13
“
Rights Agreement
” means the Investor Rights Agreement, dated as of the date hereof, by and among the
Company, Investor and the other existing shareholders of the Company signatories thereto, as such agreement may be amended, restated
or modified from time to time.
1.14
“
Shares
” has the meaning set forth in the Recitals.
1.15
“
Warrant
” has the meaning set forth in the Recitals.
1.16
“
Warrant Shares
” means the shares of Common Stock or other capital stock of the Company then purchasable
upon exercise of the Warrant in accordance with the terms of the Warrant.
2.
Investor Group Covenants
. Unless approved in advance in writing by the Board (acting by a simple majority not including
any Investor Designees, each of whom shall abstain from any vote on the matter), no member of the Investor Group, nor any of their
respective Representatives in their capacities as such, will (and Investor will cause each member of the Investor Group and their
respective Representatives acting in such capacity not to), directly or indirectly, acting on behalf of themselves or in concert
with the Company (or any of its Representatives in their capacities as such):
2.1
acquire (or propose or agree to acquire), of record or beneficially, on the open market or otherwise, by purchase or otherwise,
any loans, debt securities, equity securities, or assets of the Company or any of its subsidiaries, or rights or options to acquire
interests in any of the Company’s loans, debt securities, equity securities, or assets, except for (a) the purchase of the
Shares and the Warrant pursuant to the Purchase Agreement, (b) the purchase of the Warrant Shares pursuant to the exercise of the
Warrant, or (c) as provided in
Section 3
below;
2.2
make any statement or proposal to the Board or to any of the Company’s shareholders regarding, or make any public
announcement, proposal, or offer (including any “solicitation” of “proxies” as such terms are defined or
used in Regulation 14A of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)) with respect
to, or otherwise solicit, seek or offer to effect (including, for the avoidance of doubt, indirectly by means of communication
with the press or media): (a) any business combination, merger, tender offer, exchange offer, or similar transaction involving
the Company or any of its subsidiaries; (b) any restructuring, recapitalization, liquidation, or similar transaction involving
the Company or any of its subsidiaries; (c) any acquisition of any of the Company’s loans, debt securities, equity securities
or assets, or rights or options to acquire interests in any of the Company’s loans, debt securities, equity securities, or
assets; (d) any proposal to seek representation on the Board or otherwise seek to control or influence the management, Board, or
policies of the Company; (e) make any request or proposal to waive, terminate, or amend the provisions of this
Section 2
;
or (f) make any proposal, arrangement, or other statement that is inconsistent with the terms of this
Section 2
; provided,
however, none of the foregoing shall limit or prevent the Investor Designees from serving as members of the Board in accordance
with the Rights Agreement, including participation and consideration of matters properly brought before the Board;
2.3
instigate, encourage, or assist any third party (including forming a “group” (as defined in Rule 13d-5(b)(1)
of the Exchange Act) with any such third party) to do, or enter into any discussions or agreements with any third party with respect
to, any of the actions set forth in
Section 2.2
above; or
2.4
take any action that would reasonably be expected to require the Company or any of its Affiliates to make a public announcement
regarding any of the actions set forth in
Section 2.2
above.
3.
Exceptions to Investor Group Covenants
. Notwithstanding anything to the contrary in this Agreement:
3.1
Investor shall be permitted (as an exception to the restrictions in
Section 2
) to acquire in the open market, from
time to time and in the aggregate, up to such additional number of shares of Common Stock equal to 50% of the Warrant Shares that
have been purchased upon exercise of the Warrant as of such time; and
3.2
Investor shall be permitted (as an exception to the restrictions in
Section 2
) to exercise all of its rights, including
its right of first offer, pursuant to the Rights Agreement, in full and without restriction.
4.
Termination
. This Agreement, including the restrictions set forth in
Section 2
, shall terminate and be
of no further force and effect on the earlier to occur of (i) the two-year anniversary of the date of this Agreement and (ii) the
date on which the Warrant is exercised in full in accordance with its terms. Upon termination, the Investor Group and their Representatives
may acquire in the open market or otherwise additional shares of Common Stock or other securities of the Company in compliance
with applicable state and federal laws.
5.
Miscellaneous
.
5.1
Successors and Assigns
. The terms and conditions of this Agreement inure to the benefit of and are binding upon the
respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly provided herein.
5.2
Counterparts
. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail
or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
5.3
Titles and Subtitles
. The titles and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting this Agreement.
5.4
Notices
. All notices, requests, consents, claims, demands, waivers and other communications under this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient,
and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Any communication to Investor 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
given in accordance with this
Section 5.4
).
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
If to Investor:
|
|
Heavenly RX Ltd.
Address: 1112
North Flagler Drive
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
5.5
Amendments and Waivers
. Any term of this Agreement may be amended, modified or terminated and the observance of any
term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively)
only with the written consent of each of the parties hereto.
5.6
Severability
. In case any one or more of the provisions contained in this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid,
legal, and enforceable to the maximum extent permitted by law.
5.7
Entire Agreement
. This Agreement, the Rights Agreement, the Purchase Agreement, the other documents and agreements
delivered pursuant to the Purchase Agreement 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.
5.8
Specific Performance
. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the
event any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise
breached. Accordingly, it is agreed that each party to this Agreement shall be entitled to an injunction to prevent breaches of
this Agreement, and to specific enforcement of this Agreement and its terms and provisions.
5.9
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
.
(a)
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
(b)
ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF WASHINGTON IN EACH CASE LOCATED
IN THE CITY OF SEATTLE AND COUNTY OF KING, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET
FORTH IN THIS AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT.
THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN
SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 5.9(C)
.
