Exhibit 10.1

June 3, 2008

Stephen C. Jones

Jones Soda Co.

234 9th Avenue N.

Seattle, Washington 98109

Dear Steve:

This letter establishes what will be the terms of your employment with the Jones
Soda Co. (the “Company”) as its Chief Executive Officer if you accept this
offer.

Effective Date and Responsibilities

If you accept this offer of employment by fulfilling the conditions set forth
later in this letter, the effective date of your employment pursuant to this
letter will be the later of the date of this letter and the date on which you
provide the Company evidence of your eligibility to be employed by the Company
in the United States (the “Effective Date”). This offer of employment is
contingent on you providing such evidence. The Company will take reasonable
steps to procure such eligibility on your behalf and will be responsible for the
fees related to petitioning for H-1B status to enable you to be employed with
the Company.

You will perform the duties customarily performed by the Chief Executive Officer
of a corporation which is, in all respects, similar to Jones Soda and such other
duties as may be assigned from time to time by the Board of Directors of the
Company. Your role as Chief Executive Officer is a full time position and, once
your employment commences, you are expected to be based in Seattle, Monday
through Friday, or be traveling on Company business, for at least three weeks
out of each month. You may work remotely for no more than one week per month
(excluding travel relating to Company business).

Until the Effective Date, you will continue to serve as an independent
contractor to the Company (in the role of Chief Executive Officer), with your
services being provided primarily from Canada. During this period, your
compensation will be $20,000 per month, effective May 1, 2008, and your
independent contractor relationship may be terminated by the Company with or
without cause.

Compensation and Benefits

Once your employment becomes effective, your compensation and benefits will be
as follows:

 

Annual Base Salary:    $245,000, payable twice a month in accordance with the
Company’s standard payroll practice and subject to applicable withholding taxes.

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Annual Bonus Opportunity:    Your annual bonus opportunity for the year ending
April 30, 2009 will be up to $160,000, payable in the sole and absolute
discretion of the Board of Directors (on the recommendation of the Compensation
Committee) based on the achievement of performance objectives to be agreed upon
between you and the Compensation Committee, and approved by the Board of
Directors, within 30 days after the date of this letter. Such performance
objectives shall include objectives that are tied to the Company’s 2008 and 2009
budgets and operating plans and such other factors as may by approved by the
Compensation Committee and the Board of Directors. Benefits:   

Medical and dental coverage for you under the Jones Soda Co. plan in accordance
with, and subject to, the terms thereof (including, without limitation, the
terms relating to eligibility and enrollment); provided, however, that the
Company will use commercially reasonable efforts to cause its insurance carrier
to waive the three-month eligibility requirement so that your coverage can
commence as of the Effective Date.

 

You will be eligible to participate in Company’s 401(k) retirement plan in
accordance with, and subject to, the terms thereof (including, without
limitation, the terms relating to eligibility and enrollment).

Corporate Housing:    The Company will provide you with corporate housing in
Seattle. Vacation:    Four weeks per year. Stock Options:    Subject to approval
by the Compensation Committee, you will be granted an option to purchase 160,000
shares of the Company’s common stock. The exercise price of your stock option
grant will be equal to the closing price of the Company’s common stock on the
date of the grant (as reported on The Nasdaq Stock Market). The option will vest
in equal installments every six months over forty-two months and expire ten
years from the date of grant. The vesting commencement date will be May 1, 2008.
Vesting will, of course, depend on your continued service to the Company, either
as an employee, director, independent contractor or other capacity approved by
the Compensation Committee.

 

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   Your option will be subject to the terms and conditions of the Company’s 2002
Stock Option and Restricted Stock Plan (the “2002 Plan”) and will be documented
by delivery to you of a Stock Option Letter Agreement specifying the terms and
conditions of the option. Severance and Change in Control Benefits:   

If, after the Effective Date and before May 1, 2009, the Company terminates your
employment as Chief Executive Officer without Cause (as defined below) or you
terminate your employment for Good Reason (as defined below), or if, while you
are employed by the Company and prior to May 1, 2009, the Company consummates a
Corporate Transaction (as defined in the 2002 Plan), you will be entitled to:

 

•        A lump sum payment equal to your then effective annual base salary
(payable on the date of your termination or the date of the Corporation
Transaction, as applicable); and

 

•        Immediate vesting of the unvested portion of your stock option granted
pursuant to this letter.

