Exhibit 10.3

SEPARATION AGREEMENT AND RELEASE

(Peter Burns)

This separation agreement (the “Agreement”) is made effective this 13th day of
February, 2008, by and between Jones Soda Co. (“EMPLOYER”) and Peter Burns
(“EMPLOYEE”).

In consideration of the mutual promises contained in this Agreement, EMPLOYER
and EMPLOYEE agree as follows:

1. EMPLOYEE’s employment with EMPLOYER will terminate effective March 31, 2008
(“Separation Date”). The termination will be without cause. On the Separation
Date, the EMPLOYER will pay to the EMPLOYEE all accrued compensation earned
through the Separation Date and all accrued but unused PTO (18 days), less
applicable withholdings.

2. As a severance payment, EMPLOYER will continue to pay EMPLOYEE, at the
latter’s present rate of compensation (i.e., a gross amount of $18,750.00 per
month) for the time period of April 1, 2008 to December 31, 2008 (the “Severance
Period”), less applicable withholdings (the “Severance Amount.”).

a. The Severance Amount will be paid in accordance with EMPLOYER’s payroll
schedule during the Severance Period. Payment will be by check made payable to
EMPLOYEE and sent to EMPLOYEE’s last-known address.

b. EMPLOYER does not agree to pay for EMPLOYEE’S car allowance or mobile phone
during the Severance Period. Such benefits are excluded from this Agreement.

c. EMPLOYER’s obligation to pay the Severance Amount is in lieu of, and
replaces, any obligation to pay severance under the employment agreement between
the parties dated March 20, 2007.

3. During the Severance Period, EMPLOYER will pay for EMPLOYEE’S COBRA benefits.
These payments will be treated as taxable income and will not be grossed up.
Health benefits will be based on the prevailing health plan of EMPLOYER.

4. On March 31, 2008, EMPLOYER will pay EMPLOYEE a bonus in the amount of
$112,500.00, less applicable withholdings.

5. EMPLOYEE acknowledges that this Agreement includes compensation and benefits
he would not otherwise be entitled to receive under his employment agreement or
any existing employee benefit plans provided by EMPLOYEE.

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6. EMPLOYEE must submit any and all outstanding expense reports by March 31,
2008. All such reports must comply with EMPLOYER’s expense policy for
reimbursement to issue.

7. The parties will issue a joint press release regarding this termination on
March 31, 2008.

8. EMPLOYEE accepts the benefits contained in this Agreement in full
satisfaction of all his rights and interests relating to his employment with
EMPLOYER and, in consideration therefore, EMPLOYEE hereby releases EMPLOYER, its
affiliates and subdivisions, successors, past and present officers, directors,
agents, and employees from all claims (other than claims for the payments
provided for under this Agreement), causes of action or liabilities, suspected
or unsuspected and irrespective of any present lack of knowledge of any possible
claim or of any fact or circumstance pertaining thereto, which EMPLOYEE may have
or claim to have against EMPLOYER arising from or during his employment or as a
result of his separation from employment, including, but not limited to,
workers’ compensation claims, claims of discrimination based on age (including
claims under the federal Age Discrimination in Employment Law), race, color,
national origin, sex, marital status, sexual orientation, physical or mental
disability under any federal, state, or local law, rule, or regulation; claims
under state or federal law governing the payment of wages; and claims under any
express or implied contract. EMPLOYEE hereby covenants not to assert any such
claims or causes of action. This release applies to all claims which arose up to
the date of this Agreement. Excluded from this Release are any claims which
cannot by law be released and any claims related to the enforcement of the terms
of this Agreement.

9. EMPLOYEE represents that he has read, considered, and fully understands this
Agreement and all its terms, and executes it freely and voluntarily.

10. EMPLOYEE acknowledges that:

(a) Pursuant to applicable law, he has been offered the opportunity to review a
copy of this Agreement for a period of twenty-one (21) days (the “Review
Period”);

(b) EMPLOYER advised EMPLOYEE at the beginning of the Review Period to consult
with an attorney concerning the terms and conditions of this Agreement,
including without limitation the release set forth in this Agreement; and

(c) The terms and conditions of this Agreement have not been amended, modified,
or revoked during the Review Period. EMPLOYER and EMPLOYEE agree that EMPLOYEE
shall have seven (7) calendar days (the “Revocation Period”) following the date
on which EMPLOYEE signs this Agreement to revoke his acceptance of the Agreement
and the release set forth in this Agreement, and this Agreement shall not become
effective until the Revocation Period has expired.