5.10
Delays or Omissions
. No delay or omission to exercise any right, power, or remedy accruing to any party under this
Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of
such non-breaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default,
or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
COMPANY:
JONES SODA CO.
By_
/s/ Jennifer Cue
____________________
Name: Jennifer Cue
Title: President and Chief Executive Officer
INVESTOR:
HEAVENLY RX LTD.
By_
/s/ Bradley Morris
__________________
Name: Bradley Morris
Title: Director
[Signature Page to Heavenly Standstill Agreement]
Exhibit 10.5
STANDSTILL AGREEMENT
(SOL Global Investments)
This Standstill Agreement (this “
Agreement
”),
dated as of July 11, 2019, is entered into by and between Jones Soda Co., a Washington corporation (the “
Company
”),
and SOL Global Investments Corp., an Ontario corporation (“
Investor
”).
RECITALS
WHEREAS
, Investor currently owns approximately
4,066,048 shares of Common Stock of the Company (“
Common Stock
”), representing approximately 6.7% ownership
interest in the Company;
WHEREAS
, Investor is a minority shareholder
of Heavenly RX Ltd., a British Columbia corporation (“
Heavenly
”), and Heavenly and the Company intend to enter
into certain transactions, of which Investor shall be an indirect beneficiary as result of its minority ownership of Heavenly;
and
WHEREAS
, as an inducement to the Company
to enter into the transactions with Heavenly, Investor desires to enter into this Agreement with the Company.
NOW, THEREFORE
, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties to this Agreement, intending to be legally
bound, hereby agree as follows:
1.
Definitions
. For purposes of this Agreement:
1.1
“
Agreement
” has the meaning set forth in the Preamble.
1.2
“
Affiliate
” means, with respect to any Person, any other Person that is directly or indirectly controlled
by 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. For the sake of clarity, Heavenly shall not be deemed to be an Affiliate of Investor for purposes of this Agreement.
1.3
“
Board
” means the board of directors of the Company.
1.4
“
Common Stock
” has the meaning set forth in the Recitals.
1.5
“
Company
” has the meaning set forth in the Preamble.
1.6
“
Exchange Act
” has the meaning set forth in
Section 2.2
.
1.7
“
Heavenly
” has the meaning set forth in the Recitals.
1.8
“
Investor
” has the meaning set forth in the Preamble.
1.9
“
Investor Group
” means Investor and its Affiliates.
1.10
“
Person
” means any individual, corporation, limited or general partnership, limited liability company,
limited liability partnership, trust, association, joint venture, governmental entity, or other entity.
1.11
“
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), solely in their capacity as representatives acting on the direction of and on behalf of such Person.
2.
Investor Group Covenants
. Unless approved in advance in writing by the Board (acting by a simple majority not including
any director that is an interested party as determined by the Board in good faith with the advice of legal counsel, which may include
any designees of Heavenly), each of whom shall abstain from any vote on the matter), no member of the Investor Group, nor any of
their respective Representatives in their capacities as such, will (and Investor will cause each member of the Investor Group and
their respective Representatives acting in such capacity not to), directly or indirectly, acting on behalf of themselves or in
concert with the Company (or any of its Representatives in their capacities as such):
2.1
acquire (or propose or agree to acquire), of record or beneficially, on the open market or otherwise, by purchase or otherwise,
any loans, debt securities, equity securities, or assets of the Company or any of its subsidiaries, or rights or options to acquire
interests in any of the Company’s loans, debt securities, equity securities, or assets, except as provided in
Section
3
below;
2.2
make any statement or proposal to the Board or to any of the Company’s shareholders regarding, or make any public
announcement, proposal, or offer (including any “solicitation” of “proxies” as such terms are defined or
used in Regulation 14A of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)) with respect
to, or otherwise solicit, seek or offer to effect (including, for the avoidance of doubt, indirectly by means of communication
with the press or media): (a) any business combination, merger, tender offer, exchange offer, or similar transaction involving
the Company or any of its subsidiaries; (b) any restructuring, recapitalization, liquidation, or similar transaction involving
the Company or any of its subsidiaries; (c) any acquisition of any of the Company’s loans, debt securities, equity securities
or assets, or rights or options to acquire interests in any of the Company’s loans, debt securities, equity securities, or
assets; (d) any proposal to seek representation on the Board or otherwise seek to control or influence the management, Board, or
policies of the Company; (e) make any request or proposal to waive, terminate, or amend the provisions of this
Section 2
;
or (f) make any proposal, arrangement, or other statement that is inconsistent with the terms of this
Section 2
; provided,
however, none of the foregoing shall limit or prevent any such Representative from serving as a member of the Board if appointed
or elected, including participation and consideration of matters properly brought before the Board;
2.3
instigate, encourage, or assist any third party (including forming a “group” (as defined in Rule 13d-5(b)(1)
of the Exchange Act) with any such third party) to do, or enter into any discussions or agreements with any third party with respect
to, any of the actions set forth in
Section 2.2
above; or
2.4
take any action that would reasonably be expected to require the Company or any of its Affiliates to make a public announcement
regarding any of the actions set forth in
Section 2.2
above.
3.
Exceptions to Investor Group Covenants
. Notwithstanding anything to the contrary in this Agreement:
3.1
Investor shall be permitted (as an exception to the restrictions in
Section 2
) to acquire in the open market, from
time to time and in the aggregate, up to such additional number of shares of Common Stock such that Investor’s aggregate
ownership of Common Stock equals (but does not exceed) 9.99% of the Company’s outstanding Common Stock as of such time (on
an outstanding basis and
not
on a fully diluted basis); and
3.2
Investor shall be permitted (as an exception to the restrictions in
Section 2
) to exercise all of its rights set
forth in any written agreement it may enter into with the Company from time to time, if any, in full and without restriction.
