JONES SODA CO (Form: 10-Q, Received: 08/12/2011 17:26:31)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _______________ to _______________

Commission File Number 000-28820

Jones Soda Co.

(Exact name of registrant as specified in its charter)


Washington (State or other jurisdiction of incorporation or organization)		52-2336602 (I.R.S. Employer Identification Number)

234 Ninth Avenue North Seattle, Washington (Address of principal executive offices)		98109 (Zip Code)

(206) 624-3357
(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file for such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of August 5, 2011, there were 31,992,675 shares of the Company’s common stock issued and outstanding.

JONES SODA CO.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011
TABLE OF CONTENTS


	Page
Explanatory Note		3
Cautionary Notice Regarding Forward Looking Statements		3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
a) Condensed Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010		5
b) Condensed Consolidated Statements of Operations — three and six months ended June 30, 2011 and 2010		6
c) Condensed Consolidated Statements of Cash Flows — six months ended June 30, 2011 and 2010		7
d) Notes to Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 4. Controls and Procedures		22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		23
Item 1A. Risk Factors		24
Item 6. Exhibits		24
EX-10.1
EX-10.3
EX-10.4
EX-10.5
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

EXPLANATORY NOTE

Unless otherwise indicated or the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “Jones,” “Jones Soda,” and the “Company” are to Jones Soda Co. ^® , a Washington corporation, and our wholly-owned subsidiaries Jones Soda Co. (USA) Inc., Jones Soda (Canada) Inc., myJones.com Inc. and Whoopass USA Inc.

In addition, unless otherwise indicated or the context otherwise requires, all references in this Quarterly Report to “ Jones Soda ” refer to our premium soda sold under the trademarked brand name “ Jones Soda Co .”

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This Quarterly Report on Form 10-Q (Report) contains a number of forward-looking statements that reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, the economy, events or developments that management expects or anticipates will or may occur in the future, including statements related to potential strategic transactions, distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, cash flows and financing, our ability to continue as a going concern, statements regarding future operating results and non-historical information, are forward-looking statements. In particular, the words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from historical results as well as the results expressed in, anticipated or implied by these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In particular, our business, including our financial condition and results of operations and our ability to continue as a going concern may be impacted by a number of factors, including, but not limited to, the following:

•

Our ability to successfully execute on our 2011 operating plan;

•

Our ability to establish and maintain distribution arrangements with independent distributors, retailers, brokers and national retail accounts, most of whom sell and distribute competing products, and whom we rely upon to employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our product, on which our business plan and future growth are dependent in part;

•

Our ability to successfully launch new products or our failure to achieve case sales goals with respect to existing products;

•

Our ability to secure additional financing or to generate sufficient cash flow from operations;

•

Our ability to use the net proceeds from future financings to improve our financial condition or market value;

•

Dilutive and other adverse effects on our existing shareholders and our stock price arising from future securities issuances;

•

Our ability to manage our inventory levels and to predict the timing and amount of our sales;

•

Our reliance on third-party contract manufacturers of our products, which could make management of our marketing and distribution efforts inefficient or unprofitable;

•

Our ability to secure a continuous supply and availability of raw materials, as well as other factors affecting our supply chain;

•

Rising raw material, fuel and freight costs as well as freight capacity issues may have an adverse impact on our results of operations;

•

Our ability to source our flavors on acceptable terms from our key flavor suppliers;

•

Our ability to maintain brand image and product quality and the risk that we may suffer other product issues such as product recalls;

•

Our ability to attract and retain key personnel, which would directly affect our efficiency and results of operations;

•

Our inability to protect our trademarks and trade secrets, which may prevent us from successfully marketing our products and competing effectively;

•

Litigation or legal proceedings, which could expose us to significant liabilities and damage our reputation;

•

Our ability to maintain effective disclosure controls and procedures and internal control over financial reporting;

•

Our ability to build and sustain proper information technology infrastructure;

•

Our inability to maintain compliance with the continued listing requirements of The Nasdaq Capital Market which may adversely affect our market price and liquidity;

•

Our ability to create and maintain brand name recognition and acceptance of our products, which are critical to our success in our competitive, brand-conscious industry;

•

Our ability to compete successfully against much larger, well-funded, established companies currently operating in the beverage industry;

•

Our ability to continue developing new products to satisfy our consumers’ changing preferences;

•

Global economic conditions that may adversely impact our business and results of operations;

•

Our ability to comply with the many regulations to which our business is subject.

For a more detailed discussion of some of the factors that may affect our business, results and prospects, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on March 21, 2011. Readers are also urged to carefully review and consider the various disclosures made by us in this Report and in our other reports we file with the Securities and Exchange Commission, including our periodic reports on Form 10-Q and current reports on Form 8-K, and those described from time to time in our press releases and other communications, which attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

JONES SODA CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)


	June 30, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	4,628		$	5,448
Accounts receivable, net of allowance of $304 and $166		2,575			2,220
Taxes receivable		5			480
Inventory		3,025			2,279
Prepaid expenses and other current assets		212			305

Total current assets		10,445			10,732
Fixed assets, net of accumulated depreciation of $3,028 and $2,973		428			296
Other assets		595			435

Total assets	$	11,468		$	11,463

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,527		$	853
Accrued expenses		1,855			1,592
Taxes payable		60			146
Capital lease obligations, current portion		22			—

Total current liabilities		3,464			2,591
Capital lease obligations		94			—
Long-term liabilities — other		2			2
Commitments and contingencies (Note 7)
Shareholders’ equity:
Common stock, no par value:
Authorized — 100,000,000; issued and outstanding shares — 31,992,581 and 30,418,301 at June 30, 2011 and December 31, 2010, respectively		50,089			47,917
Additional paid-in capital		6,866			6,570
Accumulated other comprehensive income		510			450
Accumulated deficit		(49,557	)		(46,067	)

Total shareholders’ equity		7,908			8,870

Total liabilities and shareholders’ equity	$	11,468		$	11,463

See accompanying notes to condensed consolidated financial statements.

JONES SODA CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Revenue	$	4,914		$	5,365		$	9,001		$	9,258
Cost of goods sold		3,497			3,894			6,584			6,979
Write-down of excess GABA inventory		—			178			—			178

Gross profit		1,417			1,293			2,417			2,101
Licensing revenue		7			8			12			18
Operating expenses:
Promotion and selling		1,873			1,078			3,153			2,302
General and administrative		1,313			1,745			2,793			3,428

		3,186			2,823			5,946			5,730

Loss from operations		(1,762	)		(1,522	)		(3,517	)		(3,611	)
Other income (expense), net		6			(3	)		78			(8	)

Loss before income taxes		(1,756	)		(1,525	)		(3,439	)		(3,619	)
Income tax expense, net		(64	)		(29	)		(51	)		(67	)

Net loss	$	(1,820	)	$	(1,554	)	$	(3,490	)	$	(3,686	)

Net loss per share — basic and diluted	$	(0.06	)	$	(0.06	)	$	(0.11	)	$	(0.14	)
Weighted average basic and diluted common shares outstanding		31,990,645			26,451,211			31,724,816			26,439,596

See accompanying notes to condensed consolidated financial statements.

JONES SODA CO.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(In thousands)


	Six Months Ended June 30,
	2011			2010
OPERATING ACTIVITIES:
Net loss	$	(3,490	)	$	(3,686	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		86			228
Stock-based compensation		295			401
Change in allowance for doubtful accounts		138			35
Inventory write-down		—			246
Write-down of excess GABA inventory		—			178
Loss on disposal of fixed assets		—			155
Deferred income taxes		—			2
Other non-cash charges and credits		—			7
Changes in operating assets and liabilities:
Accounts receivable		(477	)		(965	)
Taxes receivable		483			—
Inventory		(732	)		201
Prepaid expenses and other current assets		64			25
Other assets		23			74
Accounts payable		622			980
Accrued expenses		253			(436	)
Taxes payable		(89	)		37

Net cash used in operating activities		(2,824	)		(2,518	)
INVESTING ACTIVITIES:
Purchase of certificate of deposit, restricted		(183	)		—
Redemption of certificate of deposit, restricted		—			376
Purchase of fixed assets		(173	)		(16	)
Sale of fixed assets		3			—

Net cash (used in) provided by investing activities		(353	)		360
FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net		2,185			—
Proceeds from capital lease obligation		122			—
Proceeds from exercise of stock options		17			60
Payments on capital lease obligations		(6	)		—
Repayment of note payable		—			(345	)

Net cash provided by (used in) financing activities		2,318			(285	)

Net decrease in cash and cash equivalents		(859	)		(2,443	)
Effect of exchange rate changes on cash		39			(10	)
Cash and cash equivalents, beginning of period		5,448			4,975


Cash and cash equivalents, end of period	$	4,628		$	2,522


Supplemental disclosure:
Cash received (paid) during period for:
Interest	$	50		$	(5	)
Income taxes		361			1

See accompanying notes to condensed consolidated financial statements.

JONES SODA CO.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations and Summary of Significant Accounting Policies

Jones Soda Co. develops, produces, markets and distributes premium beverages, including the following product lines and extensions:

•

Jones Soda ^® , a premium carbonated soft drink;

•

Jones Zilch™, with zero calories (and an extension of the Jones Soda ^® product line);

•

WhoopAss Energy Drink ^® , an energy supplement drink; and

•

WhoopAss Zero Energy Drink ^{^®} , with zero sugar (and an extension of the WhoopAss Energy Drink ^{^®} product line).

We are a Washington corporation and have three operating subsidiaries, Jones Soda Co. (USA) Inc., Jones Soda (Canada) Inc., and myJones.com, Inc., as well as one non-operating subsidiary, Whoopass USA Inc.

Basis of presentation and consolidation

The accompanying condensed consolidated balance sheet as of December 31, 2010, which has been derived from audited consolidated financial statements and the unaudited interim condensed consolidated financial statements as of June 30, 2011, have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the Securities and Exchange Commission (SEC) rules and regulations applicable to interim financial reporting. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions between the Company and its subsidiaries have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments, consisting only of those of a normal recurring nature, considered necessary for a fair presentation of our financial position, results of operations and cash flows at the dates and for the periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Use of estimates

The preparation of the condensed consolidated financial statements requires management to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, inventory valuation, depreciable lives and valuation of fixed assets, valuation allowances for receivables, trade promotion liabilities, stock-based compensation expense, valuation allowance for deferred income tax assets, contingencies, and forecasts supporting the going concern assumption and related disclosures. Actual results could differ from those estimates.

Seasonality

Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors. We historically have generated a greater percentage of our revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, management believes that

period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.

Liquidity

As of June 30, 2011, we had cash and cash equivalents of approximately $4.6 million and working capital of $7.0 million. Cash used in operations during the six months ended June 30, 2011 totaled $2.8 million. Our cash flows vary throughout the year based on seasonality. We traditionally use more cash in the first half of the year as we build inventory to support our historically seasonally-stronger shipping months of April through September, and expect cash used by operating activities to decrease in the second half of the year as we collect receivables generated during our stronger shipping months. We incurred a net loss of $1.8 million during the three months ended June 30, 2011.

Our operating plan factors in the use of cash to meet our contractual obligations. A substantial portion of these contractual obligations consists of obligations to purchase raw materials, including sugar and glass under our supply agreements. We enter into these supply agreements in order to fix the cost of these key raw materials, which we expect will be used in the ordinary course of our business. Our contractual obligations also relate to payments for sponsorships, and have been reduced by approximately $7.0 million through 2017 as the result of our termination of the sponsorship arrangement with the New Jersey Nets (see Note 7).

We intend to continually monitor and adjust our business plan as necessary to respond to developments in our business, our markets and the broader economy. Our current 2011 operating plan does not require us to obtain additional financing; however, this will depend on our ability to meet our sales volume goals and otherwise execute on our operating plan. We believe it is imperative to meet these objectives and continue to expand our distribution network and increase sales volume in order to lessen our reliance on external financing in the future. In order to execute on our growth strategy beyond our 2011 operating plan, we will require additional financing to support our working capital needs. The amount of additional capital we will require, and the timing of our capital needs, will depend on a number of factors, including the performance of our business for the remainder of 2011 and beyond and the market conditions for debt or equity financing. Although we believe we may have various debt and equity financing alternatives available to us, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders. We continue to monitor whether credit facilities may be available to us on acceptable terms. There can be no assurance that any new debt or equity financing arrangement will be available to us when needed on acceptable terms, if at all. In addition, there can be no assurance that these financing alternatives would provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions in the best interest of the Company and our shareholders, which may include, without limitation, public or private offerings of debt or equity securities, joint ventures with one or more strategic partners, strategic acquisitions and other strategic alternatives, but there can be no assurance that we will enter into any agreements or transactions.

The uncertainties relating to our ability to successfully execute our 2011 operating plan, combined with our inability to implement further meaningful cost containment measures that do not jeopardize our growth plans and the difficult financing environment, continue to raise substantial doubt about our ability to continue as a going concern. Our financial statements for the quarters ended June 30, 2011 and 2010 were prepared assuming we would continue as a going concern, which contemplates that we will continue in operation for the foreseeable future and will be able to realize assets and settle liabilities and commitments in the normal course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that could result should we be unable to continue as a going concern.

2. Equity Financing

In June 2010, we entered into an equity line of credit arrangement (Equity Line) with Glengrove Small Cap Value, Ltd (Glengrove), pursuant to which Glengrove committed to purchase, upon the terms and subject to the conditions of the purchase agreement establishing the facility, up to $10 million worth of shares of our common stock, subject to a maximum aggregate limit of 5,228,893 common shares. The facility provided that we may, from time to time, over the 24-month term of the facility and at our sole discretion, present Glengrove with draw down notices to purchase our common stock at a price equal to the daily volume weighted average price of our common stock on each date during the draw down period on which shares are purchased, less a discount of 6.0%. During 2010, we completed draw downs and sales under the facility of an aggregate of 3,632,120 shares for net proceeds of approximately $4.0 million. On February 1, 2011, we completed our final draw down and sale of 1,596,773 shares for net proceeds of approximately $2.2 million. We sold to Glengrove a total of 5,228,893 shares, which is the maximum number of shares issuable under the terms of the Equity Line and the Equity Line by its terms automatically has terminated.

3. Inventory

Inventory consists of the following (in thousands):


	June 30, 2011		December 31, 2010
Finished goods	$	2,438	$	1,695
Raw materials		587		584

	$	3,025	$	2,279

Finished goods primarily include product ready for shipment, as well as promotional merchandise held for sale. Raw materials primarily include ingredients, concentrate and packaging.

4. Capital Lease

In January 2011, we entered into capital lease agreements totaling $122,000 for the lease of two branded vehicles used for marketing. The debt is payable over a 60-month period at 6.99% interest. Our remaining scheduled lease payments, which include $20,000 in interest, are $15,000 for 2011, $29,000 for each of the years 2012 through 2015, and $5,000 for 2016.

5. Lease Obligations

In June 2011, we entered into an office building sublease for use as our principal headquarters, as our previous lease expires in August 2011 and does not include an option to renew. The term of the sublease is five years with an option to extend for up to three additional five year terms. Under the terms of the sublease, we were required to deliver a Letter of Credit (LOC) issued by KeyBank National Association in an amount equivalent to 50% of the total Subtenant Improvement Allowance (as defined in the sublease agreement), or $183,000, which will be released after year three of the sublease term, provided we have not been late in the payment of rent more than five times during such period. As a condition of and to secure the LOC, KeyBank National Association required us to place $183,000 in an interest bearing restricted reserve account, invested in a certificate of deposit which is recorded in other assets.

Our scheduled sublease payments as of June 30, 2011 are as follows (in thousands):


	Operating Lease
2011	$	—
2012		201
2013		206
2014		211
2015		216
Thereafter		127

	$	961

6. Stock-Based Compensation

At our Annual Meeting held on May 25, 2011, our shareholders approved the Jones Soda Co. 2011 Incentive Plan (2011 Plan). As a result, the 2002 Stock Option and Restricted Stock Plan (2002 Plan) was terminated, and equity awards granted after the 2011 Annual Meeting will be made under the 2011 Plan. Awards outstanding under the 2002 Plan will remain outstanding in accordance with their existing terms.

The 2011 Plan initially authorizes the issuance of 3,000,000 shares of the Company’s common stock. Starting in 2012, the number of shares authorized under the 2011 Plan also may be increased each January 1 ^st by an amount equal to the least of (a) 1,300,000 shares, (b) 4.0% of our outstanding common stock as of the end of our immediately preceding fiscal year, and (c) a lesser amount determined by the Board of Directors (the Board), provided that the number of shares that may be granted pursuant to awards in a single year may not exceed 10% of the Company’s outstanding shares of common stock on a fully diluted basis as of the end of the immediately preceding fiscal year.

Under the terms of the 2011 Plan, the Board may grant awards to employees, officers, directors, consultants, agents, advisors and independent contractors. Awards may consist of stock options, stock appreciation rights, stock awards, restricted stock, stock units, performance awards or other stock or cash-based awards. As of June 30, 2011, there were 3,000,000 shares available for issuance under the 2011 Plan.

(a)

Stock options:

A summary of our stock option activity is as follows:


	Outstanding Options
	Number of			Weighted Average
	Shares			Exercise Price
Balance at January 1, 2011		1,789,784		$	1.96
Options granted		480,000			1.35
Options exercised		(25,288	)		0.68
Options cancelled/expired		(176,243	)		1.20

Balance at June 30, 2011		2,068,253		$	1.68
Exercisable, June 30, 2011		1,096,879		$	2.17
Vested and expected to vest		2,024,156		$	1.70

(b)

Restricted stock awards:

A summary of our restricted stock activity is as follows:


	Weighted-Average
	Restricted			Grant Date
	Shares			Fair Value
Non-vested restricted stock at January 1, 2011		158,581		$	1.52
Granted		—			—
Vested		(107,264	)		1.52
Cancelled/expired		(47,781	)		1.42

Non-vested restricted stock at June 30, 2011		3,536		$	2.80

A total of 47,352 shares were withheld by the Company as payment for withholding taxes due in connection with the vesting of restricted stock awards issued under the 2002 Plan for the six months ended June 30, 2011, and the average price paid per share of $1.32, reflects the average market value per share of the shares withheld for tax purposes. There were no shares withheld by the

Company for the three months ended June 30, 2011. A total of 808 and 1,715 shares were withheld by the Company as payment for withholding taxes due in connection with the vesting of restricted stock awards issued under the 2002 Plan for the three and six months ended June 30, 2010, respectively, and the average price paid per share of $2.03 and $1.82, respectively, reflects the average market value per share of the shares withheld for tax purposes.

(c)

Stock-based compensation expense:

Stock-based compensation expense is recognized using the straight-line attribution method over the employees’ requisite service period. We recognize compensation expense for only the portion of stock options or restricted stock expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to stock-based compensation expense may be required in future periods.

At June 30, 2011, the unrecognized compensation expense related to stock options and non-vested restricted stock awards was $683,000 and $4,300, respectively, which is to be recognized over weighted-average periods of 2.2 years and 0.4 years, respectively.

The following table summarizes the stock-based compensation expense (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Type of awards:
Stock options	$	115	$	213	$	200	$	348
Restricted stock		5		21		95		53

	$	120	$	234	$	295	$	401


Income statement account:
Promotion and selling	$	28	$	25	$	86	$	58
General and administrative		92		209		209		343

	$	120	$	234	$	295	$	401

We employ the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model:


	Six Months Ended June 30
	2011			2010
Expected dividend yield		—			—
Expected stock price volatility		99.4	%		91.9	%
Risk-free interest rate		2.5	%		2.8	%
Expected term (in years)	5.9 years			5.6 years
Weighted-average grant date fair-value	$	1.06		$	0.60

The aggregate intrinsic value of stock options outstanding at June 30, 2011 and 2010 was $135,000 and $311,000 and for options exercisable was $257,000 and $188,000, respectively. The intrinsic value of outstanding and exercisable stock options is calculated as the quoted market price of the stock at the balance sheet date less the exercise price of the option. The total intrinsic value of options exercised during the three and six months ended June 30, 2011 and 2010 was $700 and $57,000 and $14,000 and $58,000, respectively.

7. Commitments and contingencies

Commitments

Agreement in connection with annual sponsorship fees for the year ended December 31, 2010 and the first half of 2011 and a termination fee of $350,000 payable in three installments ending March 1, 2012.

With the conclusion of our sponsorship with the Portland Trailblazers effective June 30, 2011, our remaining sponsorships are comprised of several athlete and other sponsorships; these obligations vary in terms. Sponsorship obligations in future periods under these commitments, after giving effect to the termination of the New Jersey Nets Sponsorship, are expected to occur as follows (in thousands):


	Total		2011		2012		2013
Sponsorships	$	425	$	125	$	150	$	150

Legal proceedings

On September 4, 2007, a putative class action complaint was filed against us, our then serving chief executive officer, and our then serving chief financial officer in the U.S. District Court for the Western District of Washington, alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The case was entitled Saltzman v. Jones Soda Company, et al. , Case No. 07-cv-1366-RSL, and purported to be brought on behalf of a class of purchasers of our common stock during the period March 9, 2007 to August 2, 2007. Six substantially similar complaints subsequently were filed in the same court, some of which alleged claims on behalf of a class of purchasers of our common stock during the period November 1, 2006 to August 2, 2007. Some of the subsequently filed complaints added as defendants certain current and former directors and another former officer of the Company. The complaints generally alleged violations of federal securities laws based on, among other things, false and misleading statements and omissions about our financial results and business prospects. The complaints sought unspecified damages, interest, attorneys’ fees, costs, and expenses. On October 26, 2007, these seven lawsuits were consolidated as a single action entitled In re Jones Soda Company Securities Litigation , Case No. 07-cv-1366-RSL. On March 5, 2008, the Court appointed Robert Burrell lead plaintiff in the consolidated securities case. On May 5, 2008, the lead plaintiff filed a First Amended Consolidated Complaint, which purports to allege claims on behalf of a class of purchasers of our common stock during the period of January 10, 2007, to May 1, 2008, against the Company and Peter van Stolk, our former Chief Executive Officer, former Chairman of the Board, and former director. The First Amended Consolidated Complaint generally alleges violations of federal securities laws based on, among other things, false and misleading statements and omissions about our agreements with retailers, allocation of resources, and business prospects. Defendants filed a motion to dismiss the amended complaint on July 7, 2008. After hearing oral argument on February 3, 2009, the Court granted the motion to dismiss in its entirety on February 9, 2009. Plaintiffs filed their motion for leave to amend their complaint on March 25, 2009. On June 22, 2009, the Court issued an order denying plaintiffs’ motion for leave to amend and dismissed the case with prejudice. On July 7, 2009, the Court entered judgment in favor of the Company and Mr. van Stolk. On August 5, 2009, plaintiffs filed a notice of appeal of the Court’s order dismissing the complaint and denying plaintiffs’ motion for leave to amend, and the resulting July 7, 2009 judgment. On August 30, 2010, the Ninth Circuit panel affirmed the denial of plaintiffs’ motion for leave to amend. On September 20, 2010, plaintiffs filed a petition for rehearing of their appeal by the full Ninth Circuit. On October 20, 2010, the Ninth Circuit denied plaintiffs’ petition for rehearing. Plaintiffs did not file a petition for review by the U.S. Supreme Court, and the time for doing so has passed.

In addition, on September 5, 2007, a shareholder derivative action was filed in the Superior Court for King County, Washington, allegedly on behalf of and for the benefit of the Company, against certain of our former officers and current and former directors. The case was entitled Cramer v. van Stolk, et al. , Case No. 07-2-29187-3 SEA (Cramer Action). The Company also was named as a nominal defendant. Four other shareholders filed substantially similar derivative cases. Two of these actions were filed in Superior Court for King County, Washington. One of these two Superior Court actions was voluntarily dismissed and the other was consolidated with the Cramer Action under the caption In re Jones Soda Co. Derivative Litigation, Lead Case No. 07-2-31254-4 SEA. On April 28, 2008, plaintiffs in the consolidated action filed an amended complaint based on the same basic allegations of fact as in the federal securities class actions and alleging, among other things, that certain of our current and former officers and directors breached their fiduciary duties to the Company and were unjustly enriched in connection with the public disclosures that are the subject of the federal securities class actions. On May 2, 2008, the Court signed a stipulation and order staying the proceedings in the consolidated Cramer Action until all motions to dismiss in the consolidated federal securities class action have been adjudicated. On July 9, 2010, the Court dismissed the consolidated action without prejudice.