 

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11. EMPLOYEE acknowledges the Confidentiality Agreement dated April 2, 2007,
between EMPLOYER AND EMPLOYEE, and hereby affirms his continuing obligations
pursuant to the terms of that agreement.

12. During the Severance Period, EMPLOYEE agrees to refrain from directly or
indirectly soliciting the Company’s employee’s or independent agent so as to
induce them to leave their employment relationship with EMPLOYER.

13. EMPLOYEE agrees to cooperate in a reasonable manner with EMPLOYER during the
Severance Period with respect to transitional matters relating to EMPLOYEE’s
duties at the company. Furthermore, EMPLOYEE agrees that during the Severance
Period and thereafter, EMPLOYEE will cooperate with EMPLOYER in connection with
any past, present, or potential litigation, including any and all class action
lawsuits against EMPLOYER; such cooperation will include, but not be limited to,
making himself available to testify and preserving any and all possible evidence
in the case, such as documents, notes, and electronic materials. EMPLOYER agrees
to reimburse EMPLOYEE for all reasonable out of pocket reasonable expenses
associated with such cooperation,

14. The parties agree that the terms and conditions of this Agreement and the
negotiations regarding this Agreement are strictly confidential. With the
exception of EMPLOYEE’S immediate family, counsel, and financial advisors, and
EMPLOYER’s counsel and financial advisors or as necessary to effectuate the
terms of this Agreement, EMPLOYEE and EMPLOYER represent that the terms and
conditions of this Agreement have not and shall not be disclosed, discussed, or
revealed to any other persons, entities, or organizations, without prior written
approval. EMPLOYEE and EMPLOYER further agree to take all reasonable steps
necessary to ensure that confidentiality is maintained by any of the individuals
referenced above to whom disclosure is authorized, and agrees to accept
responsibility for any breach of confidentiality by any individual to whom they
disclose the terms and conditions of this Agreement. Nothing in this paragraph
or Agreement, however, shall prevent the parties from responding to an order or
subpoena from an administrative agency or a court of competent jurisdiction.

15. The parties agree not to make any public statements or take any actions to
disparage, place in a negative light, or impair the reputation, goodwill, or
commercial interest of the other party; provided, however, that this provision
shall not prevent the parties from responding to an order or subpoena from an
administrative agency or a court of competent jurisdiction.

16. EMPLOYEE represents that in entering into this Agreement, he does not rely
and has not relied upon any representation or statement made by EMPLOYER or any
of its employees or agents concerning this Agreement.

 

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17. EMPLOYEE represents that his rights and duties hereunder are personal to
him, and not assignable to others, except by will or by the laws of descent and
distribution. EMPLOYEE represents that he is the true party in interest and that
he has not filed any complaints, charges, or lawsuits against EMPLOYER and
agrees that he will not do so at any time hereafter relating to or arising out
of events occurring prior to the date of this Agreement. EMPLOYER may assign its
rights under this Agreement, along with the assumption of its obligations
hereunder, in connection with any merger or consolidation of EMPLOYER or any
sale of all or any portion of EMPLOYER’s assets. All the terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted
assigns.

18. Promptly following EMPLOYEES’s termination of employment, EMPLOYEE shall
return to EMPLOYER all property of EMPLOYER (in whatever medium), and all copies
thereof, in EMPLOYEE’s possession or under his control.

19. EMPLOYEE acknowledges that any violation of the nonsolicitation provisions
of this Agreement (paragraphs 12 above) will cause irreparable harm to EMPLOYER,
and EMPLOYER shall be entitled to extraordinary relief in court, including, but
not limited to, equitable relief, such as injunctive relief.

20. This Agreement is intended to constitute a full and final resolution of
EMPLOYEE’s employment relationship with EMPLOYER. Interpretation of this
Agreement shall be under Washington law. If any action is necessary to enforce
the terms of this Agreement, it shall be brought in a court of appropriate
jurisdiction in King County, Washington, and the substantially prevailing party
shall be entitled to receive reasonable attorneys’ fees and costs.

 

EMPLOYEE     /s/ Peter Burns     2/15/08 Peter Burns     DATE EMPLOYER     Jones
Soda Co.     /s/ Scott Bedbury     2/15/08 By        Scott Bedbury     DATE
Its        Chairman    

 

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