4.
Investor Group Acknowledgement
. Investor acknowledges and agrees that the Company has not approved the Investor or
any member of the Investor Group becoming an “acquiring person” as defined in RCW 23B.19.020(1) for purposes of RCW
23B.19.040(1)(a)(ii) or otherwise, and any approval given by the Company in connection therewith shall only apply to Heavenly and
not to Investor nor to any Affiliates of Heavenly or Investor.
5.
Termination.
This Agreement, including the restrictions set forth in
Section 2
, shall terminate and be
of no further force and effect on the earlier to occur of (i) the two-year anniversary of the date of this Agreement and (ii) the
date on which the Warrant issued to Heavenly by the Company on the date hereof, which provides Heavenly with the right to purchase
up to 15,000,000 shares of Common Stock, is exercised in full by Heavenly in accordance with its terms. Upon termination, the Investor
Group and their Representatives may acquire in the open market or otherwise additional shares of Common Stock or other securities
of the Company in compliance with applicable state and federal laws.
6.
Miscellaneous
.
6.1
Successors and Assigns
. The terms and conditions of this Agreement inure to the benefit of and are binding upon the
respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly provided herein.
6.2
Counterparts
. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all
of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail
or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.
6.3
Titles and Subtitles
. The titles and subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting this Agreement.
6.4
Notices
. All notices, requests, consents, claims, demands, waivers and other communications under this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient,
and on the next Business Day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Any communication to the Investor 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
given in accordance with this
Section 6.4
).
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
If to Investor: SOL
Global Investments Corp.
Suite 301, 366 Bay Street
Toronto, ON,
Canada
M5H 4B2
Attention: Chief Executive Office and Chief
Legal Officer
And
2300 E. Las Olas Blvd, 5
th
Floor
Fort Lauderdale, FL, 33301
Attention:
Chief
Executive Office and Chief Legal Officer
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
6.5
Amendments and Waivers
. Any term of this Agreement may be amended, modified or terminated and the observance of any
term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively)
only with the written consent of each of the parties hereto.
6.6
Severability
. In case any one or more of the provisions contained in this Agreement is for any reason held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision
of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid,
legal, and enforceable to the maximum extent permitted by law.
6.7
Entire Agreement
. This Agreement, the Rights Agreement, the Purchase Agreement, the other documents and agreements
delivered pursuant to the Purchase Agreement 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.
6.8
Specific Performance
. Each party acknowledges and agrees that each party hereto will be irreparably damaged in the
event any of the provisions of this Agreement are not performed by the parties in accordance with their specific terms or are otherwise
breached. Accordingly, it is agreed that each party to this Agreement shall be entitled to an injunction to prevent breaches of
this Agreement, and to specific enforcement of this Agreement and its terms and provisions.
6.9
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
.
(a)
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without
giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).
(b)
ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF WASHINGTON IN EACH CASE LOCATED
IN THE CITY OF SEATTLE AND COUNTY OF KING, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET
FORTH IN THIS AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT.
THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN
SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c)
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH
PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY
HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 6.9(C)
.
6.10
Delays or Omissions
. No delay or omission to exercise any right, power, or remedy accruing to any party under this
Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of
such non-breaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default,
or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
COMPANY:
JONES SODA CO.
By_
/s/ Jennifer Cue
____________________
Name: Jennifer Cue
Title: President and Chief Executive Officer
INVESTOR:
SOL GLOBAL INVESTMENTS CORP.
By _
/s/
_
Andrew De Francesco
_____________
Name: Andrew De Francesco
Title: Chairman
[Signature Page to SOL Standstill Agreement]
Exhibit 10.6
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“
Agreement
”),
dated as of ____________________, is by and between Jones Soda Co., a Washington corporation (the “
Company
”),
and
________________
_ (“
Indemnitee
”).
WHEREAS, Indemnitee is currently a director
and/or officer of the Company, or the Company expects Indemnitee to join the Company as a director and/or an officer;
WHEREAS, both the Company and Indemnitee recognize
the increased risk of litigation and other claims being asserted against directors and officers of public companies;
WHEREAS, the board of directors of the Company
(the “
Board
”) has determined that enhancing the ability of the Company to retain and attract as directors and
officers the most capable persons is in the best interests of the Company and that the Company therefore should seek to assure
such persons that indemnification and insurance coverage is available; and
WHEREAS, in recognition of the need to provide
Indemnitee with substantial protection against personal liability, in order to procure Indemnitee’s service, or continued
service as a director and/or officer of the Company and to enhance Indemnitee’s ability to serve the Company in an effective
manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of,
among other things, any amendment to the Company’s Articles of Incorporation or Bylaws (collectively, the “
Constituent
Documents
”), any change in the composition of the Board or any change in control or business combination transaction
relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancement of Expenses
(as defined in
Section 1(e)
below) to, Indemnitee as set forth in this Agreement and, to the extent insurance is maintained,
for the coverage, or continued coverage of Indemnitee under the Company’s directors’ and officers’ liability
insurance policies.
NOW, THEREFORE, in consideration of the foregoing
and the Indemnitee’s agreement to provide services, or continue to provide services, to the Company, the parties agree as
follows:
1.
Definitions
. For purposes of this Agreement, the following terms shall have the following meanings:
(a)
“
Beneficial Owner
” has the meaning given to the term “beneficial owner” in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “
Exchange Act
”).