No. 07-1782RSL (Sexton Action), and appointed Bryan P. Sexton lead plaintiff. The actions comprising the consolidated Sexton Action are based on the same basic allegations of fact as in the securities class actions filed in the U.S. District Court for the Western District of Washington and the Cramer Action, filed in the Superior Court for King County. The actions comprising the Sexton Action alleged, among other things, that certain of our current and former directors and former officers breached their fiduciary duties to the Company and were unjustly enriched in connection with the public disclosures that are the subject of the federal securities class actions. The complaints sought unspecified damages, restitution, disgorgement of profits, equitable and injunctive relief, attorneys’ fees, costs, and expenses. The Court granted an agreed motion by the parties to stay the Sexton Action until the resolution of the appeal in the securities class action described above. By order dated February 14, 2011, the Court lifted the stay and the plaintiffs filed a notice of designation of operative complaint by the deadline of April 18, 2011. On June 2, 2011, the plaintiffs in the actions comprising the Sexton Action filed a notice of voluntary dismissal without prejudice.

In addition to the matters above, we are or may be involved from time to time in various claims and legal actions arising in the ordinary course of business, including proceedings involving product liability claims and other employee claims, and tort and other general liability claims, for which we carry insurance, as well as trademark, copyright, and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

8. Comprehensive Loss

Comprehensive loss is comprised of net loss and other adjustments, including items such as non-U.S. currency translation adjustments. We do not provide income taxes on currency translation adjustments, as the historical earnings from our Canadian subsidiary are considered to be indefinitely reinvested.

The following table summarizes our comprehensive loss for the periods presented (in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Net loss	$	(1,820	)	$	(1,554	)	$	(3,490	)	$	(3,686	)
Currency translations		21			(78	)		60			(45	)

Comprehensive loss	$	(1,799	)	$	(1,632	)	$	(3,430	)	$	(3,731	)

9. Segment Information

We have one operating segment with operations primarily in the United States and Canada. Revenues are assigned to geographic locations based on the location of customers. Geographic information is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
United States	$	3,678	$	3,784	$	6,842	$	6,484
Canada		1,227		1,322		2,106		2,335
Other Countries		9		259		53		439

Total revenue	$	4,914	$	5,365	$	9,001	$	9,258

During the three months ended June 30, 2011 and 2010, three of our customers represented approximately 43% and 35%, respectively, of revenue, one of which, A. Lassonde Inc., a Canadian direct store delivery distributor, represented approximately 33% and 24%, respectively, of revenue. During the six months ended June 30, 2011 and 2010, three of our customers represented approximately 40% and 32%, respectively, of revenue, one of which, A. Lassonde Inc., a Canadian direct store delivery distributor, represented approximately 28% and 21%, respectively, of revenue.

10. Subsequent Events

In August 2011, we announced that we agreed to terminate the Amended Sponsorship Agreement with the New Jersey Nets, dated October 29, 2007, effectively ending the agreement five years early. In connection with the termination, we agreed to pay $500,000 which is recorded in accrued liabilities as of June 30, 2011. The payment includes a $150,000 payment owed under the Amended Sponsorship Agreement in connection with annual sponsorship fees for the year ended December 31, 2010 and the first half of 2011 and a termination fee of $350,000 payable in three installments ending March 1, 2012.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and the 2010 audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K , which was filed with the Securities and Exchange Commission (SEC) on March 21, 2011.

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,” variations of such words, and similar expressions. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined at the beginning of this report under “Cautionary Notice Regarding Forward-Looking Statements” and in Item 1A of our most recent Annual Report on Form 10-K filed with the SEC. These factors may cause our actual results to differ materially from any forward-looking statements. Except as required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We develop, produce, market and distribute premium beverages, including the following product lines and extensions:

•

Jones Soda ^® , a premium carbonated soft drink;

•

Jones Zilch™, with zero calories (and an extension of the Jones Soda ^® product line);

•

WhoopAss Energy Drink ^{^®} , an energy supplement drink; and

•

WhoopAss Zero Energy Drink ^® , with zero sugar (and an extension of the WhoopAss Energy Drink ^® product line).

We sell and distribute our products primarily throughout the United States (U.S.) and Canada through our network of independent distributors, which we refer to as our direct store delivery (DSD) channel, and directly to national retail accounts, which we refer to as our direct to retail (DTR) channel. Additionally, in limited circumstances we sell concentrate for distribution or production of our products, which we refer to as our concentrate soda channel. We do not directly manufacture our products but instead outsource the manufacturing process to third-party contract manufacturers.

Our products are sold in 50 states in the U.S. and nine provinces in Canada, primarily in convenience stores, grocery stores, delicatessens, and sandwich shops, as well as through our national accounts with several large retailers. We also sell various products on-line, which we refer to as our interactive channel, including soda with customized labels, wearables, candy and other items. Our distribution landscape is evolving, with the majority of our case sales of our core products, including Jones Soda as well as our newly re-launched WhoopAss Energy Drink , sold through our DSD channel in recent years. We are strategically building our national and regional retailer network by focusing on the distribution system that will provide us the best top-line driver for our products and optimize availability of our products. We have focused our sales and marketing resources on the expansion

and penetration of our products through our independent distributor network and national and regional retail accounts in our core markets throughout the U.S. and Canada. We also intend to initiate and enhance distributor relationships in international regions where we believe there may be appropriate demand for our products. Our international business outside of North America is comprised of Ireland, the United Kingdom and Australia.

Our business strategy is to increase sales by expanding distribution of our products in new and existing markets (primarily within North America). Our business strategy focuses on:

•

expanding points of distribution of Jones Soda throughout the entire U.S. in the grocery, mass and club channels;

•

growing our convenience and gas (C&G) distribution behind WhoopAss Energy Drink ;

•

expanding the stock-keeping unit (SKU) offerings in the grocery stores where we are already present; and

•

developing innovative beverage brands that will allow us to capture share in the growing natural carbonated drink segment.

In order to compete effectively in the beverage industry, we believe that we must convince independent distributors that Jones Soda and WhoopAss Energy Drink are leading brands in the premium soda and energy drink segments of the sparkling beverage category. We believe our story is compelling as we perform well compared to our direct competitors in the premium soda segment in sales per point of distribution. Additionally, as a means of maintaining and expanding our distribution network, we introduce new products and product extensions, and when warranted, new brands. Although we believe that we will be able to continue to create competitive and relevant brands to satisfy consumers’ changing preferences, there can be no assurance that we will be able to do so or that other companies will not be more successful in this regard over the long term.

We believe that our current cash and cash equivalents, which includes net proceeds of approximately $2.2 million received from our final draw down under the equity line of credit facility in February 2011 (see Note 2 to the financial statements), will be sufficient to meet our anticipated cash needs at least into the first half of 2012. Additionally, in August 2011, we announced we were able to terminate our sponsorship arrangement with the New Jersey Nets (see “Liquidity and Capital Resources”) thereby reducing our sponsorship commitments by approximately $7.0 million through 2017 as we return our attention to grassroots marketing initiatives that focus on a nationwide audience. Our current 2011 operating plan does not require us to obtain additional financing; however, this will depend on our ability to meet our sales volume goals and otherwise execute on our operating plan. We believe it is imperative to meet these objectives and continue to expand our distribution network and increase sales volume in order to lessen our reliance on external financing in the future. In order to execute on our growth strategy beyond our 2011 operating plan, we will require additional financing to support our working capital needs. The amount of additional capital we will require, and the timing of our capital needs, will depend on a number of factors, including the performance of our business for the remainder of 2011 and beyond and the market conditions for debt or equity financing. Although we believe we may have various debt and equity financing alternatives available to us, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders. We continue to monitor whether credit facilities may be available to us on acceptable terms. There can be no assurance that any new debt or equity financing arrangement will be available to us when needed on acceptable terms, if at all. In addition, there can be no assurance that these financing alternatives would provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions in the best interest of the Company and our shareholders, which may include, without limitation, public or private offerings of debt or equity securities, joint ventures with one or more strategic partners, strategic acquisitions and other strategic alternatives, but there can be no assurance that we will enter into any agreements or transactions.

Results of Operations

The following selected unaudited financial and operating data are derived from our condensed consolidated financial statements and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our condensed consolidated financial statements.


	Three Months Ended June 30,												Six Months Ended June 30,
				% of						% of						% of						% of
	2011			Revenue			2010			Revenue			2011			Revenue			2010			Revenue
							(Dollars in thousands, except share data)
Consolidated statements of operation data:
Revenue	$	4,914			100.0		$	5,365			100.0		$	9,001			100.0		$	9,258			100.0
Cost of goods sold		(3,497	)		(71.2	)		(3,894	)		(72.6	)		(6,584	)		(73.1	)		(6,979	)		(75.4	)
Write-down of excess GABA inventory		—			—			(178	)		(3.3	)		—			—			(178	)		(1.9	)

Gross profit		1,417			28.8			1,293			24.1			2,417			26.9			2,101			22.7
Licensing revenue		7			0.1			8			0.1			12			0.1			18			0.2
Promotion and selling expenses		(1,873	)		(38.1	)		(1,078	)		(20.1	)		(3,153	)		(35.0	)		(2,302	)		(24.9	)
General and administrative expenses		(1,313	)		(26.7	)		(1,745	)		(32.5	)		(2,793	)		(31.0	)		(3,428	)		(37.0	)


Loss from operations		(1,762	)		(35.9	)		(1,522	)		(28.4	)		(3,517	)		(39.0	)		(3,611	)		(39.0	)
Other income (expense), net		6			0.1			(3	)		(0.1	)		78			0.9			(8	)		(0.1	)


Loss before income taxes		(1,756	)		(35.8	)		(1,525	)		(28.5	)		(3,439	)		(38.1	)		(3,619	)		(39.1	)
Income tax expense, net		(64	)		(1.3	)		(29	)		(0.5	)		(51	)		(0.6	)		(67	)		(0.7	)

Net loss	$	(1,820	)		(37.1	)	$	(1,554	)		(29.0	)	$	(3,490	)		(38.7	)	$	(3,686	)		(39.8	)

Basic and diluted net loss per share	$	(0.06	)				$	(0.06	)				$	(0.11	)				$	(0.14	)


	As of
	June 30, 2011		December 31, 2010
	(Dollars in thousands)
Balance sheet data:
Cash and cash equivalents and accounts receivable, net	$	7,203	$	7,668
Fixed assets, net		428		296
Total assets		11,468		11,463
Long-term liabilities		96		2
Working capital		6,981		8,141


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Case sale data (288-ounce equivalent):
Finished products cases		358,300		390,500		660,300		701,100
Concentrate cases		—		84,000		—		110,800

Total cases		358,300		474,500		660,300		811,900

Quarter Ended June 30, 2011 Compared to Quarter Ended June 30, 2010

Revenue

For the quarter ended June 30, 2011, revenue was approximately $4.9 million, a decrease of $451,000, or 8.4%, from $5.4 million in revenue for the three months ended June 30, 2010. This decrease is in part attributable to a 4.3% decline in revenue due to the discontinuation of underperforming product lines, Jones Naturals ^® , Jones Organics ^TM , Jones 24C ^® and Jones GABA ^® , and certain underperforming Jones Soda flavors (which we refer to as stock keeping units, or SKUs). This product line and SKU rationalization was initiated in the second half of 2010, after the arrival of our new Chief Executive Officer in April of that year, as part of our strategic decision to focus our business on our higher-margin, core products, including Jones Soda SKUs that we believe have demonstrated strong sales performance at retail (measured by the number of units of a particular SKU sold per point of distribution within a specific period of time, referred to as sales velocity) and our newly re-launched WhoopAss Energy Drink . As a result, for the second quarter of 2011 we earned significantly less revenue from these discontinued products and SKUs compared to the same period in the prior year as we cycle through the remaining inventory of these products, which we expect to continue through the remainder of the year. The following table summarizes the case sales and revenue for the three months ended June 30:


	Case Sales (288-ounce equivalent)				Revenue (in thousands)
	2011		2010		2011		2010
Core products — North America		347,000		323,400	$	4,852	$	4,688
Core products — International		700		21,100		9		259
Discontinued products		9,700		35,400		46		191
Discontinued SKUs		900		10,600		7		96
Concentrate		—		84,000		—		131

Total		358,300		474,500	$	4,914	$	5,365

Also contributing to the decrease in revenue was a significant decline in our international market as a result of an underperforming key distributor serving the Ireland market that ultimately sought bankruptcy protection. This accounted for a 4.6% decrease in revenue in the second quarter of 2011 compared to the same period in 2010, and we expect this to continue to negatively impact our revenue for the remainder of the year as we transition to a new distributor in the Ireland market. In addition, there were no case sales of concentrate during the second quarter of 2011 compared to 84,000 cases during the same period of 2010.

The decrease in revenue for the quarter ended June 30, 2011 compared to the same period of 2010 was offset, in part, by an increase in revenue from our continuing core product offerings in the North American market of 3.1%, driven by growth in case sales of Jones Soda and WhoopAss Energy Drink . We believe our efforts with respect to reinforcing and expanding our distribution network by partnering with new distributors and replacing underperforming distributors, coupled with our strategic refocus to emphasize our higher-margin core products, are beginning to positively impact our business.

For the quarter ended June 30, 2011, promotion allowances and slotting fees, which are a reduction to revenue, totaled $573,000, an increase of $229,000, or 66.6%, from $344,000 a year ago. The increase in promotion allowances and slotting fees was primarily attributable to a focus on more traditional trade spend strategies for core products through our DSD channel in order to increase sales velocity. We expect promotional allowances and slotting fees to be higher in 2011 than in 2010 as the year continues and we concentrate on these traditional trade spend strategies.

Gross Profit

For the quarter ended June 30, 2011, gross profit increased by approximately $124,000, or 9.6%, to $1.4 million as compared to $1.3 million in gross profit for the quarter ended June 30, 2010. Despite the overall decrease in revenue during the quarter compared to the same period in the prior year for the reasons outlined above under “Revenue”, the increase in gross profit was benefited by a reduction in cost of goods sold in the second quarter of 2011 compared to the same period in the prior year as a result of our transition out of underperforming product lines which had a higher cost to produce. Additionally, the prior year gross profit was negatively impacted by a $178,000 write-down of excess GABA inventory. For the quarter ended June 30, 2011, gross profit as a percentage of revenue increased to 28.8% from 24.1% for the second quarter of 2010.

Promotion and Selling Expenses

Promotion and selling expenses for the quarter ended June 30, 2011 were $1.9 million, an increase of $795,000, or 73.7%, from $1.1 million for the quarter ended June 30, 2010. Promotion and selling expenses as a percentage of revenue increased to 38.1% for the quarter ended June 30, 2011, from 20.1% in the same period in 2010. The increase in promotion and selling expenses was primarily due to an increase in selling expenses year over year of $419,000, to $964,000, or 19.6% of revenue driven by added sales and marketing personnel to support our growth strategy. Also contributing to the increase was trade promotion and marketing expenses which grew from $533,000 to $909,000, or 18.5% of revenue for the quarter ended June 30, 2011, due primarily to a $350,000 charge accrued to the second quarter in connection with the termination of our New Jersey Nets sponsorship agreement in August 2011. We anticipate increased promotion and selling expenses in future quarters compared prior year periods due to our hiring of additional sales and marketing personnel to support our strategy of securing and growing larger distributor and national retail accounts, as well as our efforts to grow our Jones Soda and WhoopAss Energy Drink core product lines.

General and Administrative Expenses

General and administrative expenses for the quarter ended June 30, 2011 were $1.3 million, a decrease of $432,000, or 24.8%, compared to $1.7 million for the quarter ended June 30, 2010. General and administrative expenses as a percentage of revenue decreased to 26.7% for the three months ended June 30, 2011 from 32.5% in the same period of 2010. The decrease in general and administrative expenses was primarily due to decreases in salaries and benefits, driven by a decrease in stock-based compensation, and a decrease in professional fees. In addition, general and administrative expenses were favorably impacted due to a loss on disposal of fixed assets in the prior year period.

Income Tax Expense, Net

Provision for income taxes for the quarters ended June 30, 2011 and 2010 was an expense of $64,000 and $29,000, respectively. The tax provision relates primarily to the tax on income from our Canadian operations. No tax benefit is recorded for the loss in our U.S. operations as we have recorded a full valuation allowance on our U.S. net deferred tax assets. We expect to continue to record a full valuation allowance on our U.S. net deferred tax assets until we sustain an appropriate level of taxable income through improved

U.S. operations. Our effective tax rate is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a full valuation allowance on our U.S. net deferred tax assets.

Net Loss

Net loss for the quarter ended June 30, 2011 increased to $1.8 million from a net loss of $1.6 million for the quarter ended June 30, 2010. This was primarily due to an increase in promotion and selling expenses of $795,000, offset by a decrease in general and administrative expenses for the reasons discussed above.

Six Month Period Ended June 30, 2011 Compared to Six Month Period Ended June 30, 2010

Revenue

For the six months ended June 30, 2011, revenue was approximately $9.0 million, a decrease of $257,000, or 2.8%, from $9.3 million in revenue for the six months ended June 30, 2010. This decrease is primarily attributable to a 8.8% decline in revenue due to the discontinuation of underperforming products lines, Jones Naturals ^® , Jones Organics ^TM , Jones 24C ^® and Jones GABA ^® , and certain underperforming Jones Soda flavors (which we refer to as stock keeping units, or SKUs). This product line and SKU rationalization was initiated in the second half of 2010, after the arrival of our new Chief Executive Officer in April of that year, as part of our strategic decision to focus our business on our higher-margin, core products, including Jones Soda SKUs that we believe have demonstrated strong sales performance at retail (measured by the number of units of a particular SKU sold per point of distribution within a specific period of time, referred to as sales velocity) and our newly re-launched WhoopAss Energy Drink. As a result, for the first half of 2011 we earned significantly less revenue from these discontinued products and SKUs compared to the same period in the prior year as we cycle through the remaining inventory of these products, which we expect to continue through the remainder of the year. The following table summarizes the case sales and revenue for the six months ended June 30:


	Case Sales (288-ounce equivalent)				Revenue (in thousands)
	2011		2010		2011		2010
Core products — North America		642,600		559,300	$	8,899	$	7,855
Core products — International		3,700		35,500		53		439
Discontinued products		12,700		76,700		39		549
Discontinued SKUs		1,300		29,600		10		314
Concentrate		—		110,800		—		101

Total		660,300		811,900	$	9,001	$	9,258

Also contributing to the decrease in revenue was a significant decline in our international market as a result of an underperforming key distributor serving the Ireland market that ultimately sought bankruptcy protection. This accounted for a 4.2% decrease in revenue in the first half of 2011 compared to the same period in 2010, and we expect this to continue to negatively impact our revenue for the remainder of the year as we transition to a new distributor in the Ireland market. In addition, there were no case sales of concentrate during the first half of 2011 compared to 110,800 cases during the same period a year ago.

The decrease in revenue for the six months ended June 30, 2011 compared to the same period of 2010 was offset, in part, by an increase in revenue from our continuing core product offerings in the North American market of 11.3%, driven by growth in case sales of Jones Soda and WhoopAss Energy Drink . We believe this was the direct result of our efforts, beginning in the latter part of 2010, to reinforce and expand our distributor network by partnering with new distributors and replacing underperforming distributors, in addition to our transition out of underperforming products and SKUs as we focus on our core product lines.

For the six months ended June 30, 2011, promotion allowances and slotting fees, which are a reduction to revenue, totaled $901,000, an increase of $148,000, or 19.7%, from $753,000 a year ago. The increase in promotion allowances and slotting fees was primarily attributable to a focus on more traditional trade spend strategies for core products through our DSD channel in order to increase sales velocity. We expect promotional allowances and slotting fees to be higher in 2011 compared to the same periods in 2010 as the year continues as we concentrate on these traditional trade spend strategies.

Gross Profit

For the six months ended June 30, 2011, gross profit increased by approximately $316,000, or 15.0%, to $2.4 million as compared to $2.1 million in gross profit for the six months ended June 30, 2010. Despite the overall decrease in revenue during the six months ended June 30, 2011 compared to the same period in the prior year for the reasons outlined above under “Revenue”, this increase in gross profit was primarily a result of a reduction in cost of goods sold for the first six months of 2011 compared to the same period in the prior year as a result of our transition out of underperforming product lines which had a higher cost to produce. Additionally, the prior year gross profit was negatively impacted by a $178,000 write-down of excess GABA inventory. For the six months ended June 30, 2011, gross profit as a percentage of revenue increased to 26.9% from 22.7% for the six months of 2010.

Promotion and Selling Expenses

Promotion and selling expenses for the six months ended June 30, 2011 were $3.2 million, an increase of $851,000, or 37.0%, from $2.3 million for the six months ended June 30, 2010. Promotion and selling expenses as a percentage of revenue increased to 35.0% for the six months ended June 30, 2011, from 24.9% in the same period in 2010. The increase in promotion and selling expenses was primarily due to an increase in selling expenses year over year of $560,000, to $1.7 million, or 19.2% of revenue, driven by added sales and marketing personnel to support our growth strategy. Also contributing to the increase was trade promotion and marketing expenses which grew from $1.1 million, to $1.4 million, or 15.9% of revenue for the six months ended June 30, 2011, due

primarily to a $350,000 charge accrued to the second quarter in connection with the termination of our New Jersey Nets sponsorship agreement in August 2011. We anticipate increased promotion and selling expenses in future quarters compared prior year periods due to our hiring of additional sales and marketing personnel to support our strategy of securing and growing larger distributor and national retail accounts, as well as our efforts to grow our Jones Soda and WhoopAss Energy Drink core product lines.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2011 were $2.8 million, a decrease of $635,000, or 18.5%, compared to $3.4 million for the six months ended June 30, 2010. General and administrative expenses as a percentage of revenue decreased to 31.0% for the six months ended June 30, 2011 from 37.0% in the same period of 2010. The decrease in general and administrative expenses was primarily due to decreases in salaries and benefits, driven by a decrease in stock-based compensation, as well as a decrease in professional fees and depreciation expense. In addition, general and administrative expenses were favorably impacted due to a loss on disposal of fixed assets in the prior year period.

Income Tax Expense, Net

Provision for income taxes for the six months ended June 30, 2011 and 2010 was an expense of $51,000 and $67,000, respectively. The tax provision relates primarily to the tax provision on income from our Canadian operations. No tax benefit is recorded for the loss in our U.S. operations as we have recorded a full valuation allowance on our U.S. net deferred tax assets. We expect to continue to record a full valuation allowance on our U.S. net deferred tax assets until we sustain an appropriate level of taxable income through improved U.S. operations. Our effective tax rate is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a full valuation allowance on our U.S. net deferred tax assets.

Net Loss

Net loss for the six months ended June 30, 2011 decreased to $3.5 million from a net loss of $3.7 million for the six months ended June 30, 2010. This was primarily, for the reasons discussed above, due to a decrease in general and administrative expenses of $635,000 offset by an increase in promotion and selling expenses of $851,000, combined with an increase in gross profit of $316,000 due to increased revenue from our core products and the discontinuation of lower margin, underperforming product lines and SKUs.

Liquidity and Capital Resources

Liquidity

As of June 30, 2011, we had cash and cash equivalents of approximately $4.6 million and working capital of $7.0 million. Cash used in operating activities during the six months ended June 30, 2011 totaled $2.8 million. Our cash flows vary throughout the year based on seasonality. We traditionally use more cash in the first half of the year as we build inventory to support our historically seasonally-stronger shipping months of April through September, and expect cash used by operating activities to decrease in the second half of the year as we collect receivables generated during our stronger shipping months. Additionally, for the six months ended June 30, 2011, net cash used by investing activities totaled $353,000, due to the investment in a certificate of deposit in conjunction with our new operating lease buildout, as well as the purchase of fixed assets primarily comprised of the purchase of two branded vehicles, while net cash provided by financing activities totaled $2.3 million due to the proceeds from our final draw down on our equity line, and to a lesser extent, proceeds from the capital lease obligation for the financing of the purchased branded vehicles. We incurred a net loss of $1.8 million during the three months ended June 30, 2011.

continue to increase volume going forward, as our operating plan already reflects prior significant general and administrative cost containment measures, leaving us little room for further reductions in such costs that do not jeopardize our growth plans.