(b)
“
Change in Control
” means the occurrence after the date of this Agreement of any of the following events:
(i)
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 30% or more of
the Company’s then outstanding Voting Securities unless the change in relative Beneficial Ownership of the Company’s
securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to
vote generally in the election of directors;
(ii)
the consummation of a reorganization, merger or consolidation, unless immediately following such reorganization, merger or consolidation,
all of the Beneficial Owners of the Voting Securities of the Company immediately prior to such transaction beneficially own, directly
or indirectly, more than 50% of the combined voting power of the outstanding Voting Securities of the entity resulting from such
transaction;
(iii)
during any period of two consecutive years, not including any period prior to the execution of this Agreement, individuals who
at the beginning of such period constituted the Board (including for this purpose any new directors whose election by the Board
or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the period or whose election or nomination for election was
previously so approved) cease for any reason to constitute at least a majority of the Board; or
(iv)
the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s assets.
(c)
“
Claim
” means:
(i)
any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; or
(ii)
any inquiry, hearing or investigation that Indemnitee determines might lead to the institution of any such action, suit, proceeding
or alternative dispute resolution mechanism.
(d)
“
Disinterested Director
” means a director of the Company who is not and was not a party to the Claim in respect
of which indemnification is sought by Indemnitee.
(e)
“
Expenses
” means any and all expenses, including attorneys’ and experts’ fees, court costs, transcript
costs, travel expenses, duplicating, printing and binding costs, telephone charges, and all other costs and expenses incurred in
connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend,
be a witness or participate in, any Claim. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting
from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas
bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 5 only, Expenses incurred by Indemnitee in connection
with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise.
Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(f)
“
Expense Advance
” means any payment of Expenses advanced to Indemnitee by the Company pursuant to
Section
4
or
Section 5
hereof.
(g)
“
Indemnifiable Event
” means any event or occurrence, whether occurring before, on or after the date of this
Agreement, related to the fact that Indemnitee is or was a director, officer, employee or agent of the Company or any subsidiary
of the Company, or is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or
agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise (collectively
with the Company, “
Enterprise
”) or by reason of an action or inaction by Indemnitee in any such capacity (whether
or not serving in such capacity at the time any Loss is incurred for which indemnification can be provided under this Agreement).
(h)
“
Independent Counsel
” means a law firm, or a member of a law firm, that is experienced in matters of corporation
law and neither presently performs, nor in the past five years has performed, services for either: (i) the Company or Indemnitee
(other than in connection with matters concerning Indemnitee under this Agreement or of other indemnitees under similar agreements)
or (ii) any other party to the Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s
rights under this Agreement.
(i)
“
Losses
” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil,
criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal,
state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all
other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on
appeal), or preparing to defend, be a witness or participate in, any Claim.
(j)
“
Person
” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate,
trust, business association, organization, governmental entity or other entity and includes the meaning set forth in Sections 13(d)
and 14(d) of the Exchange Act.
(k)
“
Standard of Conduct Determination
” shall have the meaning ascribed to it in
Section 9(b)
below.
(l)
“
Voting Securities
” means any securities of the Company that vote generally in the election of directors.
(m)
“
Washington Court
” shall have the meaning ascribed to it in
Section 9(e)
below.
2.
Services to the Company
. Indemnitee agrees to serve or continue to serve as a director or officer of the Company for so
long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation or is no longer serving in such
capacity. This Agreement shall not be deemed an employment agreement between the Company (or any of its subsidiaries or Enterprise)
and Indemnitee. Indemnitee specifically acknowledges that his or her employment with or service to the Company or any of its subsidiaries
or Enterprise, as applicable, is at will and Indemnitee may be discharged at any time for any reason, with or without cause, except
as may be otherwise provided in any written employment agreement between Indemnitee and the Company (or any of its subsidiaries
or Enterprise), other applicable formal severance policies duly adopted by the Board or, with respect to service as a director
or officer of the Company, by the Company’s Constituent Documents or Washington law. This Agreement shall continue in force
after Indemnitee has ceased to serve as a director or officer of the Company or, at the request of the Company, of any of its subsidiaries
or Enterprise, as provided in
Section 12
hereof.
3.
Indemnification
. Subject to
Section 9
and
Section 10
of this Agreement, the Company shall indemnify Indemnitee,
to the fullest extent permitted by the laws of the State of Washington in effect on the date hereof, or as such laws may from time
to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Losses if Indemnitee
was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason
of or arising in part out of an Indemnifiable Event, including, without limitation, Claims brought by or in the right of the Company,
Claims brought by third parties, and Claims in which Indemnitee is solely a witness.
4.
Advancement of Expenses
. Indemnitee shall have the right to advancement by the Company, prior to the final disposition of
any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably
paid or incurred by Indemnitee in connection with any Claim arising out of an Indemnifiable Event. Indemnitee’s right to
such advancement is not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the
foregoing, within 30 days after any request by Indemnitee, the Company shall, in accordance with such request, (a) pay such Expenses
on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee
for such Expenses. In connection with any request for Expense Advances, Indemnitee shall not be required to provide any documentation
or information to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. In connection
with any request for Expense Advances, Indemnitee shall execute and deliver to the Company an undertaking (which shall be accepted
without reference to Indemnitee’s ability to repay the Expense Advances), in the form attached hereto as
Exhibit A
,
to repay any amounts paid, advanced, or reimbursed by the Company for such Expenses to the extent that it is ultimately determined,
following the final disposition of such Claim, that Indemnitee is not entitled to indemnification hereunder. Indemnitee’s
obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.
5.
Indemnification for Expenses in Enforcing Rights
. To the fullest extent allowable under applicable law, the Company shall
also indemnify against, and, if requested by Indemnitee, shall advance to Indemnitee subject to and in accordance with
Section
4
, any Expenses actually and reasonably paid or incurred by Indemnitee in connection with any action or proceeding by Indemnitee
for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or
under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Claims relating to Indemnifiable
Events, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the
case may be. However, in the event that Indemnitee is ultimately determined not to be entitled to such indemnification or insurance
recovery, as the case may be, then all amounts advanced under this
Section 5
shall be repaid. Indemnitee shall be required
to reimburse the Company in the event that a final judicial determination is made that such action brought by Indemnitee was frivolous
or not made in good faith.
6.
Partial Indemnity
. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for
a portion of any Losses in respect of a Claim related to an Indemnifiable Event but not for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
7.
Notification and Defense of Claims
.
(a)
Notification of Claims
. Indemnitee shall notify the Company in writing as soon as practicable of any Claim which could relate
to an Indemnifiable Event or for which Indemnitee could seek Expense Advances, including a brief description (based upon information
then available to Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by Indemnitee to timely notify
the Company hereunder shall not relieve the Company from any liability hereunder unless and to the extent such failure materially
prejudices the Company. If at the time of the receipt of such notice, the Company has directors’ and officers’ liability
insurance in effect under which coverage for Claims related to Indemnifiable Events is potentially available, the Company shall
give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies. The
Company shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence
between the Company and such insurers regarding the Claim, in each case substantially concurrently with the delivery or receipt
thereof by the Company.
(b)
Defense of Claims
. The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable
Event at its own expense and, except as otherwise provided below, to the extent the Company so wishes, it may assume the defense
thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume
the defense of any such Claim, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses
subsequently directly incurred by Indemnitee in connection with Indemnitee’s defense of such Claim other than reasonable
costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ its own legal counsel in such
Claim, but all Expenses related to such counsel incurred after notice from the Company of its assumption of the defense shall be
at Indemnitee’s own expense; provided, however, that if (i) Indemnitee’s employment of its own legal counsel has been
authorized by the Company, (ii) Indemnitee has reasonably determined upon the advice of counsel that there may be a conflict of
interest between Indemnitee and the Company in the defense of such Claim, (iii) after a Change in Control, Indemnitee’s employment
of its own counsel has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to
assume the defense of such Claim, then Indemnitee shall be entitled to retain its own separate counsel (but not more than one law
firm plus, if applicable, local counsel in respect of any such Claim) and all Expenses related to such separate counsel shall be
borne by the Company.
8.
Procedure upon Application for Indemnification
. In order to obtain indemnification pursuant to this Agreement, Indemnitee
shall submit to the Company a written request therefor, including in such request such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification
following the final disposition of the Claim, provided that documentation and information need not be so provided to the extent
that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. Indemnification shall be made insofar
as the Company determines Indemnitee is entitled to indemnification in accordance with
Section 9
below.
9.
Determination of Right to Indemnification
.
(a)
Mandatory Indemnification; Indemnification as a Witness
.
(i)
To the extent that Indemnitee shall have been successful on the merits or otherwise in defense of any Claim relating to an Indemnifiable
Event or any portion thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice,
Indemnitee shall be indemnified against all Losses relating to such Claim in accordance with
Section 3
to the fullest extent
allowable by law, and no Standard of Conduct Determination (as defined in
Section 9(b)
) shall be required.
(ii)
To the extent that Indemnitee’s involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve
as a witness, and not as a party, the Indemnitee shall be indemnified against all Losses incurred in connection therewith to the
fullest extent allowable by law and no Standard of Conduct Determination (as defined in
Section 9(b)
) shall be required.
(b)
Standard of Conduct
. To the extent that the provisions of
Section 9(a)
are inapplicable to a Claim related to an
Indemnifiable Event that shall have been finally disposed of, any determination of whether Indemnitee has satisfied any applicable
standard of conduct under Washington law that is a legally required condition to indemnification of Indemnitee hereunder against
Losses relating to such Claim and any determination that Expense Advances must be repaid to the Company (a “
Standard of
Conduct Determination
”) shall be made as follows:
(i)
if no Change in Control has occurred, (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the
Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though
less than a quorum or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to
the Board, a copy of which shall be delivered to Indemnitee; and
(ii)
if a Change in Control shall have occurred, (A) if the Indemnitee so requests in writing, by a majority vote of the Disinterested
Directors, even if less than a quorum of the Board or (B) otherwise, by Independent Counsel in a written opinion addressed
to the Board, a copy of which shall be delivered to Indemnitee.
The Company shall indemnify and hold harmless Indemnitee against
and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within 30 days of such request, any
and all Expenses incurred by Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.
(c)
Making the Standard of Conduct Determination
. The Company shall use its reasonable best efforts to cause any Standard of
Conduct Determination required under
Section 9(b)
to be made as promptly as practicable. If the person or persons designated
to make the Standard of Conduct Determination under
Section 9(b)
shall not have made a determination within 30 days after
the later of (A) receipt by the Company of a written request from Indemnitee for indemnification pursuant to
Section 8
(the date of such receipt being the “
Notification Date
”) and (B) the selection of an Independent Counsel, if
such determination is to be made by Independent Counsel, then Indemnitee shall be deemed to have satisfied the applicable standard
of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the
person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating
thereto. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of Indemnitee to indemnification
under this Agreement shall be required to be made prior to the final disposition of any Claim.
(d)
Payment of Indemnification
. If, in regard to any Losses:
(i)
Indemnitee shall be entitled to indemnification pursuant to
Section 9(a)
;
(ii)
no Standard Conduct Determination is legally required as a condition to indemnification of Indemnitee hereunder; or
(iii)
Indemnitee has been determined or deemed pursuant to
Section 9(b)
or
Section 9(c)
to have satisfied the Standard
of Conduct Determination,
then the Company shall pay to Indemnitee, within fifteen (15) days
after the later of (A) the Notification Date or (B) the earliest date on which the applicable criterion specified in clause (i),
(ii) or (iii) is satisfied, an amount equal to such Losses.