Our operating plan factors in the use of cash to meet our contractual obligations. A substantial portion of these contractual obligations consists of obligations to purchase raw materials, including sugar and glass under our supply agreements. We enter into these supply agreements in order to fix the cost of these key raw materials, which we expect will be used in the ordinary course of our business. Our contractual obligations also relate to payments for sponsorships, and have been reduced by approximately $7.0 million through 2017 as the result of the termination of our sponsorship arrangement with the New Jersey Nets (see “Contractual Obligations”).

Contractual Obligations

In June 2011, we entered into an office building sublease for use as our principal headquarters as our previous lease expires in August 2011 and did not include an option to renew. The term of the sublease is five years with an option to extend for up to three additional five year terms.

Under the terms of the sublease, we were required to deliver a Letter of Credit (LOC) issued by KeyBank National Association in an amount equivalent to 50% of the total Subtenant Improvement Allowance (as defined in the sublease agreement), or $183,000 which will be released after year three of the sublease term, provided we have not been late in the payment of rent more than five times during such period. As a condition of and to secure the LOC, KeyBank National Association required us to place $183,000 in an interest bearing restricted reserve account, invested in a certificate of deposit.

In August 2011, we announced that we agreed to terminate the Amended Sponsorship Agreement with the New Jersey Nets, dated October 29, 2007, effectively ending the agreement five years early. In connection with the termination, we agreed to pay $500,000 which is recorded in accrued liabilities as of June 30, 2011, and includes a $150,000 payment owed under the Amended Sponsorship Agreement in connection with annual sponsorship fees for the year ended December 31, 2010 and the first half of 2011, and a termination fee of $350,000 payable in three installments ending March 1, 2012.

With the conclusion of our sponsorship with the Portland Trailblazers effective June 30, 2011, our remaining sponsorships are comprised of several individual athlete sponsorships and other sponsorships;

these obligations vary in terms. Our commitments as of June 30, 2011 with respect to known contractual obligations, after giving effect to the termination of the New Jersey Nets Sponsorship, were as follows (in thousands):


	Payments Due by Period
			Less Than 1						More Than
Contractual Obligations	Total		Year		2-3 Years		4-5 Years		5 Years
Operating lease obligations	$	991	$	129	$	412	$	432	$	18
Capital lease obligations		136		29		58		49		—
Sponsorships ⁽¹⁾		425		200		225		—		—
Purchase obligations		2,779		2,779		—		—		—

TOTAL	$	4,331	$	3,137	$	695	$	481	$	18


(1)		Excludes amount recorded in accrued liabilities as of June 30, 2011 in connection with the termination of the New Jersey Nets Sponsorship arrangement, as discussed above.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Seasonality

Our sales are seasonal and we experience significant fluctuations in quarterly results as a result of many factors. We historically have generated a greater percentage of our revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.

Critical Accounting Policies

See the information concerning our critical accounting policies included under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Securities and Exchange Commission on March 21, 2011. There have been no material changes in our critical accounting policies during the three months ended June 30, 2011.

ITEM 4. CONTROLS AND PROCEDURES

Procedures

(a) Evaluation of disclosure controls and procedures

The Company maintains disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of June 30, 2011. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that these disclosure controls and procedures were effective as of June 30, 2011.

(b) Changes in internal controls

There were no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 4, 2007, a putative class action complaint was filed against us, our then serving chief executive officer, and our then serving chief financial officer in the U.S. District Court for the Western District of Washington, alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The case was entitled Saltzman v. Jones Soda Company, et al., Case No. 07-cv-1366-RSL, and purported to be brought on behalf of a class of purchasers of our common stock during the period March 9, 2007 to August 2, 2007. Six substantially similar complaints subsequently were filed in the same court, some of which alleged claims on behalf of a class of purchasers of our common stock during the period November 1, 2006 to August 2, 2007. Some of the subsequently filed complaints added as defendants certain current and former directors and another former officer of the Company. The complaints generally alleged violations of federal securities laws based on, among other things, false and misleading statements and omissions about our financial results and business prospects. The complaints sought unspecified damages, interest, attorneys’ fees, costs, and expenses. On October 26, 2007, these seven lawsuits were consolidated as a single action entitled In re Jones Soda Company Securities Litigation, Case No. 07-cv-1366-RSL. On March 5, 2008, the Court appointed Robert Burrell lead plaintiff in the consolidated securities case. On May 5, 2008, the lead plaintiff filed a First Amended Consolidated Complaint, which purports to allege claims on behalf of a class of purchasers of our common stock during the period of January 10, 2007, to May 1, 2008, against the Company and Peter van Stolk, our former Chief Executive Officer, former Chairman of the Board, and former director. The First Amended Consolidated Complaint generally alleges violations of federal securities laws based on, among other things, false and misleading statements and omissions about our agreements with retailers, allocation of resources, and business prospects. Defendants filed a motion to dismiss the amended complaint on July 7, 2008. After hearing oral argument on February 3, 2009, the Court granted the motion to dismiss in its entirety on February 9, 2009. Plaintiffs filed a motion for leave to file an amended complaint on March 25, 2009. On June 22, 2009, the Court issued an order denying plaintiffs’ motion for leave to amend and dismissed the case with prejudice. On July 7, 2009, the Court entered judgment in favor of the Company and Mr. van Stolk. On August 5, 2009, plaintiffs filed a notice of appeal of the Court’s orders dismissing the complaint and denying plaintiffs’ motion for leave to amend, and the resulting July 7, 2009 judgment. On August 30, 2010, the Ninth Circuit panel affirmed the denial of plaintiffs’ motion for leave to amend. On September 20, 2010, plaintiffs filed a petition for rehearing of their appeal by the full Ninth Circuit. On October 20, 2010, the Ninth Circuit denied plaintiffs’ petition for rehearing. Plaintiffs did not file a petition for review by the U.S. Supreme Court, and the time for doing so has passed.

In addition, on September 5, 2007, a shareholder derivative action was filed in the Superior Court for King County, Washington, allegedly on behalf of and for the benefit of the Company, against certain of our former officers and current and former directors. The case was entitled Cramer v. van Stolk, et al., Case No. 07-2-29187-3 SEA (Cramer Action). The Company also was named as a nominal defendant. Four other shareholders filed substantially similar derivative cases. Two of these actions were filed in Superior Court for King County, Washington. One of these two Superior Court actions was voluntarily dismissed and the other was consolidated with the Cramer Action under the caption In re Jones Soda Co. Derivative Litigation, Lead Case No. 07-2-31254-4 SEA. On April 28, 2008, plaintiffs in the consolidated action filed an amended complaint based on the same basic allegations of fact as in the federal securities class actions and alleging, among other things, that certain of our current and former officers and directors breached their fiduciary duties to the Company and were unjustly enriched in connection with the public disclosures that are the subject of the federal securities class actions. On May 2, 2008, the Court signed a stipulation and order staying the proceedings in the consolidated Cramer Action until all motions to dismiss in the consolidated federal securities class action have been adjudicated. On July 9, 2010, the Court dismissed the consolidated action without prejudice.

The two other shareholder derivative actions were filed in the U.S. District Court for the Western District of Washington. On April 10, 2008, the Court presiding over the federal derivative cases consolidated them under the caption Sexton v. van Stolk, et al., Case No. 07-1782RSL (Sexton Action), and appointed Bryan P. Sexton lead plaintiff. The actions comprising the consolidated Sexton Action are based on the same basic allegations of fact as in the securities class actions filed in the U.S. District Court for the Western District of Washington and the Cramer Action, filed in the Superior Court for King County. The actions comprising the Sexton Action alleged, among other things, that certain of our current and former directors and former officers breached their fiduciary duties to the Company and were unjustly enriched in connection with the public disclosures that are the subject of the federal securities class actions. The complaints sought unspecified damages, restitution, disgorgement of profits, equitable and injunctive relief, attorneys’ fees, costs, and expenses. The Court granted an agreed motion by the parties to stay the Sexton Action until the resolution of the appeal in the securities class action described above. By order dated February 14, 2011, the Court lifted the stay and the plaintiffs filed

a notice of designation of operative complaint by the deadline of April 18, 2011. On June 2, 2011, the plaintiffs in the actions comprising the Sexton Action filed a notice of voluntary dismissal without prejudice.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 (the “Form 10-K”), which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. However, there have been no material changes that we are aware of from the risk factors set forth in Part I, Item 1A in our Form 10-K.

ITEM 6. EXHIBITS


10.1++		Sublease Agreement dated June 13, 2011, between 1000 Master Tenant LLC and Jones Soda Co. (Filed herewith.)

10.2*		Jones Soda Co. 2011 Incentive Plan (Previously filed with, and incorporated herein by reference to, Annex A to the Company’s Definitive Proxy Statement filed on April 12, 2011.)

10.3*		Form of Stock Option Grant Notice and Agreement under the Jones Soda Co. 2011 Incentive Plan (Filed herewith.)

10.4*		Form of Restricted Stock Award Notice and Agreement under the Jones Soda Co. 2011 Incentive Plan (Filed herewith.)

10.5*		Form of Restricted Stock Unit Notice and Agreement under the Jones Soda Co. 2011 Incentive Plan (Filed herewith.)

31.1		Section 302 Certification of CEO — William R. Meissner, Chief Executive Officer (Filed herewith.)

31.2		Section 302 Certification of CFO — Michael R. O’Brien, Chief Financial Officer (Filed herewith.)

32.1		Section 906 Certification of CEO — William R. Meissner, Chief Executive Officer of Jones Soda Co., pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith.)

32.2		Section 906 Certification of CFO — Michael R. O’Brien, Chief Financial Officer of Jones Soda Co., pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith.)


101.INS**		XBRL Instance Document.

101.SCH**		XBRL Taxonomy Extension Schema Document.

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document.


*		Management contract or compensatory plan or arrangement.

**		Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

++		Portions of the marked exhibits have been omitted pursuant to requests for confidential treatment filed with the SEC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 12, 2011


	JONES SODA CO.
	By:	/s/ WILLIAM R. MEISSNER
		William R. Meissner
		President and Chief Executive Officer


	By:	/s/ MICHAEL R. O’BRIEN
		Michael R. O’Brien
		Chief Financial Officer

EXHIBIT 10.1

[***] Portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

SUBLEASE AGREEMENT

This Sublease Agreement (the “Sublease”) is entered into as of this 13 ^th day of June, 2011, by and between 1000 Master Tenant LLC, a Washington limited liability company (“Sublandlord”) and Jones Soda Co., a Washington corporation (“Subtenant”).

This Sublease is subject and subordinate to that certain Master Lease Agreement by and between Sublandlord, as tenant, and 1000 1 ^st Avenue South Limited Partnership, a Washington limited partnership, as landlord (the “Master Landlord”), dated October 24, 2008 (“Master Lease”), and any recorded deed of trust. Subtenant shall comply with all applicable provisions of the Master Lease. This Sublease and Subtenant’s use and enjoyment of the Premises shall at all times be subject to and in compliance with applicable laws, codes, ordinances and regulations related to the Building’s status as a historic building and promulgated by the National Park Service, the State of Washington, the Pioneer Square Preservation Board and the City of Seattle (“HTC Regulations”). To the extent that any provisions of this Sublease are inconsistent with applicable HTC Regulations, the HTC Regulations shall control and shall be applicable to Sublandlord and Subtenant.

Sublandlord represents and warrants to Subtenant that the Master Lease is, as of the date hereof, in full force and effect, and no uncured event of default by either party thereto has occurred thereunder and, to Sublandlord’s knowledge, no event has occurred and is continuing which would constitute an event of default by any party thereto but for the requirement of the giving of notice and/or the expiration of the period of time to cure. Sublandlord shall not agree to terminate the Master Lease nor agree to any amendment to the Master Lease which might have a material adverse effect on Subtenant’s occupancy of the Premises or its use of the Premises for its intended purpose. Sublandlord shall not exercise any right it may have under the Master Lease or applicable law to elect to terminate the Master Lease (e.g., due to events of damage, destruction, or condemnation, or in the event of Master Landlord’s bankruptcy and rejection of the Master Lease) without the prior consent of Subtenant. Sublandlord shall neither do nor permit anything to be done which would constitute a default or breach under the Master Lease or which would cause the Master Lease to be terminated or forfeited by reason of any right of termination or forfeiture reserved or vested in the Master Landlord, and Sublandlord agrees to comply with all terms, conditions, and covenants of the Master Lease. Sublandlord represents and warrants that no consent to this Sublease is required from the Master Landlord.

1. SUBLEASE SUMMARY AND EXHIBITS.

1.1. Subleased Premises . The Subleased premises (“Premises”) consists of an agreed area of 9,500 rentable square feet of retail/office space as outlined on the floor plan attached hereto and incorporated herein as Exhibit A (“Floor Plan”) and incorporated herein by this reference, located on the real property legally described

on the attached Exhibit B and incorporated herein by this reference, and commonly known as Palmer Court, first floor located at 1000 First Avenue South, Seattle, Washington. Adjacent and along the easterly façade of the Building is a Common Area exterior deck that provides, among other things, access to and from the Building (the “Deck”). The Premises shall also include, at no additional charge to Subtenant, an approximately three hundred forty-nine (349) square foot portion of the Deck as set forth on Exhibit J attached hereto and incorporated herein (the “Patio”). Before Subtenant holds any events or otherwise uses the Patio, it shall install at Subtenant’s sole expense a fence or other method of demarcation made of material(s) mutually acceptable to Subtenant and Sublandlord, consistent with the architecture of the Building and reasonably approved in advance by Sublandlord to separate the Patio from the remainder of the Deck and the ingress/egress routes it provides to the Building. The Premises does not include the real property beneath the Premises or structural elements of the building in which the Premises is located (“Building”). The Building, the real property upon which it is situated, all other improvements located on such land, and all common areas appurtenant to the Building are referred to herein as the “Property.”

Subtenant understands and acknowledges that the Premises is located in an industrial area subject to potential nuisances, primarily emanating from other properties in the vicinity of the Building, such as, by way of illustration only, excessive noise, dust and pungent odors. Subtenant represents and warrants that its intended use is consistent with the location of the Premises and such potential nuisances.

1.2. Sublease Commencement Date . The Sublease shall commence on the date on which Sublandlord delivers possession of the Premises to Subtenant with the Sublandlord’s Work described in Section 3.1 below substantially completed (the “Commencement Date”). The “Projected Commencement Date” is the date that is up to forty-five (45) days from the date of mutual execution hereof.

1.3. Sublease Expiration Date . The Sublease shall expire at midnight on the last day of the calendar month in which the fifth (5 ^th ) anniversary of the Commencement Date occurs (the “Expiration Date”).

1.4. Monthly Base Rent . The base monthly rent (“Monthly Base Rent”), based on an agreed Premises area of 9,500 rentable square feet, shall be as follows:


					Building
Month	$/YR/SF		Annual Base Rent		Monthly Base Rent
01 - 05	$Abated*		Abated*		$ Abated		*
06-12	$	21.00	$	199,500.00	$	16,625.00
13-24	$	21.50	$	204,250.00	$	17,020.83
25-36	$	22.00	$	209,000.00	$	17,416.67
37-48	$	22.50	$	213,750.00	$	17,812.50
49-60	$	23.00	$	218,500.00	$	18,208.33
61-65	$	23.50	$	223,250.00	$	18,604.17


*		All Monthly Base Rent shall abate during this period.


Multi-Tenant Lease Triple Net		Page 2
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Rent shall be payable at Sublandlord’s address shown in Section 1.8 below, or such other place designated in writing by Sublandlord.

1.5. Prepaid Rent . Upon occupancy of this Sublease, Subtenant shall deliver to Sublandlord the first payment of Monthly Base Rent.

1.6. Security Deposit & Letter of Credit . Upon execution of this Sublease, Subtenant shall deliver to Sublandlord a security deposit in the amount of Eighteen Thousand Six Hundred Four Dollars and Seventeen Cents ($18,604.17) (“Security Deposit”).

In addition to the Security Deposit, within five (5) business days following execution of this Sublease, Subtenant shall provide Sublandlord with a Letter of Credit (“LOC”) in the amount equivalent to fifty percent (50%) of the total Subtenant Improvement Allowance. Such LOC must be issued by a reputable bank to guarantee Subtenant’s ability to pay the Sublease and costly/nonstandard improvements as the improvements are amortized over the term of the lease. Sublandlord agrees to release the LOC requirement after year three of the Term in the event Subtenant has not been in late in the payment of Rent more than five times during this period. The LOC is hereby attached to this Sublease as Exhibit F .

1.7. Permitted Uses . The Premises shall be used only for retail/merchandising, light manufacturing relating to Subtenant’s business, office support, and preparation and sale of food and beverages including liquor (subject to receipt of and in compliance with an appropriate liquor license), and for no other purpose without the prior written consent of Sublandlord, not to be unreasonably withheld. At all times, Subtenant shall keep the Patio clean and neat, avoid blocking pedestrian traffic, and cause all trash and garbage to be picked up and removed at its expense. Subtenant may offer low level music on the Patio and may install and use tables, chairs, umbrellas, and the like, provided that the same kept in a clean, useable and orderly condition, so as to present a tidy, attractive and consistent appearance to customers and passersby.


Multi-Tenant Lease Triple Net		Page 3
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

1.8. Notice and Payment Addresses.


	Sublandlord:		1000 Master Tenant LLC 270 S Hanford St, Ste 100 Seattle, WA 98134

	Subtenant:		Jones Soda Co.

	Before Month 6:		234 9 ^th Ave. N. Seattle, WA 98109-5120

	On and After Month 6:		The Premises

1.9. Subtenant’s Pro Rata Share . Sublandlord and Subtenant agree that Subtenant’s pro rata share is Thirteen and One-Half Percent (13.50%) (“Subtenant’s Pro Rata Share”)(based on 70,350 total rentable square feet in the Building).

1.10. Subtenant Improvement Allowance . The design and construction of Subtenant’s desired initial leasehold improvements to the Premises (the “Subtenant Improvements”) will be constructed in accordance with Sublandlord’s tenant improvement procedures set forth in Exhibit G attached hereto and incorporated herein. Sublandlord hereby agrees to provide Subtenant with a Subtenant Improvement Allowance (“TI Allowance”) of Thirty Eight Dollars and Fifty Cents ($38.50) per rentable square foot. Such TI Allowance shall be usable for space planning, construction drawings, project/construction management, hard and soft construction costs, and permits. Sublandlord and its contractor will allow the Subtenant and its subcontractors to work in parallel with the Sublandlord’s contractors only with approval from the Sublandlord’s contractor whose consent will not unreasonably be withheld as provided in Exhibit G attached hereto and incorporated herein.

1.11. Exhibits.


	Exhibit A		Site Plan and Premises Floor Plan
	Exhibit A-1		Expansion Space Floor Plan
	Exhibit B		Legal Description
	Exhibit C		Guaranty
	Exhibit D		Affidavit
	Exhibit E		Sublandlord’s Work
	Exhibit F		Letter of Credit
	Exhibit G		Subtenant Improvements
	Exhibit H		Subtenant’s Approved Signage
	Exhibit I		Prohibited Uses
	Exhibit J		Depiction of the Deck and Patio Area
	Exhibit K		Form of Wall Sublease


	Multi-Tenant Lease Triple Net		Page 4
	[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

2. AGREEMENT TO SUBLEASE PREMISES . Sublandlord hereby agrees to lease to Subtenant, and Subtenant hereby agrees to lease from Sublandlord the Premises “as is” and upon the terms and conditions set forth herein. Subtenant acknowledges that Sublandlord will construct tenant improvements for other Subtenant’s in the Building during the Term. Subtenant and its employees, agents and customers will be subject to noise and construction debris commonly encountered in connection with the construction of tenant improvements for other tenants that Sublandlord will use commercially reasonable efforts to mitigate and which shall not be subject to the provisions in Section 31 below. Sublandlord also grants to Subtenant a license and nonexclusive right to the use of all Common Areas (defined below) located from time to time in the Building and at the Property and the benefit of all other easements, rights, and provisions of any covenants and restrictions pertaining to the Property or Building and intended for the common use and enjoyment of other occupants and subtenants thereof.

3. TERM AND CONDITION OF PREMISES.

3.1. Term . The Sublease shall commence on the Commencement Date set forth in Section 1.2 and shall expire on the Expiration Date set forth in Section 1.3 , unless the Sublease is sooner terminated as provided herein (“Term”). Sublandlord will deliver the Premises to Subtenant with the work Sublandlord has agreed to perform set forth on Exhibit E, attached hereto and incorporated herein (“Sublandlord’s Work”). In the event Sublandlord is unable to deliver possession of the Premises on the Projected Commencement Date, Subtenant shall receive one (1) day’s worth of Base Rent abatement for each one (1) day after the Projected Commencement Date on which the Premises are delivered, with the benefit of such abatement to be applied to the sixth month’s Monthly Base Rent. Monthly Base Rent shall not abate, however, if delivery of possession of the Premises is delayed by acts or omissions of Subtenant (or, up to a total of thirty (30) days, force majeure events), or acts or omissions of the City of Seattle or the Pioneer Square Preservation Board. If the Commencement Date is delayed beyond the first (1 ^st ) anniversary of the Projected Commencement Date, Subtenant may terminate this Sublease, and receive a full refund of any advance rent or other deposits or sums or charges paid to Sublandlord. If Subtenant does not elect to terminate as aforesaid, the foregoing Monthly Base Rent abatement shall continue to accrue.

The Sublease Term may be extended as set forth in Section 3.3 . References herein to “Term” shall also include the Option Term(s) if the Option set forth below is exercised.

3.2. Condition of Premises . Except to the extent otherwise set forth herein, Sublandlord makes no representations or warranties to Subtenant regarding the condition of the Premises, including the structural condition of the Premises or the condition of mechanical, electrical, and other systems on or serving the Premises or the Building. By signing this Sublease, Subtenant acknowledges that it has had adequate opportunity to investigate the Premises and the Building, acknowledges responsibility for making any corrections, alterations and repairs to the Premises other than Sublandlord’s


Multi-Tenant Lease Triple Net		Page 5
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Work, and acknowledges that the time needed to complete any such items, other than Sublandlord’s Work, shall not delay the Commencement Date.

Notwithstanding anything to the contrary elsewhere herein, Sublandlord represents to Subtenant that (i) Sublandlord has the authority to enter into this Sublease and its execution and delivery by Sublandlord has been duly authorized; (ii) to the best of Sublandlord’s knowledge as of the Commencement Date, the Premises, all Common Areas at the Building, all electrical, HVAC, mechanical, plumbing, and fire/life safety systems in the Building (the “Buildings Systems”) will comply with applicable laws, codes, and ordinances; (iii) to the best of Sublandlord’s knowledge all Building Systems are, or will be on the Commencement Date, in reasonably good working order and condition.

3.3. Options to Renew . Provided Subtenant is not, at the time of its notice of exercise described below, in uncured default under the terms and conditions of this Sublease, Subtenant may extend this Sublease for up to three (3) additional Five (5) year terms (each an “Option Term”) on the same terms and conditions set forth herein, except that the Monthly Base Rent for the first year of each Option Term shall be adjusted to the Fair Market Value, as defined in Section 3.4(c), for similar properties in the area but not less than the Monthly Base Rent for the last year of the Sublease Term. Subtenant must give Sublandlord not less than one hundred and twenty (120) days’ written notice of its intent to exercise the Option Term.

3.4. Option to Expand and [***]. Sublandlord hereby agrees that during the Term of this Sublease, Subtenant shall have a right of expansion (“Expansion Right”) and [***] with respect to all of the 4,757 rentable square foot area set forth as Office 201 on Exhibit A-1 hereto (“Expansion Space”).

(a) Subject to Section 3.4(b), Subtenant may exercise its Expansion Right with respect to the Expansion Space at any time during the Term of the Sublease. If Subtenant exercises its Expansion Right within the first twelve (12) months following the Commencement Date, the Monthly Base Rent for the Expansion Space shall be $21.00 per rentable square foot. If Subtenant exercises the Expansion Right after the first twelve (12) months following the Commencement Date, the Monthly Base Rent for the Expansion Space shall be determined based on the Fair Market Value, as defined in Section 3.4(c), for the Expansion Space.