(e)
Selection of Independent Counsel for Standard of Conduct Determination
. If a Standard of Conduct Determination is to be
made by Independent Counsel pursuant to
Section 9(b)(i)
, the Independent Counsel shall be selected by the Board, and the
Company shall give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. If
a Standard of Conduct Determination is to be made by Independent Counsel pursuant to
Section 9(b)(ii)
, the Independent Counsel
shall be selected by Indemnitee, and Indemnitee shall give written notice to the Company advising it of the identity of the Independent
Counsel so selected. In either case, Indemnitee or the Company, as applicable, may, within five (5) days after receiving written
notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection
may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition
of “Independent Counsel” in
Section 1(h)
, and the objection shall set forth with particularity the factual basis
of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as Independent Counsel. If such
written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit; and (ii) the
non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising
such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately
preceding sentences, the introductory clause of this sentence and numbered clause (i) of this sentence shall apply to such subsequent
selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive
alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this
Section 9(e)
to make the Standard of Conduct Determination shall have been selected within twenty (20) days after the Company gives its initial
notice pursuant to the first sentence of this
Section 9(e)
or Indemnitee gives its initial notice pursuant to the second
sentence of this
Section 9(e)
, as the case may be, either the Company or Indemnitee may petition the King County Superior
Court of the State of Washington (“
Washington Court
”) to resolve any objection which shall have been made by
the Company or Indemnitee to the other’s selection of Independent Counsel and/or to appoint as Independent Counsel a person
to be selected by the Court or such other person as the Court shall designate, and the person or firm with respect to whom all
objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall
pay all of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s
determination pursuant to
Section 9(b)
.
(f)
Presumptions and Defenses
.
(i)
Indemnitee’s Entitlement to Indemnification
. In making any Standard of Conduct Determination, the person or persons
making such determination shall presume that Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification,
and the Company shall have the burden of proof to overcome that presumption and establish that Indemnitee is not so entitled. Any
Standard of Conduct Determination that is adverse to Indemnitee may be challenged by the Indemnitee in the Washington Court. No
determination by the Company (including by its directors or any Independent Counsel) that Indemnitee has not satisfied any applicable
standard of conduct may be used as a defense to any legal proceedings brought by Indemnitee to secure indemnification or reimbursement
or advance payment of Expenses by the Company hereunder or create a presumption that Indemnitee has not met any applicable standard
of conduct.
(ii)
Reliance as a Safe Harbor
. For purposes of this Agreement, and without creating any presumption as to a lack of good faith
if the following circumstances do not exist, Indemnitee shall be deemed to have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company if Indemnitee’s actions or omissions to act are taken
in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports
or statements furnished to Indemnitee by the officers or employees of the Company or any of its subsidiaries in the course of their
duties, or by committees of the Board or by any other Person (including legal counsel, accountants and financial advisors) as to
matters Indemnitee reasonably believes are within such other Person’s professional or expert competence and who has been
selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of
any director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right
to indemnity hereunder.
(iii)
No Other Presumptions
. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption
that Indemnitee did not meet any applicable standard of conduct or have any particular belief, or that indemnification hereunder
is otherwise not permitted.
(iv)
Defense to Indemnification and Burden of Proof
. It shall be a defense to any action brought by Indemnitee against the Company
to enforce this Agreement (other than an action brought to enforce a claim for Losses incurred in defending against a Claim related
to an Indemnifiable Event in advance of its final disposition) that it is not permissible under applicable law for the Company
to indemnify Indemnitee for the amount claimed. In connection with any such action or any related Standard of Conduct Determination,
the burden of proving such a defense or that the Indemnitee did not satisfy the applicable standard of conduct shall be on the
Company.
(v)
Resolution of Claims
. The Company acknowledges that a settlement or other disposition short of final judgment may be successful
on the merits or otherwise for purposes of
Section 9(a)(i)
if it permits a party to avoid expense, delay, distraction,
disruption and uncertainty. In the event that any Claim relating to an Indemnifiable Event to which Indemnitee is a party is resolved
in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim
or proceeding with our without payment of money or other consideration) it shall be presumed that Indemnitee has been successful
on the merits or otherwise for purposes of
Section 9(a)(i)
. The Company shall have the burden of proof to overcome this
presumption.
10.
Exclusions from Indemnification
. Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated
to:
(a)
indemnify or advance funds to Indemnitee for Expenses or Losses with respect to proceedings initiated by Indemnitee, including
any proceedings against the Company or its directors, officers, employees or other indemnitees and not by way of defense, except:
(i)
proceedings referenced in
Section 5
above (unless a court of competent jurisdiction determines that each of the material
assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous); or
(ii)
where the Company has joined in or the Board has consented to the initiation of such proceedings,
(b)
indemnify Indemnitee if a final decision by a court of competent jurisdiction determines that such indemnification is prohibited
by applicable law, including, without limitation, (i) in connection with a proceeding by or in the right of the Company in which
Indemnitee was adjudged liable to the Company; or (ii) in connection with any other proceeding charging improper personal benefit
to Indemnitee, whether or not involving action in Indemnitee’s official capacity, in which Indemnitee was adjudged liable
on the basis that personal benefit was improperly received by Indemnitee;
(c)
indemnify Indemnitee for the disgorgement of profits arising from the purchase or sale by Indemnitee of securities of the Company
in violation of Section 16(b) of the Exchange Act, or any similar successor statute; or
(d)
indemnify or advance funds to Indemnitee for Indemnitee’s reimbursement to the Company of any bonus or other incentive-based
or equity-based compensation previously received by Indemnitee or payment of any profits realized by Indemnitee from the sale of
securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304
of the Sarbanes-Oxley Act of 2002 in connection with an accounting restatement of the Company or the payment to the Company of
profits arising from the purchase or sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act).