(b) [***] .

(c) “Fair Market Value” means the prevailing market rate for comparable buildings in the vicinity of the Building for gross rent (i.e., inclusive of operating expenses and taxes, but excluding electricity) for office space (like that existing in the Premises on the date on which the Fair Market Value is being calculated) taking into account the size of the space and the length of the term of the Sublease with respect to such space. Sublandlord shall notify Subtenant of its determination of the Fair Market Value within ten (10) days. If Subtenant disagrees with Sublandlord’s determination of


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

the Fair Market Value, Sublandlord and Subtenant shall confer for a period of thirty (30) days in an attempt to agree on the Fair Market Value. In the event Sublandlord and Subtenant fail to reach an agreement on such rental rate within such thirty (30) day period, then the Fair Market Value that will be used in computing Monthly Base Rent shall be determined as follows: Within five (5) days after the expiration of the thirty (30) day period described above, Sublandlord and Subtenant shall each select an appraiser with at least ten (10) years experience in the market in which the Building is located. If the two appraisers are unable to agree within ten (10) days after their selection, they shall select a similarly qualified third appraiser (the “Neutral Appraiser”). Within twenty (20) days after selection of the Neutral Appraiser, the three appraisers shall simultaneously exchange determinations of the Fair Market Value. If the lowest appraisal is not less than ninety percent (90%) of the highest appraisal, then the three appraisals shall be averaged and the result shall be the Fair Market Value. If the lowest appraisal is less than ninety percent (90%) of the highest appraisal, then the Fair Market Value shall be deemed the rate set forth in the appraisal submitted by an appraiser appointed by a party that is closest in dollar amount to the appraisal submitted by the Neutral Appraiser. If the Fair Market Value has not been determined on or before the Commencement Date for the relevant space, Subtenant shall begin paying Base Monthly Rent at the rate Subtenant is paying for the Premises, and Subtenant and Sublandlord shall make any necessary adjusting payments when the Fair Market Value is determined. Each party shall pay the cost of its own appraiser and the parties shall share the cost of the Neutral Appraiser equally. Subtenant may rescind the exercise of its expansion right with respect to any portion of the Expansion Space within ten (10) days following the determination of Fair Market Value for such space.

4. RENT . All Rent (as defined in Section 4.4, below) payments shall be made without any prior demand and therefore without deduction or offset to the Sublandlord at the address set forth in Section 1.8 .

4.1. Payment of Monthly Base Rent . Subtenant agrees to pay the Monthly Base Rent for the Premises on or before the first day of each calendar month. Subtenant shall pay Sublandlord Monthly Base Rent due for the sixth (6 ^th ) month of the Term plus the Security Deposit when Subtenant executes the Sublease. The Monthly Base Rent shall be paid to the Sublandlord at such place as Sublandlord may from time to time designate in writing.

4.2. Additional Rent.

(a) Real Property Taxes . Subtenant shall pay Sublandlord as Additional Rent (as defined in Section 4.2(d), below), in the manner described below, an amount equal to Subtenant’s Pro Rata Share of Real Property Taxes, defined below, payable by Sublandlord for the Property in any full or partial calendar year. “Real Property Taxes” shall mean real and personal property taxes, assessments, including omit tax (but excluding any such omit tax properly allocable to periods prior to the Commencement Date of this Sublease), and other governmental impositions and charges


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of every kind and nature, now or hereafter imposed, including surcharges with respect thereto and interest thereon with respect to assessments amortized over a period exceeding one year, which may during the Term of this Sublease be levied, assessed, imposed, or otherwise become due and payable with respect to the Property, including the Subtenant improvements, and the Property and all improvements, fixtures, and equipment thereon, or the use, occupancy or possession thereof; taxes on Property of Subtenant which have not been paid by Subtenant directly to the taxing authority; any taxes levied or assessed upon or measured by the Premises, the Building, or the Property, or any amounts received by Sublandlord in connection therewith or hereunder, but not including any federal or state net income, estate, inheritance, succession, transfer, gift, franchise, or capital stock tax, or any income taxes arising out of or related to ownership and operation of income-producing real estate, any Real Property Taxes allocable to any time prior to the Commencement Date hereof or after the expiration or earlier termination hereof. All Real Property Taxes due hereunder shall be determined with respect to the period for which such taxes are (or would have been if timely levied) due and payable; and any taxes levied or assessed in lieu of, or as a substitute for, the foregoing in whole or part. Notwithstanding the foregoing, in the event rental income becomes subject to Washington business and occupation tax, such business and occupation tax shall be subject to this Section 4.2(a).

(b) Operating Expenses . Subtenant shall pay Sublandlord as Additional Rent, in the manner described below, an amount equal to Subtenant’s Pro Rata Share of the Property’s Operating Expenses, defined below, payable by Sublandlord in any full or partial calendar year. “Operating Expenses” shall mean all expenses paid or incurred by Sublandlord for maintaining, operating and repairing the Property and the personal property used in conjunction therewith, including, without limitation, the costs of utility and other services not paid separately by Subtenant, services of independent contractors, compensation, including employment taxes and fringe benefits, of all persons who perform duties in connection with the operation, maintenance and repair of the Property and its equipment, insurance premiums, licenses, permits and inspection fees, commercially reasonable management fees of four percent (4%) of the gross base rents for the Building, commercially reasonable legal and accounting expenses, amortization of capital improvements that Sublandlord reasonably anticipates will improve the operating efficiency of the Property, but the amortization expense shall not exceed reasonably expected savings in operating costs resulting from such capital improvements, and any other expense or charge, which in accordance with generally accepted accounting and management practices would be considered an expense of maintaining, operating or repairing the Property, but excluding costs of any special services rendered to individual Subtenants, including Subtenant, for which a special charge is made.

(c) Common Area Maintenance Expenses . Subtenant shall pay Sublandlord as Additional Rent, in the manner described below, an amount equal to Subtenant’s Pro Rata Share of the Common Area Maintenance Expenses, defined below, for the Property incurred or payable by Sublandlord with respect to the Common Areas


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(defined below) of the Property in any partial or full calendar year. The terms “Common Area Maintenance Expenses” shall mean all expenses paid or incurred by Sublandlord for maintaining, operating and repairing the common areas of the Property, including, without limitation, that portion of the Deck that does not include the Patio, stairways, elevators, hallways, lobby, rooftop, parking areas, landscaping, and restrooms open to use by more than one Subtenant (“Common Areas”), including costs of obtaining services and products for maintaining, operating and repairing such Common Areas and the personal property used in conjunction therewith, services of independent contractors compensation, including employment taxes and fringe benefits, of all persons who perform duties in connection with the operation, maintenance, repair of the Common Areas, insurance premiums, personal property taxes, licenses, seasonal decorations, activities and events, permits and inspection fees, amortization of capital improvements that Sublandlord reasonably anticipates will improve the operating efficiency of the Common Areas, but such amortization expenses shall not exceed reasonably expected savings in operating costs resulting from such capital improvements, and any other expense or charge described, which in accordance with generally accepted accounting and management practices would be considered an expense of maintaining, operating or repairing the Common Areas of the Property. In no event shall any such charges, modifications or alterations to the Common Areas increase Subtenant’s Pro Rata Share as specified in Section 1.9 . Sublandlord acknowledges that Subtenant’s acceptance of the Sublease is based on the condition and location of the parking, loading, and Common Areas of the Property and Premises as of the Commencement Date herein. Sublandlord shall, at all times, act in good faith and with due diligence to minimize interruption, reduction or discontinuation as to not unreasonably interfere with the ordinary conduct of Subtenant’s business operations in the Premises.

In no event shall Operating Expenses or Common Area Maintenance Expenses include, and Subtenant shall not be required by this Sublease to pay for, the following: (i) costs of any special services rendered to individual Subtenants, including Subtenant, for which a special charge is made; (ii) any capital costs except as expressly permitted above; (iii) interest, charges and fees incurred on debt, payment on mortgages and rent under ground leases; and all costs expended in connection with any sale, hypothecation, financing, refinancing, or ground lease of the Building or Property or of the Sublandlord’s interest therein; (iv) costs occasioned by casualties that would be covered by an all-risk property insurance policy (including earthquake and flood) or by other insurance actually carried by Sublandlord, insurance deductibles greater than $20,000 per calendar year, or self-insured retentions or co-insurance of any type; (v) administrative fees if property management fees are already included in Operating Expenses or Common Area Maintenance Expenses; (vi) reserves for any purposes; (vii) depreciation for any of the real or personal property associated with the Building or Property, including depreciation of any leasehold improvements; (viii) any duplicative charges (i.e., costs includable in Operating Expense shall not be includable in Common Area Maintenance Expenses); (ix) leasing expenses such as commissions, attorneys’ fees, auditing fees, and other costs incurred in connection with negotiations or disputes with subtenants or negotiating or enforcing


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leases and lease-related documents; and (x) costs incurred to remove or remediate any hazardous materials or substances from the Property existing in, on or under the Property as of the Commencement Date and any judgments, fines, penalties, or other costs incurred in connection with any hazardous material or substance exposure or release.

(d) Manner of Payment . Subtenant’s Pro Rata Share of Real Property Taxes, Operating Expenses, and Common Area Maintenance Expenses, is sometimes collectively referred to herein as “Additional Rent”.

(1) Sublandlord may reasonably estimate in advance the amounts Subtenant shall owe for Additional Rent for any full or partial calendar year of the Term. Subtenant shall pay such estimated amounts of Additional Rent, on a monthly basis, on or before the first day of each such calendar month. Such estimate may be reasonably adjusted from time to time by Sublandlord. The estimate for the first year of the Term is approximately $0.58 per rentable square foot per month.

(2) Within ninety (90) days after the end of each calendar year, or as soon thereafter as practicable, Sublandlord shall provide a statement (the “Statement”) to Subtenant showing: (a) the amount of actual Additional Rent for such calendar year, with a listing of amounts for major categories of Operating Expenses, Real Property Taxes, and Common Area Maintenance Expenses, (b) any amount paid by Subtenant toward such Additional Rent during such calendar year on an estimated basis and (c) any revised estimate of Subtenant’s obligations for Additional Rent for the current calendar year.

(3) If the Statement shows that Subtenant’s estimated payments were less than Subtenant’s actual obligations for Additional Rent for such year, Subtenant shall pay the difference. If the Statement shows an increase in Subtenant’s estimated payments for the current calendar year, Subtenant shall pay the difference between the new and former estimates, for the period from January 1 of the current calendar year through the month in which the Statement is sent. Subtenant shall make such payments within thirty (30) days after Sublandlord sends the Statement.

(4) If the Statement shows that Subtenant’s estimated payments exceeded Subtenant’s actual obligations for Additional Rent, Subtenant shall receive a credit for the difference against payments of Rent next due. If the Term shall have expired and no further Rent shall be due, Subtenant shall receive a refund of such difference, within thirty (30) days after Sublandlord sends the Statement.

(5) So long as Subtenant’s obligations hereunder are not materially adversely affected thereby, Sublandlord reserves the right to reasonably change, from time to time, the manner or timing of the foregoing payments. In lieu of providing one (1) Statement covering Real Property Taxes, Operating Expenses, and Common Area Maintenance Expenses, Sublandlord may provide separate statements, at the same or different times. No delay by Sublandlord in providing the Statement, or


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separate statements, shall be deemed in default by Sublandlord or a waiver of Sublandlord’s right to require payment of Subtenant’s obligations for actual or estimated Real Property Taxes, Operating Expenses, or Common Area Maintenance Expenses.

(e) Proration . If the Term commences other than on January 1, or ends other than on December 31, Subtenant’s obligations to pay estimated and actual amounts towards Additional Rent for such first or final calendar year shall be prorated to reflect the portion of such years included in the Term. Such proration shall be made by multiplying the total estimated or actual, as the case may be, Additional Rent, for such calendar years by a fraction, the numerator of which shall be the number of days of the Term during such calendar year, and the denominator of which shall be 365. Other amounts payable or to be expended pursuant to this Sublease on an annual or quarterly basis shall be similarly prorated.

(f) Sublandlord’s Records . The initial determination of Additional Rent shall be made by Sublandlord. Sublandlord or its agents shall keep records in reasonable detail showing all expenditures made or items enumerated above, which records shall be available for inspection and auditing by Subtenant at its cost at any reasonable time on reasonable notice. Subtenant reserves the right to object to any statement provided by Sublandlord, provided that nothing shall relieve Subtenant of making payments of Additional Rent as determined by Sublandlord as and when required hereunder.

4.3. Late Charges and Default Interest . If Subtenant fails to pay when due Rent or other amounts or charges which Subtenant is obligated to pay under the terms of this Sublease, the unpaid amounts shall bear interest at the maximum rate then allowed by law. Subtenant acknowledges that the late payment of any installment of Monthly Base Rent will cause Sublandlord to lose the use of that money and incur costs and expenses not contemplated under this Sublease, including without limitation, administrative and collection costs and processing and accounting expenses, the exact amount of which is extremely difficult to ascertain. Therefore, in addition to interest, if any such installment is not received by Sublandlord within ten (10) days from the date it is due, Subtenant shall pay Sublandlord a late charge equal to ten percent (10%) of such installment. Sublandlord and Subtenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Sublandlord for the loss suffered from such nonpayment by Subtenant. Acceptance of any interest or late charge shall not constitute a waiver of Subtenant’s default with respect to such nonpayment by Subtenant nor prevent Sublandlord from exercising any other rights or remedies available to Sublandlord under this Sublease.

4.4. Rent and Other Charges . Monthly Base Rent, Additional Rent, and any other amounts which Subtenant is or becomes obligated to pay Sublandlord under this Sublease or other agreement entered into in connection herewith, are sometimes herein referred to collectively as “Rent” and all remedies applicable to the nonpayment of Rent shall be applicable thereto


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5. SECURITY DEPOSIT. Subtenant agrees to deposit with Sublandlord the Security Deposit set forth at Section 1.6 upon execution of this Sublease, as security for Subtenant’s faithful performance of its obligations under this Sublease. Sublandlord and Subtenant agree that the Security Deposit may be commingled with funds of Sublandlord and Sublandlord shall have no obligation or liability for payment of interest on such deposit. Subtenant shall not mortgage, assign, transfer or encumber the Security Deposit without the prior written consent of Sublandlord and any attempt by Subtenant to do so shall be void, without force or effect and shall not be binding upon Sublandlord. If Subtenant fails to pay any Rent or other amount when due and payable under this Sublease, or fails to perform any of the terms hereof, Sublandlord may appropriate and apply or use all or any portion of the Security Deposit for Rent payments or any other amount then due and unpaid, for payment of any amount for which Sublandlord has become obligated as a result of Subtenant’s default or breach, and for any loss or damage sustained by Sublandlord as a result of Subtenant’s default or breach, and Sublandlord may so apply or use this deposit without prejudice to any other remedy Sublandlord may have by reason of Subtenant’s default or breach. If Sublandlord so uses any of the Security Deposit, Subtenant shall within ten (10) days after written demand therefore, restore the Security Deposit to the full amount originally deposited; Subtenant’s failure to do so shall constitute an act of default hereunder and Sublandlord shall have the right to exercise any remedy provided for in Section 21 hereof. Within fifteen (15) days after the Term (or any extension thereof) has expired or Subtenant has vacated the Premises, whichever shall last occur, and provided Subtenant is not then in default on any of its obligations hereunder, Sublandlord shall return the Security Deposit to Subtenant, or, if Subtenant has assigned its interest under this Sublease, to the last assignee of Subtenant. If Sublandlord sells its interest in the Premises, Sublandlord may deliver this deposit to the purchaser of Sublandlord’s interest and thereupon be relieved of any further liability or obligation with respect to the Security Deposit.

6. SUBTENANT’S USE OF THE PREMISES . Subtenant may use the Premises solely for the purposes set forth in Subtenant’s Use Clause in Section 1.7 (“Permitted Uses”). Subtenant shall not use or occupy the Premises in violation of law or any covenant, condition or restriction affecting the Building or the certificate of occupancy issued for the Building, and shall, upon notice from Sublandlord, immediately discontinue any use of the Premises which is declared by any governmental authority having jurisdiction to be a violation of law or of occupancy. Subtenant, at Subtenant’s own cost and expense, shall comply with all laws, ordinances, regulations, rules and/or any directions of any governmental agencies or authorities having jurisdiction which shall, by reason of the nature of Subtenant’s unique use or occupancy of the Premises( as opposed to general office, commercial or retail uses), impose any duty upon Subtenant or Sublandlord with respect to the Premises or its use or occupation. Sublandlord shall bear all other costs to comply with laws affecting the Property or the Building. Subtenant shall not do or permit to be done anything which will invalidate or increase the cost of any fire, extended coverage or other insurance policy covering the Building and/or property located therein, and shall comply with all rules, orders, regulations,


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requirements and recommendations of the Insurance Services Office or any other organization performing a similar function. Subtenant shall promptly upon demand reimburse Sublandlord for any additional premium charged for such policy by reason of Subtenant’s failure to comply with the provisions of this Section 6 . Subtenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other Subtenants or occupants of the Building or injure or annoy them, or use or allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose, nor shall Subtenant cause, maintain or permit any nuisance in, on or about the Premises. Subtenant shall not commit or suffer to be committed any waste in or upon the Premises.

During the term of this Sublease, no portion of the Building or Property (other than the Premises) may be used, and no other subtenant shall be permitted to operate, any business primarily engaged in the sale of carbonated beverages (the “Exclusive Use”). Sublandlord shall not lease or sublease any portion of the Building or Property to, or rename the Building to that of, any direct competitor of Subtenant, and shall not permit any such direct competitor’s signage on the exterior Building surfaces. The Exclusive Use restriction set forth herein shall not prevent Sublandlord from leasing space in the Building to any restaurant, bar or other similar hospitality business. No portion of the Building or Property may be used for any of the Prohibited Uses attached hereto and incorporated herein as Exhibit I .

7. COMPLIANCE WITH LAWS . Subtenant shall not cause or permit the Premises to be used in any way which violates any law, ordinance, or governmental regulation or order. Subtenant shall be responsible for complying with all laws applicable to the Premises solely as a result of Subtenant’s particular use, such as modifications required by the Americans With Disabilities Act as a result of Subtenant opening the Premises to the public as a place of public accommodation. If the enactment or enforcement of any law, ordinance, regulation or code during the Sublease Term requires any changes to the Premises during the Sublease Term, Subtenant shall perform all such changes at its expense if the changes are required due to the nature of Subtenant’s unique activities at the Premises, or to alterations that Subtenant seeks to make to the Premises; otherwise, Sublandlord shall perform all such changes at its expense. Sublandlord shall not be in default of any of the terms of this Sublease in the event Sublandlord is unable to obtain a building permit to complete any Subtenant improvements specified in this Sublease, provided that the foregoing shall not affect Subtenant’s rights described in Section 3.1 in the event Sublandlord fails to deliver the Premises by the Commencement Date.

8. GUARANTY. [Intentionally Left Blank.]

9. UTILITIES . Sublandlord shall cause as of the Commencement Date hereof, electricity, water, sewer and telephone utilities to be available at the Premises. Subtenant shall pay directly to the applicable utility/service provider for all water, sewer, gas, janitorial, electricity, garbage removal, heat, telephone, and other utilities and


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services used by Subtenant on the Premises during the Term. Subtenant shall be responsible for providing and paying directly for its own janitorial services to the Premises, and will not be required to contribute toward janitorial costs allocable to other subtenant spaces at the Building. Sublandlord, upon request of Subtenant, and at the sole expense and liability of Subtenant, shall join with Subtenant in any application required for obtaining or continuing such utilities or services.

10. TAXES . Subtenant shall pay all taxes, assessments, liens and license fees (“Taxes”) levied, assessed or imposed by any authority having the direct or indirect power to tax or assess any such liens, by reason of Subtenant’s occupancy of the Premises, and all Taxes on Subtenant’s personal property located on the Premises. Sublandlord shall pay all Taxes with respect to the Building and the Property, including any Taxes resulting from a reassessment of the Building and the Property due to a change of ownership or otherwise, which shall be included in Operating Expenses, subject to Section 4.2(a) above.

11. ALTERATIONS . Subtenant may make alterations, additions or improvements to the Premises (“Alterations”) with the prior written consent of Sublandlord, which consent shall not be unreasonably withheld. The term “Alterations” shall not include the installation of shelves, partitions, Subtenant’s equipment and trade fixtures which may be performed without damaging existing improvements or the structural integrity of the Premises, and Sublandlord’s consent shall not be required for Subtenant’s installation of those items. Subtenant shall complete all Alterations at Subtenant’s expense in compliance with all applicable laws and in accordance with plans and specifications approved by Sublandlord. Sublandlord shall be deemed the owner of all Alterations except for those which Sublandlord requires to be removed at the end of the Sublease term. Subtenant shall remove all Alterations at the end of the Sublease term unless Sublandlord conditioned its consent upon Subtenant leaving a specified Alteration at the Premises, in which case Subtenant shall not remove such Alteration. Subtenant shall immediately repair any damage to the Premises caused by removal of Alterations.

Notwithstanding the foregoing, in no event shall Subtenant be entitled to make any changes, alterations, or modifications of structural portions or the exterior of the Building, including, without limitation, anything which would affect window treatments, paint, surface texture, awnings, light fixtures, or signage, without first obtaining Sublandlord’s prior written consent, which may be withheld in Sublandlord’s sole and absolute discretion.

12. REPAIRS AND MAINTENANCE .

12.1 Subtenant’s Repair and Maintenance Obligations . Subtenant shall at all times throughout the Term, at its sole cost and expense, keep the Premises in good order and repair, reasonable wear and tear excepted, including, by way of illustration only, maintenance and repair of all exterior doors and entrances, windows and moldings and trim on all doors and windows, bathrooms, all partitions, door surfaces,


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fixtures, equipment and appurtenances as well as all Building Systems serving only the Premises or that portion of the Building Systems serving the entire Building which are physically located within the Premises. Subtenant shall have the VAV located within the Premises serviced at least one time per year. After each yearly servicing, Subtenant shall provide Sublandlord proof of servicing of the Subtenant VAV within five (5) days of such servicing. Subtenant shall commit no waste nor disturb the structural integrity of the Premises. Upon expiration or termination of the Sublease Term, Subtenant shall promptly and peacefully surrender the Premises, together with all keys, to Sublandlord in as good condition as when received by Subtenant from Sublandlord or as thereafter improved, reasonable wear and tear and casualty or condemnation which Subtenant is not required elsewhere under this Sublease to repair or restore excepted.

12.2 Sublandlord’s Repair and Maintenance Obligations . Sublandlord shall maintain and repair in reasonably good working order and condition as necessary the following areas of the Building: (i) all Common Areas, (ii) all structural components, (iii) the foundation, and (iv) the roof. Sublandlord shall also maintain those portions of the Building Systems not physically located within the Premises or located within the premises of another subtenant. Costs for the foregoing shall be includable in Operating Expenses and/or Common Area Maintenance Expenses as set forth in and subject to Section 4.2(b) and Section 4.2(c).

13. ACCESS . After reasonable notice from Sublandlord (except in cases of emergency, where no notice is required) Subtenant shall permit Sublandlord and its agents and employees to enter the Premises at reasonable times for the purposes of repair or inspection. This Section 13 shall not impose any repair or other obligation upon Sublandlord not expressly stated elsewhere in this Sublease. After reasonable notice to Subtenant, Sublandlord shall have the right to enter the Premises for the purpose of showing the Premises to prospective purchasers or lenders at any time, and to prospective Subtenants within one hundred eighty (180) days prior to the expiration or sooner termination of the Sublease Term. Sublandlord shall use commercially reasonable efforts to minimize any adverse impacts on Subtenant’s use, enjoyment, and access of and to the Premises as well as the visibility of its signage in connection with any entry on or activities at the Premises.

14. SIGNAGE . Except as described below, Subtenant shall obtain Sublandlord’s written consent before installing any signs upon the Premises, which consent shall not be unreasonably withheld. Subtenant shall install any approved signage at Subtenant’s sole expense and in compliance with all applicable laws. Subtenant shall not damage or deface the Premises in installing or removing signage and shall repair any injury or damage to the Premises caused by such installation or removal. Sublandlord reserves the right to remove any offensive marketing, advertisement and/or materials at all times. Sublandlord agrees to provide Subtenant with a lobby directory signage. In addition, Subject to existing governmental, municipal and historical district building codes and regulations Subtenant shall have the right to install the signage depicted on


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Exhibit H attached hereto and incorporated herein. Sublandlord shall assist with the Subtenant in securing approval on Subtenant’s proposed signage from the City of Seattle and the Pioneer Square Preservation Board. Subtenant shall have the right to display banners, balloons, and other related to advertise Subtenant’s product directly in front of Subtenant’s Premises on Occidental Street with Sublandlord’s prior written reasonable consent. Such advertising shall be contingent on requirements of the local ordinance. Sublandlord reserves the right to remove any offensive displays and/or advertisement. Signage allowed in this Section 14 shall not include any signs on the exterior walls of the Building. Subtenant, at Subtenant’s sole expense, shall have (i) the ongoing option, at its election to be made anytime and from time to time when no third party is then leasing the external façade of the south facing wall of the Building (the “Wall Sign”), to lease the Wall Sign for one or more periods as may be elected at such times by Subtenant; and (ii) a first right of refusal to lease the Wall Sign, to be exercised in writing by Subtenant within five (5) business days after Sublandlord notifies Subtenant that Sublandlord has received a bona fide third-party offer which Sublandlord would otherwise be willing to accept, providing with such notice a copy of such third-party offer (although Sublandlord may redact terms addressing rent or other consideration therefrom); and, in either such event, Sublandlord and Subtenant will enter into a separate Wall Sublease for Subtenant’s Wall Sign in the form attached hereto as Exhibit K .

15. DESTRUCTION OR CONDEMNATION.

15.1. Damage and Repair . If the Premises are partially damaged but not rendered untenantable, by fire or other insured casualty, then Sublandlord shall diligently restore the Premises and this Sublease shall not terminate. The Premises shall not be deemed untenantable if less than twenty-five percent (25%) of the Premises are damaged. Sublandlord shall have no obligation to restore the Premises if insurance proceeds are not available to pay the entire cost of such restoration. If insurance proceeds are available to Sublandlord but are not sufficient to pay the entire cost of restoring the Premises, then Sublandlord may elect to terminate this Sublease and keep the insurance proceeds, by notifying Subtenant within sixty (60) days of the date of such casualty.

If the Premises are entirely destroyed, or partially damaged and rendered untenantable, by fire or other casualty, Sublandlord may, at its option: (a) terminate this Sublease as provided herein, or (b) restore the Premises to its previous condition. If, within sixty (60) days after receipt by Sublandlord from Subtenant of written notice that Subtenant deems the Premises untenantable, Sublandlord fails to notify Subtenant of its election to restore the Premises, or if Sublandlord is unable to restore the Premises within nine (9) months of the date of the casualty event, then Subtenant may elect to terminate the Sublease.

If Sublandlord restores the Premises under this Section 15.1 , Sublandlord shall proceed with reasonable diligence to complete the work, and the Monthly Base Rent shall be abated in the same proportion as the untenantable portion of the Premises bears to the whole Premises, provided that there shall be a rent abatement only if the damage or


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

destruction of the Premises did not result from, or was not contributed to directly or indirectly by the act, fault or neglect of Subtenant, or Subtenant’s officers, contractors, licensees, agents, servants, employees, guests, invitees or visitors. No damages, compensation or claim shall be payable by Sublandlord for inconvenience, loss of business or annoyance directly, incidentally or consequentially arising from any repair or restoration of any portion of the Premises. Sublandlord will not carry insurance of any kind for the protection of Subtenant or on Subtenant’s furniture or on any fixtures, equipment, improvements or appurtenances of Subtenant under this Sublease, and Sublandlord shall not be obligated to repair any damage thereto or replace the same unless the damage is caused by Sublandlord’s negligence.

15.2. Condemnation. If the Premises are made untenantable by eminent domain or conveyed under a threat of condemnation, this Sublease shall automatically terminate as of the earlier of the date title to the Property vests in the condemning authority or the condemning authority first has possession of the Premises and all Rent shall be paid to that date. In the event of a taking of a portion of the Property that does not render the Premises untenantable, then this Sublease shall continue in full force and effect and the Monthly Base Rent shall be equitably reduced based on the proportion by which the floor area of the Premises is reduced, such reduction in Monthly Base Rent to be effective as of the earlier of the date the condemning authority first has possession of such portion or title vests in the condemning authority. Sublandlord shall be entitled to the entire award from the condemning authority attributable to the value of the Premises and Subtenant shall make no claim for the value of its leasehold. Subtenant shall be permitted to make a separate claim against the condemning authority for moving expenses or damages resulting from interruption in its business, provided that in no event shall Subtenant’s claim reduce Sublandlord’s award.

16. INSURANCE.

16.1. Subtenant’s Insurance .

(a) All insurance required to be carried by Subtenant hereunder shall be issued by responsible insurance companies reasonably acceptable to Sublandlord and Sublandlord’s lender and qualified to do business in the State of Washington. Each policy of liability insurance shall name Sublandlord, and at Sublandlord’s request any mortgagee of Sublandlord, as an additional insured. Each policy shall contain (i) a cross-liability endorsement, (ii) a provisions that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Sublandlord and that any coverage carried by Sublandlord shall be excess insurance, and (iii) with respect to property insurance policies only, a waiver by the insurer of any right of subrogation against Sublandlord, its agents, employees and representatives, which arises or might arise by reason of any payment under such policy or by reason of any act or omission of Sublandlord, its agents, employees or representatives. A copy of each paid up policy (authenticated by the insurer) or an ACORD certificate of the insurer evidencing the existence and amount of each insurance policy required hereunder shall be


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delivered to Sublandlord before the date Subtenant is first given the right of possession of the Premises, and thereafter within thirty (30) days after any demand by Sublandlord therefore. Sublandlord may, at any time and from time to time, inspect and/or copy any insurance policies required to be maintained by Subtenant hereunder. No such policy shall be cancelable except after twenty (20) days written notice to Sublandlord and Sublandlord’s lender. Subtenant shall furnish Sublandlord with renewals or “binders” of any such policy at least ten (10) days prior to the expiration thereof. Subtenant agrees that if Subtenant does not take out and maintain such insurance, Sublandlord may (but shall not be required to) procure said insurance on Subtenant’s behalf and charge the Subtenant the premiums together with a twenty-five percent (25%) handling charge, payable upon demand. Subtenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by the Subtenant, provided such blanket policies expressly afford coverage to the Premises, Sublandlord, Sublandlord’s mortgagee and Subtenant as required by this Sublease.

(b) Beginning on the date Subtenant is given access to the Premises for any purpose and continuing until the expiration of the Term, Subtenant shall procure, pay for and maintain in effect policies of property insurance covering (i) all leasehold improvements (including any alterations, additions or improvements that may be made by Subtenant), and (ii) trade fixtures, merchandise and other personal property from time to time in, on or about the Premises, in the amount not less than one hundred percent (100%) of their actual replacement cost from time to time, providing protection against any peril included within the classification “Fire and Extended Coverage” together with insurance against sprinkler damage, vandalism and malicious mischief. The proceeds of such insurance shall be used for the repair or replacement of the property so insured. Upon termination of this Sublease following a casualty as set forth herein, the proceeds under (i) shall be paid to Sublandlord, and the proceeds under (ii) above shall be paid to Subtenant.

(c) Beginning on the date Subtenant is given access to the Premises for any purpose and continuing until the expiration of the Term, Subtenant shall procure, pay for and maintain in effect workers’ compensation insurance as required by law and comprehensive public liability and property damage insurance with respect to the construction of improvements on the Premises, the use, operation or condition of the Premises and the operation of Subtenant in, on or about the Premises, providing personal injury and broad from property damage coverage for not less than One Million Dollars ($1,000,000.00) combined single limit for bodily injury, death and property damage liability.

(d) Subtenant shall deposit the policy or policies of such required insurance or ACORD certificates thereof with Sublandlord prior to the Commencement Date, which policies shall name Sublandlord and Sublandlord’s designee as additional named insured and shall also contain a provision stating that such policy or


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policies shall not be canceled or materially altered except after thirty (30) days written notice to Sublandlord.

(e) Not less than every three (3) years during the Term, Sublandlord and Subtenant shall mutually agree to increases in all Subtenant’s insurance policy limits for all insurance carried by Subtenant as set forth in this Section 16.1 . In the event Sublandlord and Subtenant cannot mutually agree upon the amounts of said increases, then Subtenant agrees that all insurance policy limits as set forth in this Section 16.1 shall be adjusted for increases in the same proportion as Monthly Base Rent.

16.2. Sublandlord Insurance. Sublandlord shall carry standard form extended coverage fire insurance of the Building shell and core in the amount of their full replacement value, commercial general liability insurance with respect to the Sublandlord’s activities at the Building and Property (including the Common Areas), and such other insurance of such types and amounts as Sublandlord, in its discretion, shall deem reasonably appropriate. The cost of any such insurance may be included in the Operating Expenses by a “blanket policy” insuring other parties and/or locations in addition to the Building, in which case the portion of the premiums therefor allocable to the Building and the Property shall be included in the Operating Expenses. In addition to the foregoing, in the event Subtenant fails to provide or keep in force any of the insurance as required above, Sublandlord, in its discretion, may provide such insurance, in which event, the cost thereof shall be payable by Subtenant to Sublandlord as Additional Rent on the first day of the calendar month immediately following demand therefor from Sublandlord.

16.3. Waiver of Subrogation . Sublandlord and Subtenant hereby release each other and any other Subtenant, their agents or employees, from responsibility for, and waive their entire claim of recovery for any loss or damage arising from any cause covered by property insurance required to be carried by each of them. Each party shall provide notice to the property insurance carrier or carriers of this mutual waiver of subrogation, and shall cause its respective property insurance carriers to waive all rights of subrogation against the other. This waiver shall not apply to the extent of the deductible amounts to any such properties policies or to the extent of liabilities exceeding the limits of such policies.


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

17. INDEMNIFICATION .

17.1. Subtenant’s Duty. Subtenant shall indemnify, defend and hold Sublandlord harmless against and from liability and claims of any kind for loss or damage to property of Subtenant or any other person, or for any injury to or death of any person, arising out of: (1) Subtenant’s use and occupancy of the Premises, or any work, activity or other things allowed or suffered by Subtenant to be done in, on or about the Premises or the Property; (2) any breach or default by Subtenant of any of Subtenant’s obligations under this Sublease; or (3) any negligent or otherwise tortuous act or omission of Subtenant, its agents, employees, invitees or contractors. Subtenant shall at Subtenant’s expense, and by counsel satisfactory to Sublandlord, defend Sublandlord in any action or proceeding arising from any such claim and shall indemnify Sublandlord against all costs, attorneys’ fees, expert witness fees and any other expenses incurred in such action or proceeding. As a material part of the consideration for Sublandlord’s execution of this Sublease, except for Sublandlord’s gross negligence or willful misconduct, Subtenant hereby assumes all risk of damage or injury to any person or property in, on or about the Premises or the Property from any cause.

17.2. Sublandlord’s Duty. Sublandlord shall indemnify, defend and hold Subtenant harmless from any liability, loss, cost, expense or claim (including reasonable attorneys’ fees) of any nature resulting from any injury to person or damage to property arising from the negligence or willful misconduct of Sublandlord, its employees, contractors, agents, or invitees or any activities conducted on or about the Premises by anyone other than Subtenant, its employees, contractors or agents.

When the claim is caused by the joint negligence or willful misconduct of Subtenant and Sublandlord or Subtenant and a third party unrelated to Subtenant (except Subtenant’s agents, officers, employees or invitees), Subtenant’s duty to indemnify and defend shall be proportionate to Subtenant’s allocable share of joint negligence or willful misconduct. When the claim is caused by the joint negligence or willful misconduct of Subtenant and Sublandlord or Sublandlord and a third party unrelated to Sublandlord (except Sublandlord’s agents, officers, employees or invitees), Sublandlord’s duty to indemnify and defend shall be proportionate to Sublandlord’s allocable share of joint negligence or willful misconduct.

In the absence of comparative or concurrent negligence on the part of the party claiming indemnity under this Section 17 or its employees, contractors, agents or invitees, the foregoing indemnity shall also include reasonable costs, expenses and attorneys’ fees incurred in successfully establishing the right to indemnity. The indemnifying party shall have the right to assume the defense of any claim subject to this indemnity with counsel reasonably satisfactory to the indemnified party. The indemnified party agrees to cooperate fully with the indemnifying party and its counsel in any matter where the indemnifying party elects to defend, provided the indemnifying party shall promptly reimburse the indemnified party for reasonable costs and expenses incurred in connection with its duty to cooperate.


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Solely for the purpose of effectuating the parties’ respective indemnification obligations under this Sublease, and not for the benefit of any third parties (including but not limited to employees of either party), each party specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW. Furthermore, the indemnification obligations under this Sublease shall not be limited in any way by any limitation on the amount or type of damages, compensation or benefits payable to or for any third party under Worker Compensation Acts, Disability Benefit Acts or other employee benefit acts. The parties acknowledge that the foregoing provisions of this paragraph have been specifically and mutually negotiated between the parties.

17.3. Limitation on Sublandlord’s Liability. Sublandlord shall not be liable for injury or damage which may be sustained by the person or property of Subtenant, its employees, invitees or customers, or any other person in or about the Premises, caused by or resulting from fire, steam, electricity, gas, water or rain which may leak or flow from or into any part of the Premises, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, whether such damage or injury results from conditions arising upon the Premises or upon other portions of the Building or Property or from other sources. Sublandlord shall not be liable for any damages arising from any act or omission of any other Subtenant of the Building or the Property.

18. ASSIGNMENT AND SUBLETTING . Subtenant shall not assign, sublet, mortgage, encumber or otherwise transfer any interest in this Sublease (collectively referred to as a “Transfer”) or any part of the Premises, without first obtaining Sublandlord’s written consent which consent shall not be unreasonably withheld or delayed. No Transfer shall relieve Subtenant of any liability under this Sublease notwithstanding Sublandlord’s consent to such transfer. Consent to any Transfer shall not operate as a waiver of the necessity for Sublandlord’s consent to any subsequent Transfer.

If Subtenant is a partnership, limited liability company, corporation, or other entity, any transfer of this Sublease by merger, consolidation, redemption or liquidation, or any change(s) in the ownership of, or power to vote, which singularly or collectively represents a majority of the beneficial interest in Subtenant, shall constitute a Transfer under this Section 18 .

As a condition to Sublandlord’s approval, if given, any potential assignee approved by Sublandlord shall assume all obligations of Subtenant under this Sublease accruing on and after the effective date of such assignment and shall be jointly and severally liable with Subtenant for the payment of Rent and performance of all terms of this Sublease, and any potential sub-sublessee shall acknowledge that its sub-sublease is subject to and subordinate in all respects to this Sublease and to the Master Lease. In connection with any Transfer, Subtenant shall provide Sublandlord with copies of all assignments, sub-subleases and assumption instruments.


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

19. LIENS . Subtenant shall keep the Property and the Premises free from any liens created by or through Subtenant. Subtenant shall indemnify, defend and hold Sublandlord harmless from liability from any such liens including, without limitation, liens arising from any Alterations. If a lien is filed against the Property or the Premises by any person claiming by, through or under Subtenant, Subtenant shall, upon request of Sublandlord, at Subtenant’s expense, promptly either satisfy the lien and cause it to be removed from title to the Property or Premises, as applicable, or furnish to Sublandlord a bond in form and amount and issued by a surety reasonably satisfactory to Sublandlord, indemnifying Sublandlord and the Premises against all liabilities, costs and expenses, including attorneys’ fees, which Sublandlord could reasonably incur as a result of such lien(s).

20. DEFAULT . The following occurrences shall each be deemed an event of default (“Event of Default”) by Subtenant:

20.1. Failure to Pay . Subtenant fails to pay any sum, including Rent, due under this Sublease following ten (10) days’ written notice from Sublandlord of the failure to pay.

20.2. Abandonment . Subtenant abandons the Premises (defined as an absence of ten (10) days or more while Subtenant is in breach of some other term of this Sublease). Subtenant’s abandonment of the Premises shall not be subject to any notice or right to cure.

20.3. Insolvency . Subtenant becomes insolvent, voluntarily or involuntary bankrupt or a receiver, assignee or other liquidating officer is appointed for Subtenant’s business, provided that in the event of any involuntary bankruptcy or other insolvency proceeding, the existence of such proceeding such constitute an Event of Default only if such proceeding is not dismissed or vacated within sixty (60) days after its institution or commencement.

20.4. Levy or Execution . Subtenant’s interest in this Sublease or the Premises, or any part thereof, is taken by execution or other process of law directed against Subtenant, or is taken upon or subjected to any attachment by any creditor of Subtenant, if such attachment is not discharged within fifteen (15) days after being levied.

20.5. Other Non-Monetary Defaults . Subtenant breaches any agreement, term or covenant of this Sublease other than one requiring the payment of money and not otherwise enumerated in this Section 20 , and the breach continues for a period of thirty (30) days after notice by Sublandlord to Subtenant of the breach.

20.6. Failure to Take Possession . Subtenant fails to take possession of the Premises on the Commencement Date.


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

21. REMEDIES . Sublandlord shall have the following remedies upon an Event of Default. Sublandlord’s rights and remedies under this Sublease shall be cumulative, and none shall exclude any other right or remedy allowed by law.

21.1. Termination of Sublease . Sublandlord may terminate the Sublease and re-enter the Premises and take possession thereof, but no act by Sublandlord other than written notice from Sublandlord to Subtenant of termination shall terminate this Sublease. The Sublease shall terminate on the date specified in the notice of termination. Upon termination of this Sublease, Subtenant will remain liable to Sublandlord for damages in an amount equal to the Rent and other sums that would have been owing by Subtenant under this Sublease for the balance of the Sublease Term, less the net proceeds, if any, of any reletting of the Premises by Sublandlord subsequent to the termination, after deducting all Sublandlord’s Reletting Expenses (as defined below). Sublandlord shall be entitled to either collect damages from Subtenant monthly on the days on which Rent or other amounts would have been payable under the Sublease, or alternatively, Sublandlord may accelerate Subtenant’s obligations under the Sublease and recover from Subtenant: (i) unpaid Rent which had been earned at the time of termination; (ii) the amount by which the unpaid Rent which would have been earned after termination until the time of award exceeds the amount of Rent loss that Subtenant proves could reasonably have been avoided; (iii) the amount by which the unpaid Rent for the balance of the Term of the Sublease after the time of award exceeds the amount of Rent loss that Subtenant proves could reasonably be avoided (discounting such amount by the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%)); and (iv) any other amount necessary to compensate Sublandlord for all the detriment proximately caused by Subtenant’s failure to perform its obligations under the Sublease, or which in the ordinary course would be likely to result from the Event of Default, including without limitation Reletting Expenses described in Section 21.2 .

21.2. Re-entry and Reletting . Sublandlord may continue this Sublease in full force and effect, and without demand or notice, re-enter and take possession of the Premises or any part thereof, expel the Subtenant from the Premises and anyone claiming through or under the Subtenant, and remove the personal property of either. Sublandlord may relet the Premises, or any part of them, in Sublandlord’s or Subtenant’s name for the account of Subtenant, for such period of time and at such other terms and conditions, as Sublandlord, in its discretion, may determine. Sublandlord may collect and receive the Rents for the Premises. Re-entry or taking possession of the Premises by Sublandlord under this Section shall not be construed as an election on Sublandlord’s part to terminate this Sublease, unless a written notice of termination is given to Subtenant. Sublandlord reserves the right following any re-entry or reletting, or both, under this Section to exercise its right to terminate the Sublease. During the Event of Default, Subtenant will pay Sublandlord the Rent and other sums which would be payable under this Sublease if repossession had not occurred, plus the net proceeds if any, after reletting the Premises, after deducting Sublandlord’s Reletting Expenses. “Reletting


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Expenses” is defined to include all expenses incurred by Sublandlord in connection with reletting the Premises, including without limitation, all repossession costs, brokerage commissions, attorneys’ fees, remodeling and repair costs, costs for removing and storing Subtenant’s property and equipment, and Rent concessions granted by Sublandlord to any new Subtenant, prorated over the life of the new lease. Sublandlord shall use commercially reasonable efforts to mitigate its damages in the event of any Subtenant default hereunder.

21.3. Waiver of Redemption Rights . Subtenant, for itself, and on behalf of any and all persons claiming through or under Subtenant, including creditors of all kinds, hereby waives and surrenders all rights and privileges which they may have under any present or future law, to redeem the Premises or to have a continuance of this Sublease for the Sublease term, as it may have been extended.

21.4. Nonpayment of Additional Rent . All costs which Subtenant agrees to pay to Sublandlord pursuant to this Sublease shall in the event of nonpayment be treated as if they were payments of Rent, and Sublandlord shall have all the rights herein provided for in case of nonpayment of Rent.

21.5. Failure to Remove Property . If Subtenant fails to remove any of its property from the Premises at Sublandlord’s request following an uncured Event of Default, Sublandlord may, at its option and without notice, remove and store the property at Subtenant’s expense and risk. If Subtenant does not pay the storage cost within five (5) days of Sublandlord’s request, Sublandlord may, at its option, have any or all of such property sold at public or private sale (and Sublandlord may become a purchaser at such sale), in such manner as Sublandlord deems proper, without notice to Subtenant. Sublandlord shall apply the proceeds of such sale: (i) to the expense of such sale, including reasonable attorneys’ fees actually incurred; (ii) to the payment of the costs or charges for storing such property; (iii) to the payment of any other sums of money which may then be or thereafter become due Sublandlord from Subtenant under any of the terms hereof; and (iv) the balance, if any, to Subtenant. Nothing in this Section shall limit Sublandlord’s right to sell Subtenant’s personal property as permitted by law to foreclose Sublandlord’s lien for unpaid rent.

22. MORTGAGE SUBORDINATION AND ATTORNMENT . This Sublease shall automatically be subordinate to any mortgage or deed of trust created by Sublandlord which is now existing or hereafter placed upon the Premises including any advances, interest, modifications, renewals, replacements or extensions (“Sublandlord’s Mortgage”), provided the holder of any Sublandlord’s Mortgage or any person(s) acquiring the Premises at any sale or other proceeding under any such Sublandlord’s Mortgage shall elect to continue this Sublease in full force and effect. Subtenant shall attorn to the holder of any Sublandlord’s Mortgage or any person(s) acquiring the Premises at any sale or other proceeding under any Sublandlord’s Mortgage provided such person(s) assume the obligations of Sublandlord under this Sublease. Subtenant shall promptly and in no event later than fifteen (15) days execute, acknowledge and


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deliver documents which the holder of any Sublandlord’s Mortgage may reasonably require as further evidence of this subordination and attornment. Notwithstanding the foregoing, Subtenant’s obligations under this Section are conditioned on the holder of each of Sublandlord’s Mortgage and each person acquiring the Premises at any sale or other proceeding under any such Sublandlord’s Mortgage not disturbing Subtenant’s occupancy and other rights under this Sublease, so long as no uncured Event of Default exists.

23. NON-WAIVER . Sublandlord’s waiver of any breach of any term contained in this Sublease shall not be deemed to be a waiver of the same term for subsequent acts of Subtenant. The acceptance by Sublandlord of Rent or other amounts due by Subtenant hereunder shall not be deemed to be a waiver of any breach by Subtenant preceding such acceptance.

24. HOLDOVER . If Subtenant shall, without the written consent of Sublandlord, hold over after the expiration or termination of the Term, such tenancy shall be deemed to be on a month-to-month basis and may be terminated according to Washington law. During such tenancy, Subtenant agrees to pay to Sublandlord one hundred fifty percent (150%) the Monthly Base Rent last payable under this Sublease, unless a different rate is agreed upon by Sublandlord. All other terms of the Sublease shall remain in effect.