The Company and Indemnitee acknowledge that, in
certain instances, federal law or public policy may override applicable state law and prohibit the Company from indemnifying Indemnitee
under this Agreement or otherwise. For example, the Company and Indemnitee acknowledge that the Securities and Exchange Commission
(the “
SEC
”) has taken the position that indemnification is not permissible for liabilities arising under certain
federal securities laws, and federal legislation prohibits indemnification for certain ERISA violations. Furthermore, Indemnitee
understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit
the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy
to indemnify Indemnitee.
11.
Settlement of Claims
. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement
of any threatened or pending Claim related to an Indemnifiable Event effected without the Company’s prior written consent,
which shall not be unreasonably withheld; provided, however, that if a Change in Control has occurred, the Company shall be liable
for indemnification of Indemnitee for amounts paid in settlement if an Independent Counsel has approved the settlement. The Company
shall not settle any Claim related to an Indemnifiable Event in any manner that would impose any Losses on Indemnitee without Indemnitee’s
prior written consent.
12.
Duration
. All agreements and obligations of the Company contained herein shall continue during the period that Indemnitee
is a director or officer of the Company (or is serving at the request of the Company as a director, officer, employee, member,
trustee or agent of another Enterprise) and shall continue thereafter (i) so long as Indemnitee may be subject to any possible
Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (ii) throughout the pendency of any proceeding
(including any rights of appeal thereto) commenced by Indemnitee to enforce or interpret his or her rights under this Agreement,
even if, in either case, he or she may have ceased to serve in such capacity at the time of any such Claim or proceeding.
13.
Non-Exclusivity
. The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under the
Constituent Documents, the Washington Business Corporation Act, any other contract or otherwise (collectively, “
Other
Indemnity Provisions
”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right
to indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater right hereunder and (b)
to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than
that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder.
14.
Liability Insurance
. For the duration of Indemnitee’s service as a director or officer of the Company, and thereafter
for so long as Indemnitee shall be subject to any pending Claim relating to an Indemnifiable Event, the Company shall use commercially
reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to continue to
maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially
comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’
liability insurance. In all policies of directors’ and officers’ liability insurance maintained by the Company, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are provided to the most
favorably insured of the Company’s directors, if Indemnitee is a director, or of the Company’s officers, if Indemnitee
is an officer (and not a director) by such policy. Upon request, the Company will provide to Indemnitee copies of all directors’
and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.
15.
No Duplication of Payments
. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect
of any Losses to the extent Indemnitee has otherwise received payment under any insurance policy, the Constituent Documents, Other
Indemnity Provisions or otherwise of the amounts otherwise indemnifiable by the Company hereunder.
16.
Subrogation
. In the event of payment to Indemnitee under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee. Indemnitee shall execute all papers required and shall do everything
that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively
to bring suit to enforce such rights.
17.
Amendments
. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed
by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein,
no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
18.
Binding Effect
. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto
and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives.
The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise)
to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and
substances satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place.
19.
Severability
. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including
any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void or otherwise unenforceable, and
the remaining provisions shall remain enforceable to the fullest extent permitted by law. 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.
20.
Notices
. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, against receipt, or mailed, by postage prepaid, certified or registered mail:
(a)
if to Indemnitee, to the address set forth on the signature page hereto.
(b)
if to the Company, to:
Jones Soda Co.
66 South Hanford Street, Suite 150
Seattle, Washington 98134
Attn.: Corporate Secretary
Notice of change of address shall be effective
only when given in accordance with this
Section 20
. All notices complying with this
Section 20
shall be
deemed to have been received on the date of hand delivery or on the third business day after mailing.
21.
Governing Law and Forum
. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of Washington applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts
of laws. The Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out
of or in connection with this Agreement shall be brought only in the Washington Court and not in any other state or federal court
in the United States, (b) consent to submit to the exclusive jurisdiction of the Washington Court for purposes of any action or
proceeding arising out of or in connection with this Agreement, (c) waive, and agree not to plead or make, any claim that the Washington
Court lacks venue or that any such action or proceeding brought in the Washington Court has been brought in an improper or inconvenient
forum.
22.
Headings
. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.
23.
Entire Agreement
. This Agreement, together with the Other Indemnity Provisions, constitutes the entire agreement between
the Company and Indemnitee with respect to the subject matter hereof and thereof and supersedes any prior indemnification agreement
by and between the Company and Indemnitee in its entirety.
24.
Counterparts
. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed
to be an original, but all of which together shall constitute one and the same Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
|
|
JONES SODA CO.
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
|
|
|
|
|
INDEMNITEE:
|
|
|
|
|
|
By:
|
|
|
|
Name:
|
|
|
|
|
|
|
Address:
|
|
|
|
|
|
|
|
|
|
|
|
Email:
|
|
EXHIBIT A
FORM OF UNDERTAKING TO REPAY ADVANCEMENT OF EXPENSES
[DATE]
Jones Soda Co.
Attn: Chief Executive Officer
66 South Hanford Street, Suite 150
Seattle, Washington 98134
Re: Undertaking to Repay Advancement of Expenses.
To whom it may concern:
This undertaking is being provided pursuant
to that certain Indemnification Agreement, dated [DATE], by and between Jones Soda Co., a Washington corporation (the “
Company
”),
and the undersigned as Indemnitee (the “
Indemnification Agreement
”). Terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Indemnification Agreement. Pursuant to the Indemnification Agreement, among other
things, I am entitled to the advancement of Expenses paid or incurred in connection with Claims relating to Indemnifiable Events.