25. NOTICES . All notices under this Sublease shall be in writing and effective (i) when delivered by recognized overnight delivery service or in person, or (ii) three (3) days after being sent by registered or certified mail to Sublandlord or Subtenant, as the case may be, at the Notice Addresses set forth in Section 1.8.

26. COSTS AND ATTORNEYS’ FEES . If Subtenant or Sublandlord engage the services of an attorney to collect monies due or to bring any action for any relief against the other, declaratory or otherwise, arising out of this Sublease, including any suit by Sublandlord for the recovery of Rent or other payments, or possession of the Premises, the losing party shall pay the Prevailing Party a reasonable sum for attorneys’ fees in such suit, at trial and on appeal. “Prevailing Party” shall include without limitation (a) a party who dismisses an action in exchange for sums allegedly due; (b) the party who receives performance from the other party of an alleged breach or a desired remedy that is substantially equivalent to the relief sought in an action or proceeding; or (c) the party determined to be the prevailing party by an arbitrator or a court of law.

27. ESTOPPEL CERTIFICATES . Subtenant shall, from time to time, upon written request of Sublandlord, execute, acknowledge and deliver to Sublandlord or its designee a written statement specifying the following, subject to any modifications necessary to make such statements true and complete: (i) the date the Sublease Term commenced and the date it expires; (ii) the amount of Monthly Base Rent and the date to which such Rent has been paid; (iii) that this Sublease is in full force and effect and has not been assigned, modified, supplemented or amended in any way; (iv) that this


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[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Sublease represents the entire agreement between the parties; (v) that all conditions under this Sublease to be performed by Sublandlord have been satisfied; (vi) that there are no existing claims, defenses or offsets which the Subtenant has against the enforcement of this Sublease by Sublandlord; (vii) that no Rent has been paid more than one month in advance; and (viii) that no security has been deposited with Sublandlord (or, if so, the amount thereof). Any such statement delivered pursuant to this Section may be relied upon by a prospective purchaser of Sublandlord’s interest or assignee of any mortgage or new mortgagee of Sublandlord’s interest in the Premises. If Subtenant shall fail to respond within ten (10) business days of receipt by Subtenant of a written request by Sublandlord as herein provided, Subtenant shall be deemed to have given such certificate as above provided without modification and shall be deemed to have admitted the accuracy of any information supplied by Sublandlord to a prospective purchaser or mortgagee, or, in Sublandlord’s sole discretion, such failure shall be deemed an un-curable Event of Default.

28. TRANSFER OF SUBLANDLORD’S INTEREST . This Sublease shall be assignable by Sublandlord without the consent of Subtenant. In the event of any transfer or transfers of Sublandlord’s interest in the Property or the Premises, other than a transfer for security purposes only, upon the assumption of this Sublease by the transferee, Sublandlord shall be automatically relieved of obligations and liabilities accruing from and after the date of such transfer, except for any retained security deposit or prepaid rent, and Subtenant shall attorn to the transferee.

29. RIGHT TO PERFORM . If Subtenant shall fail to timely pay any sum or perform any other act on its part to be performed hereunder, after expiration of applicable notice and cure periods, Sublandlord may make any such payment or perform any such other act on Subtenant’s part to be made or performed as provided in this Sublease. Subtenant shall, on demand, reimburse Sublandlord for its expenses reasonably incurred in making such payment or performance. Sublandlord shall (in addition to any other right or remedy of Sublandlord provided by law) have the same rights and remedies in the event of the nonpayment of sums due under this Section 29 as in the case of default by Subtenant in the payment of Rent.

30. HAZARDOUS MATERIAL . Subtenant shall not cause or permit any Hazardous Material (as defined below) to be brought upon, kept, or used in or about, or disposed of on the Premises or the Property (or migrate off the Property) by Subtenant, its agents, employees, contractors or invitees, except in strict compliance with all applicable federal, state and local laws, regulations, codes and ordinances. If Subtenant breaches the obligations stated in the preceding sentence, then Subtenant shall indemnify, defend and hold Sublandlord harmless from any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses including, without limitation, diminution in the value of the Property or the Premises, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Property or the Premises, or elsewhere, damages arising from any adverse impact on marketing of space at the Property, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees (collectively, “Claims”) incurred or suffered by Sublandlord either during or after the Sublease Term


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and which relate to Hazardous Materials brought upon, kept, or used in or about, or disposed of on the Premises or Property (or which migrate off the Property) by Subtenant. Claims include without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work, whether or not required by any federal, state or local governmental agency or political subdivision, because of Hazardous Material present in, on or under the Property or the Premises, or in soil or groundwater on or under the Property, or if same has migrated to adjacent property. Subtenant shall immediately notify Sublandlord of any inquiry, investigation or notice that Subtenant may receive from any third party regarding the actual or suspected presence of Hazardous Material on the Property or the Premises or regarding the actual or suspected presence of Hazardous Material on adjacent property which has allegedly migrated from the Property.

Without limiting the foregoing, if the presence of any Hazardous Material brought upon, kept or used in or about the Property or the Premises by Subtenant, its agents, employees, contractors or invitees, results in any unlawful release or discharge of Hazardous Material on the Property or the Premises or any other property, Subtenant shall promptly take all actions, at its sole expense, as are necessary to properly remediate the Property, the Premises or other property in accordance with federal and state standards applicable to the release of any such Hazardous Material; provided that Sublandlord’s approval of such actions shall first be obtained, which approval may be withheld at Sublandlord’s sole discretion.

Notwithstanding anything to the contrary herein, Subtenant’s obligations under this Sublease to indemnify Sublandlord with respect to Hazardous Materials and to remediate Hazardous Materials are not applicable to Hazardous Materials on, in or under the Property or the Premises prior to the Commencement Date. Sublandlord shall indemnify, defend and hold Subtenant harmless from any and all Claims incurred or suffered by Subtenant either during or after the Sublease Term and which relate to Hazardous Materials existing in, on, or under the Premises or Property as of the Commencement Date or which are brought upon, kept, or used in or about, or disposed of on the Premises or Property (or which migrate off the Property) by Sublandlord.

As used herein, the term “Hazardous Material” means any hazardous, dangerous, toxic or harmful substance, material or waste including biomedical waste which is or becomes regulated by any local governmental authority, the State of Washington or the United States Government due to its potential harm to the health, safety or welfare of humans or the environment.

31. QUIET ENJOYMENT . So long as Subtenant pays the Rent and performs all of its obligations set forth herein, Subtenant’s possession of the Premises will not be disturbed by Sublandlord or anyone claiming by, through or under Sublandlord, or by the Master Landlord or the holders of any Sublandlord’s Mortgage or any successor thereto.


Multi-Tenant Lease Triple Net		Page 27
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

32. GENERAL.

32.1. Heirs and Assigns . This Sublease shall apply to and be binding upon Sublandlord and Subtenant and their respective heirs, executors, administrators, successors and assigns.

32.2. Brokers’ Fees . Leigh Callaghan and James Yalowitz represented Sublandlord in connection with this Sublease, and Austin Cohn and Anne Marie Koehler represented Subtenant in connection with this Sublease (collectively, the “Brokers”). Subtenant represents and warrants to Sublandlord that it has not engaged any other broker, and no other finder, broker or other person who would be entitled to any commission or fees for the negotiation, execution, or delivery of this Sublease other than as disclosed above. Subtenant shall indemnify, defend and hold Sublandlord harmless against any loss, cost, liability or expense incurred by Sublandlord as a result of any claim asserted by any such other broker, finder or other person on the basis of any arrangements or agreements made or alleged to have been made by or on behalf of Subtenant. Sublandlord shall pay commissions due to the Brokers in connection with this Sublease pursuant to a separate written commission agreement.

32.3. Entire Agreement . This Sublease contains all of the covenants and agreements between Sublandlord and Subtenant relating to the Premises. No prior agreements or understanding pertaining to the Sublease shall be valid or of any force or effect and the covenants and agreements of this Sublease shall not be altered, modified or added to except in writing signed by Sublandlord and Subtenant.

32.4. Severability . Any provision of this Sublease which shall prove to be invalid, void or illegal shall in no way affect, impair or invalidate any other provision of this Sublease.

32.5. Force Majeure . Time periods for either party’s performance under any provisions of this Sublease (excluding payment of Rent) shall be extended for periods of time during which the party’s performance is prevented due to circumstances beyond such party’s control, including without limitation, fires, floods, earthquakes, lockouts, strikes, embargoes, governmental regulations, acts of God, public enemy, war or other strife.

32.6. Governing Law . This Sublease shall be governed by and construed in accordance with the laws of the State of Washington.

32.7. Memorandum of Sublease . This Sublease shall not be recorded. However, Sublandlord and Subtenant shall, at the other’s request, execute and record a memorandum of Sublease in recordable form that identifies Sublandlord and Subtenant, the Commencement and Expiration Dates of the Sublease, and the legal description of the Premises as set forth on attached Exhibit B .


Multi-Tenant Lease Triple Net		Page 28
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

32.8. Submission of Sublease Form Not an Offer . One party’s submission of this Sublease to the other for review shall not constitute an offer to lease the Premises. This Sublease shall not become effective and binding upon Sublandlord and Subtenant until it has been fully signed by both Sublandlord and Subtenant.

32.9. Authority of Parties . Any individual signing this Sublease on behalf of an entity represents and warrants to the other that such individual has authority to do so and, upon such individual’s execution, that this Sublease shall be binding upon and enforceable against the party on behalf of whom such individual is signing.

33. PARKING . Subtenant and its customers shall be entitled to share parking with Sublandlord’s other Subtenants and their customers at the designated parking areas for the Property at no charge. Subtenant shall comply and shall be responsible for the compliance of its customers with the terms of the Sublease and any reasonable rules and regulations adopted by Sublandlord from time to time for the safe and orderly sharing of parking.

34. EMPLOYER INFORMATION FORM — IMMIGRANT INVESTOR PROGRAM. Subtenant understands that the renovations to this premises were funded through investments made by “Alien Entrepreneurs” pursuant to 8 CFR 204.6. This is a Federal program that brings capital into employment generating enterprises by encouraging immigrant investment in certain Regional Centers or Enterprise Zones. A condition of the program is to substantiate employment created directly or indirectly from the Alien’s investment. New employment refers to newly created jobs as opposed to jobs transferred from a different location. Periodically, U.S. Citizenship and Immigration Services will request proof of new employment creation. Subtenant hereby agrees to cooperate with Sublandlord with any requirements imposed on the Sublandlord by the U.S. Government to substantiate Subtenant’s employment creation, in particular upon five days’ written notice, to provide an Affidavit in the form attached hereto and incorporated herein as Exhibit D which may be amended from time to time by the U.S. Government and to also provide within five days’ written notice any supporting documentation required by the U.S. Government thereto.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


Multi-Tenant Lease Triple Net		Page 29
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

In W itness Whereof this Sublease has been executed the date and year first above written.


Sublandlord:		Subtenant:

1000 Master Tenant LLC, a Washington limited liability company		Jones Soda Co., a Washington corporation

	By: American Life, Inc.,	By:	/s/ William R. Meissner

	a Washington corporation Its: Managing Member		Willam R. Meissner, CEO & President

By:	/s/ Henry G. Liebman

	Henry G. Liebman, President

Consent of Master Landlord

The undersigned Master Landlord pursuant to the Master Lease described above hereby consents to the foregoing Sublease, confirms that the Sublease is an “Approved Sublease” pursuant to the Tenant Operating Agreement as defined in the Master Lease, and agrees to recognize the Sublease in the event the Master Lease is terminated prior to scheduled expiration date of the Sublease Term and any extension or renewal thereof.

1000 1st Avenue South Limited Partnership,
a Washington limited partnership

        By: American Life, Inc.,
               a Washington corporation
        Its: Managing General Partner



By:	/s/ Henry G. Liebman
	Henry G. Liebman, President


Multi-Tenant Lease Triple Net		Page 30
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


STATE OF WASHINGTON	)
		)ss
COUNTY OF KING	)

On this 13 ^th day of June, 2011, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Henry Liebman, to me known to be the President of American Life, Inc. the corporation, that executed the foregoing instrument and acknowledged the said instrument to be the free and voluntary act of and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument as the Manager Member of 1000 Master Tenant, LLC.

In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written.


		/s/ Karyne L. Pesho

		Notary Public residing at:
		Bellingham

		Karyne L. Pesho

		Notary’s Name (typed or legibly printed) My Commission Expires:
		11-01-2012


STATE OF WASHINGTON		)
	)ss
COUNTY OF KING		)

On this 13 ^th day of June, 2011, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared William Meissner to me known to be the CEO/President of Jones Soda Co., the corporation that executed the foregoing instrument and acknowledged the said instrument to be the free and voluntary act of and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument and that the seal affixed is the corporate seal of said corporation.

In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written.


		/s/ Karyne L. Pesho

		Notary Public residing at:
		Bellingham

		Karyne L. Pesho

		Notary’s Name (typed or legibly printed) My Commission Expires:
		11-01-2012


Multi-Tenant Lease Triple Net		Page 32
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit A

SITE PLAN AND PREMISES FLOOR PLAN


Multi-Tenant Lease Triple Net		Exhibit A
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit A
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit A-1

EXPANSION SPACE FLOOR PLAN

2 ^ND FLOOR


Multi-Tenant Lease Triple Net		Exhibit A-1
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit B

LEGAL DESCRIPTION

The South 36.09 feet of Lot 9 and the North 44 feet of Lot 10 in Block 324, Seattle Tidelands, situate in the City of Seattle, County of King, State of Washington.

Together with an easement for access and utilities on the North 16 feet of property lying on that portion of property legally described below, said easement recorded under King County Office of Records and Elections File No. 980717-1655.

Tax Parcel Number: 7666206678


Multi-Tenant Lease Triple Net		Exhibit B
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit C

GUARANTY

[ Intentionally Blank. ]


Multi-Subtenant Lease Triple Net		Exhibit C
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit D

AFFIDAVIT

State of Washington

County of King

My full name is ____________________. I am over the age of 18 and competent to declare the following:

I am the ________________ (officer title) of ______________________(company).

__________________________(company name) moved into the premises located at ________________________ on _________ date and we occupy ______ square feet of space. Our principle business is _____________________.

As of ______________ date _____________________________ (company) employs ___ full time employees each of whom work 35 or more hours per week; ___ employees who specifically share ___ jobs; and part time employees who in the aggregate work ________ hours per week.

I understand that this information is provided to the Department of Homeland Security to support several permanent residence visa petitions and that the Department of Homeland Security will rely on this information in making its determination of eligibility.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on ______________[date]

_____________________________[signature]


Multi-Subtenant Lease Triple Net		Exhibit D
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit E

Sublandlord’s Work
(Base Building Shell and Core Definition)

1.		All Building and site work completed per permit issued drawings.

2.		All Building and Common Areas, including any multi-tenant floors will be completed.

3.		Restrooms installed and “finished out” per building standard finishes on each floor.

4.		HVAC service (any and all VAV boxes) installed in Subtenant’s space and ready for distribution. Minimum of six (6) zones per floor; four (4) exterior zones and two (2) interior zones with thermostatic controls and wiring coiled for location by Subtenant. HVAC capacity to be one (1) ton of cooling for each 250 square feet of net usable space. (Pending confirmation from HVAC contractor regarding cooling capacity requirements for Subtenant’s requested specifications.)

5.		Electrical service provided to Premises (the meter panels are ready for distribution to the Premises). Electrical service including anticipated Subtenant’s usage of approximately six (6) watts per square foot will be installed to Subtenant’s multiple floors. The first floor shall have all electrical panels installed adjacent to the electrical shaft including one panel for shell & core equipment requirements, one panel for lighting and one 120 volt panel (with step-down transformer if needed) for Subtenant convenience outlets. Distribution from these Sublandlord installed panels shall be by Subtenant. (Pending confirmation from electrical contractor regarding power capacity requirements for Subtenant’s requested specifications.)

6.		Please note that the interior walls remain as brick and therefore little if any drywall will be required except for the restrooms and surrounding the elevator core and stairwells.

7.		All fire and life safety equipment including an oversized standpipe to all floors, with sprinklers installed and turned down supplied to Lease Premises.

8.		All building security access systems installed for Common Areas.

		Subtenant shall perform the following work items following delivery of the Premises to Subtenant, and shall receive reimbursement for the reasonable costs incurred by Subtenant therefor, provided that such reimbursement shall not exceed (a) $2.00 per SF for the lighting work described in Item 9 below, and (b) $21 per square yard of carpet & floor covering work described in Item 10 below:

9.		Building standard lighting plans and fixture (or equivalent) to be applied to Subtenant lighting package.

10.		Subtenant to choose finish upgrades from building standard carpet, vinyl, and paint.


Multi-Tenant Lease Triple Net		Exhibit E
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit F

Letter of Credit

[See next page.]


Multi-Tenant Lease Triple Net		Exhibit F
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit F
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit F
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease		Exhibit F
Triple Net

[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit G

Subtenant Improvements

1. Plans. Subtenant shall provide to Sublandlord its plans for the Subtenant Improvements in form suitable for (to the extent required) permit application (collectively, the “Working Drawings”). Working Drawings, and all material changes thereto, shall be subject to Sublandlord’s written approval, which shall not be unreasonably conditioned or withheld.

2. Contractors. All contractors and subcontractors participating in construction of the Subtenant Improvements shall be reputable and shall meet all licensing and insurance requirements of the State of Washington. Prior to the commencement of any of the foregoing work, Subtenant shall provide Sublandlord with the general contractor’s state contractor’s registration number and final Working Drawings and copies of permits.

3. Permits. Subtenant shall cause the approved Working Drawings to be submitted to the appropriate governmental agencies for plan review and building permit. Revisions which may be required by governmental agencies as a result of the plan review process shall be reviewed by Subtenant and Sublandlord and modifications reflecting same shall be mutually agreed upon in a timely manner.

4. Construction. Subtenant shall complete the Subtenant Improvements at Subtenant’s sole risk, cost and expense (subject, however to payment of the TI Allowance as described below). Construction shall be performed in a good and workmanlike manner and in compliance with all applicable rules, laws, codes and regulations.

5. Construction Representatives. Subtenant hereby appoints Melissa Kelley to act on its behalf and represent its interests with respect to all matters requiring Subtenant action in this Exhibit. All matters requiring the consent, authorization or other actions by Subtenant with respect to matters set forth in this Section shall be in writing and signed by the aforementioned person. No consent, authorization, or other action by Subtenant with respect to the matters set forth in this Exhibit shall bind Subtenant unless in writing and signed by the aforementioned person. Sublandlord hereby appoints SoDo Builder’s LLC to act on its behalf and represent its interests with respect to all matters requiring Sublandlord action in this Exhibit. All matters requiring the consent, authorization or other actions by Sublandlord with respect to matters set forth in this Section shall be in writing and signed by the aforementioned person. No consent, authorization, or other action by Sublandlord with respect to the matters set forth in this Exhibit shall bind Sublandlord unless in writing and signed by the aforementioned person.


Multi-Tenant Lease Triple Net		Exhibit G
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

6. Subtenant’s Access During Construction. Subtenant or its representatives may enter upon the Premises during construction of Sublandlord’s Work and the Subtenant Improvements for purposes of conducting all such activities as are necessary, appropriate or desirable with respect to completing the Subtenant Improvements. All terms and conditions of the Sublease shall be in full force and effect upon the date possession is given to Subtenant, except as to Term and the Commencement Date, which shall be as set forth elsewhere in the Sublease. If Subtenant’s contractors enter onto the Premises prior to substantial completion of the Sublandlord’s Work, Subtenant shall cause its contractors to ensure that Sublandlord’s Work is not thereby materially interfered with or delayed.

7. Telecom Requirements. Unless otherwise agreed by the parties in the final mutually approved Working Drawings, Subtenant is responsible for and shall select Subtenant’s telephone and data services. Subtenant shall coordinate installation of the telephone and telecom system with Sublandlord during construction of the Subtenant Improvements.

8. TI Allowance Payment. Payment of the TI Allowance may be requested by Subtenant, at its election, either pursuant to monthly draw requests or in one lump sum following completion of construction of the Subtenant Improvements. If Subtenant elects to receive the TI Allowance via monthly draw payments, then on or before the thirtieth (30th) day of each calendar month during the construction of the Subtenant Improvements, Subtenant shall deliver to Sublandlord: (A) a request for payment showing the schedule, by trade, of percentage of completion of the Subtenant Improvements and detailing the portion of the work completed and the portion not completed; (B) invoices from all subcontractors and material suppliers for the Subtenant Improvements for labor rendered and materials delivered to the Premises; (C) executed conditional mechanic’s lien releases from all subcontractors and material suppliers which shall comply with the appropriate provisions, as reasonably determined by Sublandlord. Within twenty (20) days thereafter, Sublandlord shall deliver a check to Subtenant made jointly payable to the general contractor and Subtenant in payment of the amounts so requested by Subtenant as set forth in this paragraph that are subject to reimbursement herein, provided there remains TI Allowance funds available.

9. Compliance. All Subtenant Improvements shall at all times be subject to and in compliance with all applicable laws, codes, ordinances and the HTC Regulations.


Multi-Tenant Lease Triple Net		Exhibit G
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit H

Subtenant’s Approved Signage

[See next page.]


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit H
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit I

Prohibited Uses

1. Bingo parlor, off track betting or other gambling facility.

2. Video or pinball arcade, or amusement arcades or game rooms, or amusement centers.

3. Any living quarters, sleeping apartments or lodging rooms.

4. Any establishment selling, renting or exhibiting pornographic materials, adult books, films, video tapes, compact discs, or computer software (which are defined as stores in which a material portion of the inventory is not available for sale or rental to children under eighteen (18) years old because such inventory deals with or depicts human sexuality).

5. The performance of any illicit sexual activity, lewd or obscene performance, including by way of illustration, but not by way of limitation, prostitution, peep shows, topless restaurants or performances and the like.

6. Any use which is illegal or any establishment which stocks, displays, sells, rents or offers, for sale or rent any merchandise or material commonly used or intended for use with or in consumption of any narcotic, dangerous drug, or other controlled substance (except for prescription drugs sold by pharmacies).


Multi-Tenant Lease Triple Net		Exhibit I
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit J

Depiction of the Deck and Patio Area

[See next page.]


Multi-Tenant Lease Triple Net		Exhibit J
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


Multi-Tenant Lease Triple Net		Exhibit J
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit K

Form of Wall Sublease
[See next page.]


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

WALL SUBLEASE

THIS WALL SUBLEASE (“Sublease”) is entered into as of this ____ day of _____, 20___, by and between 1000 Master Tenant LLC, a Washington limited liability company (“Sublandlord”) and Jones Soda Co., a Washington corporation (“Subtenant”).

Sublandlord and Subtenant are also the parties to that certain Sublease Agreement dated June __, 2011 (the “Office Space Sublease”), pursuant to which Subtenant leases certain office space from Sublandlord as more particularly described therein. This Sublease is the “Wall Sublease” as defined in Section 14 of the Office Space Sublease, and is entered into under the terms and conditions more specifically set forth therein.


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

1. Sign Space . Sublandlord hereby agrees to sublease to Subtenant, and Subtenant hereby agrees to sublease from Sublandlord, for the purposes set forth in Section 3 below, the exterior surface of the south facing exterior wall (“Sign Space”) on the building located at 1000 1 ^st Avenue South, Seattle, Washington (“Building”), which commercial real property is legally described in Exhibit A attached hereto and incorporated herein (the “Property”).

2. Sublease Term . This Sublease shall commence on _______, 20__ and shall expire on ________, 20__, unless the Sublease is sooner terminated as provided herein (“Term”).

3. Use of Sign Space .

3.1 Use . Subtenant is granted the use of the Sign Space solely for the purpose of affixing on-premise advertising materials in a vinyl poster format (“Advertising Materials”) for beverages manufactured by Tenant or a subsidiary of Tenant.

3.2 Approval . Subtenant shall submit to Sublandlord a copy of the proposed Advertising Materials before affixing the same to the Sign Space. Sublandlord shall have final approval regarding the content of the proposed Advertising Materials, which approval shall not be unreasonably withheld. Sublandlord shall deliver denial of such proposed Advertising Materials to Subtenant within five (5) business days of receipt of such proposed Advertising Materials from Subtenant, otherwise the proposed Advertising Materials shall be considered approved.

3.3 Prohibited Content .

3.3.1 Subtenant shall not display any “Prohibited Content” which shall mean:

3.3.1.1 Advertising Materials in the Sign Space which (i) are not approved by Sublandlord, (ii) are obscene, pornographic or sexually explicit, (iii) are political in nature, and/or (iv) advertise cigarettes or related tobacco products; and

3.3.1.2 Use of the Sign Space for any purpose which is (i) a nuisance or (ii) contrary to any law, ordinance, rule or regulation of any public authority, including, but not limited to, discrimination against any person on the basis of race, sex or national origin; and

3.3.1.3 Any Advertising Materials which result in public protests or negative coverage in the media because the public deems the Advertising Materials as offensive or immoral by community norms.

3.3.2 Sublandlord may require Subtenant to revise the Advertising Materials if, over time, such Advertising Materials are deemed offensive or


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

immoral by community norms and results in public protests or negative coverage in the media.

3.4 Removal .

3.4.1 In the event that any Advertising Materials, when complete, materially differ from the plans, sketches or drawings as approved by Sublandlord, Subtenant shall remove the Advertising Materials upon five (5) days written notice from Sublandlord.

3.4.2 In the event any Advertising Materials contain Prohibited Content, Subtenant shall remove the Advertising Materials upon five (5) days written notice from Sublandlord.

4. Permits .

4.1 At its sole cost and expense, Subtenant shall undertake diligent efforts to obtain permits from the City of Seattle and any approvals required by the Pioneer Square Preservation Board for use of the Advertising Materials to be placed on the Sign Space (the “Permits”).

4.2 Sublandlord, when required by the City of Seattle and/or the Pioneer Square Preservation Board, will make reasonable efforts at no cost to Sublandlord, to assist Subtenant in seeking such Permits, including but not limited to executing any necessary forms required by the City of Seattle and/or the Pioneer Square Preservation Board.

4.3 Subtenant shall provide copies of all Permits to Sublandlord within five (5) days of the issuance of the Permits.

4.4 Notwithstanding anything contained herein to the contrary, in the event Subtenant shall be unable to obtain any of the Permits due to no fault of Subtenant, Subtenant upon thirty (30) days written notice to Sublandlord, may cancel this Sublease, provided any Rent accrued to the date of termination shall not be refunded, and to the extent past due shall remain payable. Either party may terminate this Sublease if the Permits have not been granted within one hundred eighty (180) days of the date hereof without liability to the other, except for the payment of the Rent accrued to the date of termination.

4.5 Notwithstanding anything contained herein to the contrary, in the event (i) Subtenant shall have obtained a Permit for the Sign Space but subsequently such Permit shall be withdrawn or terminated for any reason other than as a result of Subtenant deliberately causing such termination or withdrawal, or (ii) Sublandlord or Subtenant shall receive a violation notice or summons alleging a violation of zoning law which would prevent further use of the Sign Space by Subtenant for the purpose contemplated


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

by this Sublease and such violation is not promptly dismissed (provided Subtenant shall use good faith efforts to cure such violation if within its control), Subtenant upon thirty (30) days written notice to Sublandlord, may at any time thereafter cancel the balance of the Term of this Sublease, provided any of the Rent accrued to the date of termination shall not be refunded, and to the extent past due, shall remain payable. Subtenant will pay all violations, fines or penalties resulting from or relative to the use of the Sign Space.

5. Rent . Subtenant shall pay to Sublandlord monthly rent (“Rent”) for the Sign Space on the first day of each month throughout the Term as follows:

[*The Months described below correspond to the Term of the Office Space Sublease described above, and Subtenant shall pay Monthly Rent for the Sign Space according to the following table only during those month(s) when Subtenant has exercised its option or right of first refusal rights to sublease the Sign Space, as more particularly set forth in Section 14 of the Office Space Sublease*]


Month	Monthly Rent
01-12		[***]
13-24		[***]
25-36		[***]
37-48		[***]
49-60		[***]
61-65		[***]

6. Installation of Advertising .

6.1 Following execution of this Sublease, the granting of the Permits and approval of the Advertising Materials by Landlord, Subtenant may commence to install at the Sign Space vinyl flex face advertising copy.

6.2 All work shall be undertaken and completed in a good and workmanlike manner by qualified personnel and contractors. Subtenant shall fully comply with all laws and regulations applicable to its work and occupancy of the Sign Space.

6.3 Subtenant shall not permit to be created or to remain, and shall promptly discharge, any lien, encumbrance or charge for any mechanics, laborers or materialman’s lien resulting from work which it performs upon the Sign Space or any part thereof.

7. Condition of Sign Space; Maintenance and Repair .

7.1 Subtenant covenants and agrees to maintain the Sign Space in good condition and repair throughout the Term.


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

7.2 Sublandlord hereby grants to Subtenant, its agents, servants and employees the limited right of access to the Sign Space in order to install, maintain, operate and repair its Advertising Materials to be located at the Sign Space and as necessary, access to the roof of the Building and to such other portions of the Building, exterior or interior, as may be necessary or advisable for the installation and/or maintenance of Subtenant’s signs subject to the rights of other subtenants in the Building. All access shall be coordinated through Sublandlord and shall be undertaken in a manner that will not interfere with the use of the Building by other subtenants of the Building.

7.3 Subtenant, at Subtenant’s sole cost and expense, shall promptly repair all damage to the Sign Space, any other part of the Building, Property, or its fixtures, equipment and appurtenances, whether requiring structural or nonstructural repairs, caused by or resulting from:

7.3.1 Careless, neglectful or improper use of the Sign Space or any other portion of the Building or Property by Subtenant, its servants, employees or agents; and

7.3.2 Carelessness, omission, neglect or improper conduct by Subtenant, its servants, employees or agents within the Sign Space, any other portion of the Building; and

7.3.3 The installation, repair and/or maintenance, or removal of Subtenant’s signs, fixtures, equipment or structures.

7.4 If after ten (10) days notice Subtenant fails to make repairs required by Sublandlord, such repairs may be made by Sublandlord at the expense of Subtenant and the expenses thereof incurred by Sublandlord shall be immediately due and payable by Subtenant after delivery of a bill or statement therefore. Sublandlord may make emergency repairs without any notice to Subtenant, provided it shall thereafter provide immediate notice to Subtenant.

7.5 Subtenant shall be solely responsible for, and pay all costs of installation and use of all electricity and other utilities, if any, used or consumed during installation of the Advertising Materials.

8. Alterations and Improvements . Subtenant shall not make any alterations, additions or improvements to, nor install any fixtures or equipment on the Sign Space without Sublandlord’s prior written consent, which consent may be unreasonably withheld in Sublandlord’s sole discretion. Subtenant shall pay any and all costs incurred by Sublandlord in reviewing and evaluating any request for the consent required by this section. Any alteration, addition or improvement consented to by Sublandlord shall be made in a good workmanlike manner at Subtenant’s sole cost and expense and shall comply with all applicable laws, codes, ordinances, rules, regulations and the HTC Regulations.


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

9. Surrender Upon Termination . At the end of the Term, or any extension thereof, Subtenant shall surrender the Sign Space and return it to the same condition as existed at the beginning of the Sublease, normal wear and tear from the elements excepted. Subtenant shall remove anything that Subtenant installed in the Sign Space and repair any damage to the wall surface caused by Subtenant’s use.

10. Compliance with Laws and Regulations .

10.1 Subtenant, at its sole expense, shall comply with all federal, state and municipal laws, codes, ordinances, regulations, laws, the Permits and all lawful directives of public officers which impose any duty upon Subtenant or Sublandlord with respect to the affixing of advertising upon the Sign Space.

10.2 The parties acknowledge that there are certain federal, state and local laws, regulations and guidelines now in effect and that additional laws, regulations and guidelines may hereafter be enacted relating to or affecting the Building and the Property, concerning the impact on the environment, construction, land use, the maintenance and operation of structures, and the conduct of business. Subtenant shall not cause, or permit to be caused, any act or practice by negligence, or omission, or otherwise, that would adversely affect the environment or do anything or permit anything to be done that would violate any of said laws, regulations or guidelines. Any violation of this covenant shall be an event of default under this Sublease. Subtenant shall indemnify and hold Sublandlord harmless from any and all cost, expense, claims, losses, damages, fines and penalties, including attorneys’ fees that may in any manner arise out of or be imposed because of the failure of Subtenant to comply with this covenant. The foregoing shall cover all requirements whether or not foreseeable at the present time and regardless of the expense attendant thereto.

11. Relationship . Nothing herein authorizes Subtenant to act on behalf of Sublandlord, whether as agent, representative or otherwise, and Subtenant shall take no action to obligate or bind Sublandlord without Sublandlord’s prior written consent.

12. Indemnification .

12.1 Subtenant shall be responsible for any loss or damage whatsoever to Property or persons, due to the installation, use, maintenance or operation of the Sign Space and the signs thereon, including but not limited to the installation, posting, painting or maintenance of same or the contents thereof. Subtenant agrees to indemnify and hold Sublandlord harmless from any and all loss or damage, including without limitation, reasonable attorneys’ fees, resulting or arising out of any action or omission by Subtenant, its agents, employees, licensees or contractors with respect to the installation, posting, or maintenance of its signs at the Sign Space.

12.2 The indemnification obligations contained in this Section shall not be limited by any worker’s compensation benefit or disability laws, and each indemnifying


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

party hereby waives (solely for the benefit of the indemnified party) any immunity that said indemnifying party may have under the Industrial Insurance Act, Title 51 RCW and similar worker’s compensation, benefit or disability laws. SUBLANDLORD AND SUBTENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS SUBLEASE THAT EACH OF THE INDEMNIFICATION PROVISIONS OF THIS SUBLEASE (SPECIFICALLY INCLUDING BUT NOT LIMITED TO THOSE RELATING TO WORKER’S COMPENSATION BENEFITS AND LAWS) WERE SPECIFICALLY NEGOTIATED AND AGREED TO BY SUBLANDLORD AND SUBTENANT.

13. Insurance .

13.1 Subtenant, throughout the Term of this Sublease, shall procure and maintain, at its sole cost and expense, a policy of public liability insurance naming Sublandlord as a named additional insured respecting installation, maintenance and use of the Sign Space, such policy to be issued by an insurance carrier qualified to do business in Seattle, Washington and shall provide for policy limits of not less than $1,000,000 per incident, $2,000,000 aggregate combined coverage.

13.2 Subtenant shall deliver a certificate evidencing such insurance coverage which shall be kept in force at all times during the Term hereof. In the event Subtenant fails after written notice to Subtenant to deliver such certificate of insurance or keep same in force, Sublandlord may, but is not obligated to, procure such insurance and the cost of premiums therefore shall be added to the next month’s Rent thereafter to become due, and shall be deemed to be additional Rent and shall be collectible as such.

13.3 Subtenant shall require each contractor involved in the installation and maintenance of the Sign Space to maintain insurance consistent with industry standards for the service provided by such contractor.

13.4 Each policy or certificate of insurance procured by Subtenant or its contractor pursuant to this Section 13 shall, to the extent obtainable, contain a provision that such policy shall not be canceled without at least thirty (30) days prior written notice to Sublandlord.

13.5 Sublandlord and Subtenant release each other, and their respective authorized representatives, from any claims for damage to any person or to the Sign Space, the Building and/or the Property and to Subtenant’s alterations, trade fixtures and personal property that are caused by or result from risks insured against under any insurance policies carried by the parties, in force at the time of any such damage and collection. Sublandlord and Subtenant shall cause each insurance policy obtained by it to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any insurance policy.

14. Obstruction/Diminished Use . In the event that Subtenant is: (i) prevented by law or governmental authority from using the Sign Space for advertising purposes, or (ii) an


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

existing building or structure is altered or a sign structure is placed on an existing building or a new building or structure is erected so as to materially and adversely obstruct the view of the advertising at the Sign Space, then in any of such events, Subtenant may cancel this Sublease by giving not less than thirty (30) days written notice to Sublandlord which cancellation shall be effective on the date the Subtenant is prevented from using the Sign Space by law or governmental authority, or the date of the material and adverse obstruction of the Sign Space, and neither party shall have any further rights or obligations hereunder other than obligations that existed prior to such termination. During the thirty (30) days following the effective date of termination, Subtenant will remove the Advertising Materials from the Sign Space at the Building and restore the Building to its prior condition, reasonable wear and tear excepted.

15. Notices . All notices, demands or requests by the parties to each other shall be given in person or by registered or certified mail, return receipt requested, to the following addresses:


Sublandlord:		1000 Master Tenant LLC 270 S Hanford St, Ste 100
		Seattle, WA 98134

Subtenant:		Jones Soda Co.

Before Month 6:		234 9th Ave. N. Seattle, WA 98109-5120

On and After Month 6:		The Premises demised by the Office Space Sublease

Either party hereto may change its address by giving such change to the other party in person or by certified or registered mail, return receipt requested.

16. Default .

16.1 Subtenant’s Default . Subtenant shall be in breach of this Sublease if: (a) Subtenant shall default in the payment of Rent and such default shall continue for fifteen (15) days after Sublandlord shall have given Subtenant a written notice of the same, or (b) Subtenant shall default in the performance of any other term hereunder and such default shall continue for thirty (30) days after written notice from Sublandlord of same. In the event of such breach, Sublandlord may terminate this Sublease upon giving written notice, and re-enter the Sign Space and remove any Advertising Materials.

16.2 Default by Sublandlord . Sublandlord shall not be in default and Subtenant may not terminate unless Sublandlord fails to perform obligations required of Sublandlord within a reasonable time, but in no event later than thirty (30) days after written notice by Subtenant to Sublandlord. Said notice shall specify wherein


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Sublandlord has failed to perform such obligation; provided, however, that if the nature of Sublandlord’s obligation is such that more than thirty (30) days are required for performance then Sublandlord shall not be in default if Sublandlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. Subtenant further agrees not to invoke any of its remedies under this Sublease until said thirty (30) days have elapsed.

17. Assignment . Subtenant shall not assign or transfer this Sublease.

18. Successors and Assigns . The covenants, conditions and agreements contained in this Sublease shall bind and inure to the benefit of Sublandlord and Subtenant, their respective heirs, distributees, executors, administrators, successors and except as otherwise provided in this Sublease, their assigns.

19. Entire Sublease; Modifications; No Third Party Rights . This Sublease represents the entire understanding of the parties and supersedes any previous documents, correspondence, conversations or other oral or written understanding related to this Sublease. It may not be assigned, waived or modified by the parties except in writing signed by authorized representatives of both parties, nor shall the conduct or actions of any party be deemed a modification or waiver. A modification or waiver of a part of this Sublease shall not constitute a waiver or modification of any other portion of the Sublease. Nothing in this Sublease shall create any enforceable rights in any person not a party hereto.

20. Choice of Law and Forum . This Sublease shall be governed by and construed under laws of the State of Washington and the City of Seattle without regard to its choice of law rules. Any disputes under this Sublease shall be litigated in the local or federal courts located, and the parties hereby consent to personal jurisdiction and venue, in the City of Seattle.

[See next page for signatures.]


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

In Witness Where of this Sublease has been executed the date and year first above written.


Sublandlord:		Subtenant:

1000 Master Tenant LLC, a Washington limited liability company		Jones Soda Co., a Washington corporation

	By: American Life, Inc.,	By:

	Its: a Washington corporation Managing Member		[Name, Title]

By:

	Henry G. Liebman, President

Consent of Master Landlord

1000 1st Avenue South Limited Partnership,
a Washington limited partnership

          By: American Life, Inc.,
                a Washington corporation
         Its: Managing General Partner



By:
	Henry G. Liebman, President


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


STATE OF WASHINGTON		)
	)ss
COUNTY OF KING		)

On this _____ day of _______, 20___, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Henry Liebman, to me known to be the President of American Life, Inc. the corporation, that executed the foregoing instrument and acknowledged the said instrument to be the free and voluntary act of and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument as the Manager Member of 1000 Master Tenant, LLC.

In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written.



		Notary Public residing at:




		Notary’s Name (typed or legibly printed) My Commission Expires:


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


STATE OF WASHINGTON		)
	)ss
COUNTY OF KING		)

On this _____ day of ________, 20__, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared _______________________, to me known to be the _______________ of JONES SODA, Co., the corporation that executed the foregoing instrument and acknowledged the said instrument to be the free and voluntary act of and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that ______________________ was authorized to execute the said instrument and that the seal affixed is the corporate seal of said corporation.

In Witness Whereof I have hereunto set my hand and affixed my official seal the day and year first above written.




		Notary Public residing at:




		Notary’s Name (typed or legibly printed) My Commission Expires:


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

The South 36.09 feet of Lot 9 and the North 44 feet of Lot 10 in Block 324, Seattle Tidelands, situate in the City of Seattle, County of King, State of Washington. Together with an easement for access and utilities on the North 16 feet of property lying on that portion of property legally described below, said easement recorded under King County Office of Records and Elections File No. 980717-1655.

Tax Parcel Number: 7666206678


Multi-Tenant Lease Triple Net		Exhibit K
[***] Indicates portions of this exhibit that have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Exhibit 10. 3

JONES SODA CO.
2011 INCENTIVE PLAN

STOCK OPTION GRANT NOTICE

Jones Soda Co. (the “ Company ”) hereby grants to you an Option (the “ Option ”) to purchase shares of the Company’s Common Stock under the Company’s 2011 Incentive Plan (the “ Plan ”). The Option is subject to all the terms and conditions set forth in this Stock Option Grant Notice (this “ Grant Notice ”) and in the Stock Option Agreement and the Plan, which are incorporated into this Grant Notice in their entirety.


Participant :


Grant Date :


Vesting Commencement Date :


Number of Shares Subject to Option (the “ *Shares* ”) :

Exercise Price (per Share) :


Option Expiration Date :		(subject to earlier the terms of the Plan and the termination in

	accordance with Stock Option Agreement)

Type of Option :	Nonqualified Stock Option

Vesting and Exercisability Schedule :	25% of the Option will vest and become exercisable on the first anniversary of the Vesting Commencement Date and an additional 1/48th of the Option will vest and become exercisable each additional one-month period of continuous service completed thereafter.

Additional Terms/Acknowledgement : You acknowledge receipt of, and understand and agree to, this Grant Notice, the Stock Option Agreement and the Plan. You further acknowledge that as of the Grant Date, this Grant Notice, the Stock Option Agreement and the Plan set forth the entire understanding between you and the Company regarding the Option and supersede all prior oral and written agreements on the subject.


JONES SODA CO.		PARTICIPANT


By:		[Name]

Title:

Attachments :
1. Stock Option Agreement

JONES SODA CO.
2011 INCENTIVE PLAN

STOCK OPTION AGREEMENT

Pursuant to your Stock Option Grant Notice (the “ Grant Notice ”) and this Stock Option Agreement, Jones Soda Co. has granted you an Option under its 2011 Incentive Plan (the “ Plan ”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant Notice (the “ Shares ”) at the exercise price indicated in your Grant Notice. Capitalized terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the Plan.

The details of the Option are as follows:

1. Vesting and Exercisability . Subject to the limitations contained herein, the Option will vest and become exercisable as provided in your Grant Notice, provided that vesting will cease upon your Termination of Service and the unvested portion of the Option will terminate.

2. Securities Law Compliance . Notwithstanding any other provision of this Agreement, you may not exercise the Option unless the Shares issuable upon exercise are registered under the Securities Act or, if such Shares are not then so registered, the Company has determined that such exercise and issuance would be exempt from the registration requirements of the Securities Act. The exercise of the Option must also comply with other applicable laws and regulations governing the Option, and you may not exercise the Option if the Company determines that such exercise would not be in material compliance with such laws and regulations.

3. Independent Tax Advice. You should obtain tax advice independent from the Company when exercising the Option and prior to the disposition of the Shares.

4. Method of Exercise . You may exercise the Option by giving written notice to the Company, in form and substance satisfactory to the Company, which will state your election to exercise the Option and the number of Shares for which you are exercising the Option. The written notice must be accompanied by full payment of the exercise price for the number of Shares you are purchasing. You may make this payment in any combination of the following: (a) by cash; (b) by wire transfer or check acceptable to the Company; (c) if the Common Stock is registered under the Exchange Act and to the extent permitted by law, by instructing a broker to deliver to the Company the total payment required; or (d) by any other method permitted by the Committee.

5. Treatment Upon Termination of Service . The unvested portion of the Option will terminate automatically and without further notice immediately upon your Termination of Service. You may exercise the vested portion of the Option as follows:

(a) General Rule . You must exercise the vested portion of the Option on or before the earlier of (i) three months after your Termination of Service and (ii) the Option Expiration Date;

(b) Retirement or Disability . If your employment or service relationship terminates due to Retirement or Disability, you must exercise the vested portion of the Option on or before the earlier of (i) one year after your Termination of Service and (ii) the Option Expiration Date.

(c) Death . If your employment or service relationship terminates due to your death, the vested portion of the Option must be exercised on or before the earlier of (i) one year after your Termination of Service and (ii) the Option Expiration Date. If you die after your Termination of Service but while the Option is still exercisable, the vested portion of the Option may be exercised until the earlier of (x) one year after the date of death and (y) the Option Expiration Date; and

(d) Cause . The vested portion of the Option will automatically expire at the time the Company first notifies you of your Termination of Service for Cause, unless the Committee determines otherwise. If your employment or service relationship is suspended pending an investigation of whether you will be terminated for Cause, all your rights under the Option likewise will be suspended during the period of investigation. If any facts that would constitute termination for Cause are discovered after your Termination of Service, any Option you then hold may be immediately terminated by the Committee.

It is your responsibility to be aware of the date the Option terminates.

6. Limited Transferability . During your lifetime only you can exercise the Option. The Option is not transferable except by will or by the applicable laws of descent and distribution. The Plan provides for exercise of the Option by a beneficiary designated on a Company-approved form. Notwithstanding the foregoing and to the extent permitted by Section 422 of the Code, the Committee, in its sole discretion, may permit you to assign or transfer the Option, subject to such terms and conditions as specified by the Committee.

7. Withholding Taxes . As a condition to the exercise of any portion of an Option, you must make such arrangements as the Company may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.

8. Option Not an Employment or Service Contract . Nothing in the Plan or any Award granted under the Plan will be deemed to constitute an employment contract or confer or be deemed to confer any right for you to continue in the employ of, or to continue any other relationship with, the Company or any Related Company or limit in any way the right of the Company or any Related Company to terminate your employment or other service relationship at any time, with or without Cause.

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9. No Right to Damages . You will have no right to bring a claim or to receive damages if you are required to exercise the vested portion of the Option within three months (one year in the case of Retirement, Disability or death) of your Termination of Service or if any portion of the Option is cancelled or expires unexercised. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of your Termination of Service for any reason even if the termination is in violation of an obligation of the Company or a Related Company to you.

10. Binding Effect . This Agreement will inure to the benefit of the successors and assigns of the Company and be binding upon you and your heirs, executors, administrators, successors and assigns.

11. Section 409A . Notwithstanding any provision in the Plan or this Agreement to the contrary, the Committee may, at any time and without your consent, modify the terms of the Option as it determines appropriate to avoid the imposition of interest or penalties under Section 409A; provided, however, that the Company makes no representations that the Option shall be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to the Option.

[Sections 12 and 13 are for non-U.S. employees:]

12. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation . In accepting the Option, you acknowledge, understand and agree that (a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time; (b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past; (c) all decisions with respect to future option grants, if any, will be at the sole discretion of the Company; (d) you are voluntarily participating in the Plan; (e) the Option and any Shares acquired under the Plan are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company, and which is outside the scope of your service contract, if any; (f) the Option and any Shares acquired under the Plan are not intended to replace any compensation; (g) the Option and any Shares acquired under the Plan are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Related Company; (h) the future value of the Shares underlying the Option is unknown and cannot be predicted with certainty; (i) if the underlying Shares do not increase in value, the Option will have no value; (j) if you exercise the Option and acquire Shares, the value of such Shares may increase or decrease in value, even below the exercise price; (k) no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from your Termination of Service by the Company or a Related Company (for any reason whatsoever and whether or not in breach of local laws) and in

-3-

consideration of the grant of the Option to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company or any Related Company, waive your ability, if any, to bring any such claim, and release the Company or any Related Company from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims; (l) in the event of your Termination of Service (whether or not in breach of local laws), your right to vest in the Option under the Plan, if any, will terminate effective as of the date that you are no longer actively retained and will not be extended by any notice period mandated under local law; furthermore, in the event of your Termination of Service (whether or not in breach of local laws), your right to exercise the Option after Termination of Service, if any, will be measured by the date of termination of your active service and will not be extended by any notice period mandated under local law; the Committee shall have the exclusive discretion to determine when you are no longer actively retained in service for purposes of your Option grant; and (m) the Option and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

13. Data Privacy . By entering into this Agreement and accepting the Option, you explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of any of your personal data that is necessary to facilitate the implementation, administration and management of the Option and the Plan. You understand that the Company and any Related Company may, for the purpose of implementing, administering and managing the Plan, hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan (“ Data ”).