I have become subject to [DESCRIPTION OF PROCEEDING]
(the Proceeding) based on [my status as [an officer/[TITLE OF OFFICER]/a director] of the Company/alleged actions or failures to
act in my capacity as [an officer/[TITLE OF OFFICER]/a director] of the Company. [This undertaking also constitutes notice to the
Company of the Proceeding pursuant to Section 7 of the Indemnification Agreement.] The following is a brief description of the
[current status of the] Proceeding:
[DESCRIPTION OF PROCEEDING]
[Pursuant to Section 4 of the Indemnification
Agreement, the Company can (a) pay such Expenses on my behalf, (b) advance funds in an amount sufficient to pay such Expenses,
or (c) reimburse me for such Expenses.] [Pursuant to Section 4 of the Indemnification Agreement, I hereby request an Expense Advance
in connection with the Proceeding. The Expenses for which advances are requested are as follows:]
[DESCRIPTION OF EXPENSES]
In connection with the request for Expense Advances
[set out above/delivered to the Company separately on [DATE]], I hereby undertake to repay any amounts paid, advanced or reimbursed
by the Company for such Expense Advances to the extent that it is ultimately determined that I am not entitled to indemnification
under the Indemnification Agreement.
This undertaking shall be governed by and construed
in accordance with the laws of the State of Washington, without regard to the principles of conflicts of laws thereof.
Very truly yours,
13
Exhibit 99.1
Jones Soda Completes $9 Million Strategic
Financing with SOL Global Portfolio Company HeavenlyRx
- New Capital to Drive Development of Existing Jones Portfolio,
Along with Commercializing CBD-Infused Beverages –
SEATTLE, July 11, 2019 (GLOBE NEWSWIRE) -- Jones Soda Co. (the
“Company”) (OTCQB: JSDA), a leader in the craft soda category known for its unique branding and authentic connection
to its consumers, has completed a $9.0 million strategic financing with HeavenlyRx Ltd. (“HeavenlyRx”), a portfolio
company of SOL Global Investments (“SOL Global”) focused on acquiring unique brands to sell CBD and hemp-infused products.
Under the terms of the agreement, HeavenlyRx purchased 15.0 million shares of Jones
Soda at a price of $0.60 per share for a total of $9.0 million. The Company also issued HeavenlyRx a warrant with a 12-month term
to purchase up to an additional 15.0 million shares at an exercise price of $0.78 per share, which provides Jones Soda the potential
for an additional $11.7 million in capital.
Jones Soda plans to utilize the capital to further grow and enhance its existing
beverage portfolio, along with pursuing the development of new extensions to Jones products, including the potential commercialization
of CBD-infused beverages. In addition to providing capital for various product initiatives, HeavenlyRx will leverage its relationships
with several thousand QSR locations, increasing the number of storefronts where Jones products are sold and bringing the Jones
brand to more people across the country.
“Completing this funding with a strategic partner that has vast experience
in the retail industry is a significant step forward for Jones Soda,” said Jennifer Cue, CEO of Jones Soda. “We believe
that HeavenlyRx seeking out the Jones brand is a testament to our unique beverages that resonate well with consumers, and we expect
their involvement will help accelerate future CBD-infused beverage brand development. We also believe this partnership will further
bolster our product portfolio and significantly expand the network in which we sell our products, while maintaining the independent,
rebellious and fun brand image that customers have come to love.”
As part of the strategic investment, HeavenlyRx has the right to designate two members
of Jones Soda’s board of directors, which the Company expects to occur in the coming weeks.
HeavenlyRx has recommended industry veteran Paul Norman as one of the board designees.
Norman is currently chairman and CEO of HeavenlyRx, where he is focused on developing a long-term strategic direction and growing
the company’s brand portfolio. Previously, Norman spent over 30 years at the Kellogg Company, a multinational food manufacturing
company, and most recently served as president of the company’s North American operations. During his multi-decade career
at Kellogg, Norman led various transformation efforts through strategic portfolio innovation and management that resulted in long-term,
profitable growth.
Jennifer continued: “It has continuously been our goal to expand our brand’s
presence and bring our unique array of products to a larger customer base. We anticipate this strategic partnership will deliver
the necessary capital and human resources to further grow our brand and meet those goals.”
About SOL Global Investments Corp.
SOL Global is an international investment company with a focus on, but not limited to, cannabis and cannabis related companies
in legal U.S. states, the hemp and CBD marketplaces and the emerging European cannabis and hemp marketplaces. Its strategic investments
and partnerships across cultivation, distribution and retail complement the company's R&D program with the University of Miami.
It is this comprehensive approach that is positioning SOL Global as a future frontrunner in the United States' medical cannabis
industry.
HeavenlyRx
SOL launched HeavenlyRx – a new international hemp focused portfolio company – to acquire a portfolio of battle tested
and proven hemp/CBD companies, while also acquiring certain unique brands for which they believe CBD and hemp infused products
could drastically change their growth.
About Jones Soda Co.
Headquartered in Seattle, Washington, Jones Soda Co.® (OTCQB: JSDA) markets and distributes premium beverages under the Jones®
Soda and Lemoncocco® brands. A leader in the premium soda category, Jones Soda is made with pure cane sugar and other high-quality
ingredients, and is known for packaging that incorporates ever-changing photos sent in from its consumers. Jones’ diverse
product line offers something for everyone – pure cane sugar soda, zero-calorie soda and Lemoncocco non-carbonated premium
refreshment. Jones is sold across North America in glass bottles, cans and on fountain through traditional beverage outlets, restaurants
and alternative accounts. For more information, visit www.jonessoda.com or www.myjones.com or www.drinklemoncocco.com.