You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, including any broker with whom the Shares issued upon vesting of the Option may be deposited, and that these recipients may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting the Company. You authorize the Company, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to

-4-

Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact the Company.

-5-

Exhibit 10.4

JONES SODA CO.
2011 INCENTIVE PLAN

RESTRICTED STOCK AWARD NOTICE

Jones Soda Co. (the “ Company ”) hereby grants to you a Restricted Stock Award (the “ Award ”) for shares of the Company’s Common Stock under the Company’s 2011 Incentive Plan (the “ Plan ”). The Award is subject to all the terms and conditions set forth in this Restricted Stock Award Notice (the “ Award Notice ”) and in the Restricted Stock Award Agreement and the Plan, which are incorporated into the Award Notice in their entirety.


Participant :


Grant Date :


Vesting Commencement Date :


Number of Shares Subject to the Award (the “ *Shares* ” ) :


Fair Market Value Per Share on Grant Date:		$


Vesting Schedule :

Additional Terms/Acknowledgement : You acknowledge receipt of, and understand and agree to, the Award Notice, the Restricted Stock Award Agreement and the Plan. You further acknowledge that as of the Grant Date, the Award Notice, the Restricted Stock Award Agreement and the Plan set forth the entire understanding between you and the Company regarding the Award and supersede all prior oral and written agreements on the subject.


JONES SODA CO.		PARTICIPANT


By:		[Name]

Title:

Attachments :
1. Restricted Stock Award Agreement

JONES SODA CO.
2011 INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

Pursuant to your Restricted Stock Award Notice (the “ Award Notice ”) and this Restricted Stock Award Agreement (this “ Agreement ”), Jones Soda Co. (the “ Company ”) has granted you a Restricted Stock Award (the “ Award ”) under its 2011 Incentive Plan (the “ Plan ”) for the number of shares of the Company’s Common Stock indicated in your Award Notice. Capitalized terms not defined in this Agreement but defined in the Plan have the same definitions as in the Plan.

The details of the Award are as follows:

1. Vesting

The Award will vest and no longer be subject to forfeiture according to the vesting schedule set forth in the Award Notice (the “ Vesting Schedule ”). Shares subject to the portion of the Award that has vested and is no longer subject to forfeiture according to the Vesting Schedule are referred to herein as “ Vested Shares .” Shares subject to the portion of the Award that has not vested and remains subject to forfeiture under the Vesting Schedule are referred to herein as “ Unvested Shares .” The Unvested Shares will vest (and to the extent so vested cease to be Unvested Shares remaining subject to forfeiture) in accordance with the Vesting Schedule (the Unvested and Vested Shares are collectively referred to herein as the “ Shares ”).

2. Termination of Service

Unless the Committee determines otherwise prior to your Termination of Service, all Unvested Shares will immediately be forfeited to the Company upon your Termination of Service without payment of any consideration to you.

3. Consideration for Award

The Company acknowledges your payment of full consideration for the Award in the form of services previously rendered and/or services to be rendered hereafter to the Company (in either case, in an amount equal to no less than the aggregate par value of the Shares).

4. Securities Law Compliance

4.1 You represent and warrant that you (a) have been furnished with a copy of the Plan and all information which you deem necessary to evaluate the merits and risks of receipt of the Shares, (b) have had the opportunity to ask questions and receive answers concerning the information received about the Shares and the Company, and (c) have been given the opportunity to obtain any additional information you deem necessary to verify the accuracy of any information obtained concerning the Shares and the Company.

4.2 You hereby agree that you will in no event sell or distribute all or any part of the Shares unless (a) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction involving the Shares or (b) the Company receives an opinion of your legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

4.3 You confirm that you have been advised, prior to your receipt of the Shares, that neither the offering of the Shares nor any offering materials have been reviewed by any administrator under the Securities Act or any other applicable securities act.

4.4 You hereby agree to indemnify the Company and hold it harmless from and against any loss, claim or liability, including attorneys’ fees or legal expenses, incurred by the Company as a result of any breach by you of, or any inaccuracy in, any representation, warranty or statement made by you in this Agreement or the breach by you of any terms or conditions of this Agreement.

5. Transfer Restrictions

Any sale, transfer, assignment, pledge, encumbrance, hypothecation, conveyance in trust, gift, transfer by bequest, devise or descent, or other transfer or disposition of any kind, whether voluntary or by operation of law, directly or indirectly, of Unvested Shares will be strictly prohibited and void.

[Sections 6 is for employees subject to U.S. tax law only:]

6. Section 83(b) Election for Award

You understand that under Section 83(a) of the Code, the Fair Market Value of the Unvested Shares on the date the forfeiture restrictions lapse will be taxed, on the date such forfeiture restrictions lapse, as ordinary income subject to payroll and withholding tax and tax reporting, as applicable. For this purpose, the term “forfeiture restrictions” means the right of the Company to receive back any Unvested Shares upon your Termination of Service. You understand that you may elect under Section 83(b) of the Code to be taxed at the time the Unvested Shares are acquired, rather than when and as the Unvested Shares cease to be subject to the forfeiture restrictions. Such election (an “ 8 3(b) Election ”) must be filed with the Internal Revenue Service within 30 days from the Grant Date of the Award.

You understand that there are significant risks associated with the decision to make an 83(b) Election. If you make and 83(b) Election and the Unvested Shares are subsequently forfeited to the Company, you will not be entitled to a deduction for any ordinary income previously recognized as a result of the 83(b) Election. If you make an 83(b) Election and the value of the Unvested Shares subsequently declines, the 83(b) Election may cause you to recognize more ordinary income than you would have otherwise recognized. On the other hand, if the value of the Unvested Shares increases and you have not made an 83(b) Election, you may recognize more ordinary income than you would have if you had made the election.

THE FORM FOR MAKING AN 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT AS EXHIBIT B . YOU UNDERSTAND THAT, IF YOU DECIDE TO MAKE AN 83(b) ELECTION, IT IS YOUR RESPONSIBILITY TO FILE SUCH AN ELECTION AND THAT FAILURE TO FILE SUCH AN ELECTION WITHIN THE 30-DAY PERIOD MAY RESULT IN THE RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE RESTRICTIONS LAPSE. You further understand that an additional copy of such election form should be filed with your federal income tax return for the calendar year in which the date of this Agreement falls. You acknowledge that the foregoing is only a summary of the federal income tax laws that apply to the receipt of the Unvested Shares under this Agreement and does not purport to be complete. YOU FURTHER ACKNOWLEDGE THAT THE COMPANY HAS DIRECTED YOU TO

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SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF THE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH YOU MAY RESIDE, AND THE TAX CONSEQUENCES OF YOUR DEATH.

You agree to execute and deliver to the Company with this Agreement a copy of the Acknowledgment and Statement of Decision Regarding Section 83(b) Election attached hereto as Exhibit A . You further agree that, if you choose to make an 83(b) Election with the Internal Revenue Service, you will execute and deliver to the Company with this Agreement a copy of the 83(b) Election attached hereto as Exhibit B .

7. Book Entry Registration of Shares

The Company may issue the Shares by registering the Shares in book entry form with the Company’s transfer agent in your name in which case the applicable restrictions will be noted in the records of the Company’s transfer agent in the book entry system.

8. Stop-Transfer Notices

You understand and agree that, in order to ensure compliance with the restrictions referred to in this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. The Company will not be required to (a) transfer on its books any Shares that have been sold or transferred in violation of the provisions of this Agreement or (b) treat as the owner of the Shares, or otherwise accord voting, dividend or liquidation rights to, any transferee to whom the Shares have been transferred in contravention of this Agreement.

9. Independent Tax Advice

You acknowledge that determining the actual tax consequences to you of receiving or disposing of the Shares may be complicated. These tax consequences will depend, in part, on your specific situation and may also depend on other variables not within the control of the Company. You are aware that you should consult a competent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving or disposing of the Shares. Prior to executing the Award Notice, you either have consulted with a competent tax advisor independent of the Company to obtain tax advice concerning the receipt or disposition of the Shares in light of your specific situation or you have had the opportunity to consult with such a tax advisor but chose not to do so.

10. Tax Withholding

As a condition to the removal of forfeiture restrictions from your Vested Shares, you agree to make arrangements satisfactory to the Company for the payment of any federal, state, local or foreign withholding tax obligations that arise either upon receipt of the Shares or as the forfeiture restrictions on any Shares lapse. You may satisfy such withholding obligation by any of the following means or a combination thereof: (a) tendering a cash payment to the Company, (b) having the Company withhold an amount from any cash amount otherwise due or become due from the Company to you, (c) having the Company withhold a number of shares of the Company’s Common Stock that would otherwise become vested under this Agreement (up to the employer’s minimum tax withholding rate) or (d)

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surrendering to the Company already owned shares of the Company’s Common Stock (up to the employer’s minimum required tax withholding rate). Notwithstanding the previous sentence, you acknowledge and agree that the Company and any Related Company have the right to deduct from payments of any kind otherwise due to you any federal, state or local taxes of any kind required by law to be withheld with respect the Award.

11. General Provisions

11.1 Assignment . The Company may assign its forfeiture rights at any time, whether or not such rights are then exercisable, to any person or entity selected by the Company’s Board of Directors, including, without limitation, one or more of the Company’s shareholders.

11.2 No Waiver . No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.

11.3 Cancellation of Shares . If the Company or its assignees exercises the Company’s forfeiture rights in accordance with the provisions of this Agreement, then, from and after such time, the person from whom such Shares are to be forfeited will no longer have any rights as a recipient of such Shares, such Shares will be deemed forfeited in accordance with the applicable provisions of this Agreement, and the Company or its assignees will be deemed the owner and recipient of such Shares, whether or not any certificates therefor have been delivered as required by this Agreement.

11.4 Undertaking . You hereby agree to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either you or the Shares pursuant to the express provisions of this Agreement.

11.5 Agreement Is Entire Contract . This Agreement and the Award Notice constitute the entire contract between the parties hereto with regard to the subject matter hereof and supersede all prior oral and written agreements on the subject. This Agreement and the Award Notice are made pursuant to the provisions of the Plan and will in all respects be construed in conformity with the express terms and provisions of the Plan.

11.6 Successors and Assigns . The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.

11.7 No Employment or Service Contract . Nothing in this Agreement will affect in any manner whatsoever the right or power of the Company, or a Related Company, to terminate your employment or services on behalf of the Company, for any reason, with or without Cause.

11.8 Shareholder of Record . You will be recorded as a shareholder of the Company and will have, subject to the provisions of this Agreement and the Plan, all the rights of a shareholder with respect to the Shares.

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11.9 Counterparts . The Award Notice may be executed in two or more counterparts, each of which will be deemed an original, but which, upon execution, will constitute one and the same instrument.

11.10 Governing Law . To the extent not otherwise governed by the laws of the United States, this Agreement will be construed and administered in accordance with and governed by the laws of the State of Washington without giving effect to principles of conflicts of law.

12. Section 409A. The Award is intended to be exempt from the rules of Section 409A or to satisfy those rules, and shall be construed accordingly.

[Sections 13 and 14 are for non-U.S. employees:]

13. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation .

In accepting the Award, you acknowledge, understand and agree that (a) the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time; (b) the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Awards, or benefits in lieu of Awards, even if have been granted repeatedly in the past; (c) all decisions with respect to future Award grants, if any, will be at the sole discretion of the Company; (d) you are voluntarily participating in the Plan; (e) the Award and any Shares acquired under the Plan are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company, and which is outside the scope of your service contract, if any; (f) the Award and any Shares acquired under the Plan are not intended to replace any compensation; (g) the Award and any Shares acquired under the Plan are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Related Company; (h) the future value of the Award is unknown and cannot be predicted with certainty; (i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from your Termination of Service by the Company or a Related Company (for any reason whatsoever and whether or not in breach of local laws) and in consideration of the grant of the Award to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company or any Related Company, waive your ability, if any, to bring any such claim, and release the Company or any Related Company from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims; (j) in the event of your Termination of Service (whether or not in breach of local laws), your right to vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively retained and will not be extended by any notice period mandated under local law; and (k) the Award and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

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14. Data Privacy .

By entering into this Agreement and accepting the Award, you explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of any of your personal data that is necessary to facilitate the implementation, administration and management of the Award and the Plan. You understand that the Company and any Related Company may, for the purpose of implementing, administering and managing the Plan, hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title any shares of stock or directorships held in the Company, details of all Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan (“ Data ”).

You understand that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, including any broker with whom the Shares issued upon vesting of the Award may be deposited, and that these recipients may be located in your country or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting the Company. You authorize the Company, and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact the Company.

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EXHIBIT A

ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(b) ELECTION

The undersigned, a recipient of __________ shares of Common Stock of Jones Soda Co., a Washington corporation (the “Company”), pursuant to a restricted stock award granted pursuant to the Company’s 2011 Incentive Plan (the “Plan”), hereby states as follows:

1. The undersigned acknowledges receipt of a copy of the Plan relating to the offering of such shares. The undersigned has carefully reviewed the Plan and the Restricted Stock Award Notice and Restricted Stock Award Agreement pursuant to which the award was granted.

2. The undersigned either ( check and complete as applicable ):

	(a)		has consulted, and has been fully advised by, the undersigned’s own tax advisor, ________________________, whose business address is _________________________, regarding the federal, state and local tax consequences of receiving shares under the Plan, and particularly regarding the advisability of making an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and pursuant to the corresponding provisions, if any, of applicable state law, or

	(b)		has knowingly chosen not to consult such a tax advisor.

3. The undersigned hereby states that the undersigned has decided (check as applicable)

	(a)		to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s executed Restricted Stock Award Notice, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986,” or

	(b)		not to make an election pursuant to Section 83(b) of the Code.

4. Neither the Company nor any affiliate or representative of the Company has made any warranty or representation to the undersigned with respect to the tax consequences of the undersigned’s purchase of shares under the Plan or of the making or failure to make an election pursuant to Section 83(b) of the Code or the corresponding provisions, if any, of applicable state law.



Dated:
	Recipient

	Print Name

EXHIBIT B

ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

1.		The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

		NAME OF TAXPAYER:________________________

		NAME OF SPOUSE:________________________

		ADDRESS:________________________

		________________________

		IDENTIFICATION NO. OF TAXPAYER:________________________

		IDENTIFICATION NO. OF SPOUSE:________________________

		TAXABLE YEAR: ________________________

2.		The property with respect to which the election is made is described as follows: _______ shares of the Common Stock of Jones Soda Co., a Washington corporation (the “Company”).

3.		The date on which the property was transferred is: _____________, 20___

4.		The property is subject to the following restrictions:

		The property is subject to a right pursuant to which taxpayer forfeits the rights in and to the shares if for any reason taxpayer’s service with the Company is terminated. The Company’s right to receive back the shares lapses as follows: ___________________.

5.		The aggregate fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $____________

6.		The amount (if any) paid for such property is: $________

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The undersigned is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.


Dated:

				Recipient

Dated:

				Recipient’s Spouse

DISTRIBUTION OF COPIES

1.		File original with the Internal Revenue Service Center where the taxpayer’s income tax return will be filed. Filing must be made by no later than 30 days after the date the property was transferred.

2.		Attach one copy to the taxpayer’s income tax return for the taxable year in which the property was transferred.

3.		Mail one copy to the Company at the following address:

Jones Soda Co.
234 9th Avenue North
Seattle, WA 98109

Exhibit 10.5

JONES SODA CO.
2011 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD NOTICE

Jones Soda Co. (the “ Company ”) hereby grants to you a Restricted Stock Unit Award (the “ Award ”). The Award is subject to all the terms and conditions set forth in this Restricted Stock Unit Award Notice (the “ Award Notice ”) and in the Restricted Stock Unit Award Agreement and the Jones Soda Co. 2011 Incentive Plan (the “ Plan ”), which are incorporated into the Award Notice in their entirety.

Participant :

Grant Date :

Number of Restricted Stock Units :

Vesting Schedule :

Additional Terms/Acknowledgement : You acknowledge receipt of, and understand and agree to, the Award Notice, the Restricted Stock Unit Award Agreement and the Plan. You further acknowledge that as of the Grant Date, the Award Notice, the Restricted Stock Unit Award Agreement and the Plan set forth the entire understanding between you and the Company regarding the Award and supersede all prior oral and written agreements on the subject.


JONES SODA CO.		PARTICIPANT


By:		[Name]
Title:

Attachments :
1. Restricted Stock Unit Award Agreement

JONES SODA CO.
2011 INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Pursuant to your Restricted Stock Unit Award Notice (the “ Award Notice ”) and this Restricted Stock Unit Award Agreement (this “ Agreement ”), Jones Soda Co. (the “ Company ”) has granted you a Restricted Stock Unit Award (the “ Award ”) under its 2011 Incentive Plan (the “ Plan ”) for the number of Restricted Stock Units indicated in your Award Notice. Capitalized terms not explicitly defined in this Agreement but defined in the Plan have the same definitions as in the Plan.

The details of the Award are as follows:

1. Vesting

The Award will vest and become payable according to the vesting schedule set forth in the Award Notice (the “ Vesting Schedule ”). One share of the Company’s Common Stock will be issuable for each Restricted Stock Unit that vests. Restricted Stock Units that have vested and are no longer subject to forfeiture according to the Vesting Schedule are referred to herein as “ Vested Units .” Restricted Stock Units that have not vested and remain subject to forfeiture under the Vesting Schedule are referred to herein as “ Unvested Units .” The Unvested Units will vest (and to the extent so vested cease to be Unvested Units remaining subject to forfeiture) in accordance with the Vesting Schedule (the Unvested and Vested Units are collectively referred to herein as the “ Units ”). As soon as practicable after Unvested Units become Vested Units, but in no event later than forty-five days after vesting, the Company will settle the Vested Units by issuing to you one share of the Company’s Common Stock for each Vested Unit.

2. Termination of Service

Unless the Committee determines otherwise prior to your Termination of Service, all Unvested Units will immediately be forfeited to the Company upon your Termination of Service without payment of any consideration to you.

3. Consideration for Award

4. Securities Law Compliance

opportunity to obtain any additional information you deem necessary to verify the accuracy of any information obtained concerning the Award and the Company.

4.2 You hereby agree that you will in no event sell or distribute all or any part of the shares of the Company’s Common Stock that you receive pursuant to settlement of this Award (the “ Shares ”) unless (a) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction involving the Shares or (b) the Company receives an opinion of your legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

4.3 You confirm that you have been advised, prior to your receipt of the Award, that neither the offering of the Shares nor any offering materials have been reviewed by any administrator under the Securities Act or any other applicable securities act.

5. Transfer Restrictions

6. No Rights as Shareholder

You will not have voting or other rights as a shareholder of the Company with respect to the Units.

7. Independent Tax Advice

You acknowledge that determining the actual tax consequences to you of receiving or disposing of the Units and Shares issued thereunder may be complicated. These tax consequences will depend, in part, on your specific situation and may also depend on the resolution of currently uncertain tax law and other variables not within the control of the Company. You are aware that you should consult a competent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving the Units and receiving or disposing of the Shares. Prior to executing this Agreement, you either have consulted with a competent tax advisor independent of the Company to obtain tax advice concerning the receipt of the Units and the receipt or disposition of the Shares in light of your specific situation or you have had the opportunity to consult with such a tax advisor but chose not to do so.

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8. Book Entry Registration of Shares

9. Tax Withholding

You agree to make arrangements satisfactory to the Company for the payment of any federal, state, local or foreign withholding tax obligations in connection with this Award (e.g., at vesting and/or upon receipt of the Shares) and you acknowledge that the Company may refuse to issue any Shares to you until you satisfy such withholding tax obligations. You may satisfy such withholding obligation by any of the following means or a combination thereof: (a) tendering a cash payment to the Company, (b) having the Company withhold an amount from any cash amount otherwise due or become due from the Company to you, (c) having the Company withhold a number of shares of the Company’s Common Stock that would otherwise become issuable under the Award (up to the employer’s minimum tax withholding rate) or (d) surrendering to the Company already owned shares of the Company’s Common Stock (up to the employer’s minimum required tax withholding rate). Notwithstanding the previous sentence, you acknowledge and agree that the Company and any Related Company have the right to deduct from payments of any kind otherwise due to you any federal, state or local taxes of any kind required by law to be withheld with respect the Award.

10. General Provisions

10.1 Assignment . The Company may assign its rights under this Agreement at any time, whether or not such rights are then exercisable, to any person or entity selected by the Company’s Board of Directors, including, but not limited to, one or more of the Company’s shareholders.

10.2 No Waiver . No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.

10.3 Undertaking . You hereby agree to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either you or the Units pursuant to the express provisions of this Agreement.

10.4 Agreement Is Entire Contract . This Agreement and the Award Notice constitute the entire contract between the parties hereto with regard to the subject matter hereof and supersede all prior oral or written agreements on the subject. This Agreement is made pursuant to the provisions of the Plan and will in all respects be construed in conformity with the express terms and provisions of the Plan.

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10.5 Successors and Assigns . The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.

10.6 No Employment or Service Contract . Nothing in this Agreement will affect in any manner whatsoever the right or power of the Company, or a Related Company, to terminate your employment or services on behalf of the Company, for any reason, with or without Cause.

10.7 Section 409A Compliance . Payments made pursuant to this Agreement and the Plan are intended to qualify for an exception from or comply with Section 409A of the Code. Notwithstanding any other provision in this Agreement and the Plan to the contrary, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement and/or the Plan so that the Award qualifies for exemption from or complies with Section 409A of the Code; provided, however, that the Company makes no representations that the Award shall be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to the Award.

10.8 Counterparts . This Award Notice may be executed in two or more counterparts, each of which will be deemed an original, but which, upon execution, will constitute one and the same instrument.

10.9 Governing Law . To the extent not otherwise governed by the last of the United States, this Agreement will be construed and administered in accordance with and governed by the laws of the State of Washington without giving effect to principles of conflicts of law.

[Sections 11 and 12 are for non-U.S. employees:]

11. Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation .

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are not part of normal or expected compensation for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or any Related Company; (h) the future value of the Award is unknown and cannot be predicted with certainty; (i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from your Termination of Service by the Company or a Related Company (for any reason whatsoever and whether or not in breach of local laws) and in consideration of the grant of the Award to which you are otherwise not entitled, you irrevocably agree never to institute any claim against the Company or any Related Company, waive your ability, if any, to bring any such claim, and release the Company or any Related Company from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claims; (j) in the event of your Termination of Service (whether or not in breach of local laws), your right to vest in the Award under the Plan, if any, will terminate effective as of the date that you are no longer actively retained and will not be extended by any notice period mandated under local law; and (k) the Award and the benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

12. Data Privacy .

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administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Company. You understand, however, that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact the Company.

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EXHIBIT 31.1

CERTIFICATION

I, William R. Meissner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Soda Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 12, 2011



	/s/ WILLIAM R. MEISSNER
	William R. Meissner
	President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, Michael R. O’Brien, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Jones Soda Co.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 12, 2011



	/s/ MICHAEL R. O’BRIEN
	Michael R. O’Brien
	Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Soda Co. (the “Company”) on Form 10-Q for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William R. Meissner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ WILLIAM R. MEISSNER
William R. Meissner
President and Chief Executive Officer

August 12, 2011

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Soda Co. (the “Company”) on Form 10-Q for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael R. O’Brien, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ MICHAEL R. O’BRIEN
Michael R. O’Brien
Chief Financial Officer

August 12, 2011

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