 

The severance and change in control benefits described above may only be
extended beyond April 30, 2009 by separate written agreement between you and the
Company.

 

For purposes of this letter, “Cause” is defined as:

 

•        Conviction of any felony or misdemeanor;

 

•        Breach of the Jones Soda Code of Ethics or Insider Trading Policy or
Jones Regulation FD policies, as now in effect or as modified in the future;
provided, however, that, if the breach is curable, it shall not constitute
“Cause” if such breach is cured within 30 days after the receipt by you of
written notice from the Company of the breach;

 

•        Theft or embezzlement from Jones Soda; or

 

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•        Attempt to obstruct or failure to cooperate with any investigation
authorized by Jones Soda or any governmental or self-regulatory entity;
provided, however, that, if such obstruction or failure to cooperate is curable,
it shall not constitute “Cause” if such obstruction or failure to cooperate is
cured within 30 days after the receipt by you of written notice from the Company
of such obstruction or failure to cooperate.

 

For purposes of this letter, “Good Reason” is defined as a material reduction in
your then-current base salary unless such reduction is part of a reduction in
salary that affects all executive officers of the Company at a substantially
similar percentage of magnitude. Notwithstanding the foregoing, your termination
will not be for “Good Reason” unless (i) you notify the Company in writing of
the reduction which you believe constitutes “Good Reason” within 90 days of its
initial occurrence (and such reduction is, in fact, material), (ii) the Company
fails to remedy such reduction within 30 days after the date on which it
receives such notice (the “Remedial Period”), and (iii) you actually terminate
employment within 30 days after the expiration of the Remedial Period and before
the Company has remedied such reduction.

   The severance and change of control payments described above are intended to
qualify for the short-term deferral exception to Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”), described in Treasury
Regulation Section 1.409A-1(b)(4) to the maximum extent possible, and to the
extent they do not so qualify, they are intended to qualify for the involuntary
separation pay plan exception to Section 409A described in Treasury Regulation
Section 1.409A-1(b)(9)(iii) to the maximum extent possible. To the extent
Section 409A is applicable to such payments, this letter is intended to comply
with Section 409A. Notwithstanding any other provision of this letter to the
contrary, this letter shall be interpreted, operated and administered in a
manner consistent with such intentions, so as to avoid subjecting you to any
penalty tax under Section 409A with respect to such amounts payable under this
letter. Without limiting the generality of the foregoing, and

 

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   notwithstanding any other provision of this letter to the contrary, to the
extent required in order to avoid subjecting you to a penalty tax under
Section 409A, amounts that would otherwise be payable under this letter during
the six-month period immediately following your separation from service, within
the meaning of Section 409A, shall instead be accumulated and paid on the first
business day after the date that is six months following your separation from
service.

Employment At Will

If you accept our offer of employment and you employment becomes effective, you
will be an employee-at-will, meaning that either you or the Company may
terminate our relationship at any time for any reason, with or without cause.
Any statements to the contrary that may have been made to you, by the Company,
its agents, or representatives, whether orally or in writing, are superseded by
and canceled by this offer letter. As noted above, if we terminate your
employment without “Cause” or you terminate your employment for “Good Reason”
after the Effective Date and on or before April 30, 2009, you will be entitled
to the severance benefits outlined above.

Confidentiality and Noncompetition Agreements

As a condition of your employment, you will be required to sign the enclosed
Confidentiality Agreement and Noncompetition Agreement. The Company’s
willingness to grant you the compensation and other benefits referred to above
is based in significant part on your commitment to fulfill the obligations
specified in these agreements.

You should understand that the Noncompetition Agreement will significantly
restrict your future flexibility in many ways. For example, you will be unable
to seek or accept certain employment opportunities for a period of 12 months
after you leave the Company. Please review the Confidentiality Agreement and
Noncompetition Agreement carefully and, if appropriate, have your attorney
review it as well.

Steps to Take to Accept Employment

If you wish to accept employment with the Company, please do the following:

 

  1. Sign both copies of this letter;

 

  2. Sign both copies of the enclosed Confidentiality Agreement;

 

  3. Sign both copies of the enclosed Noncompetition Agreement;

 

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  3. Retain for your files one of the copies of each of the documents you
executed

 

  4. Return the other signed copy of each document to me.

You will also be required to sign, promote and enforce our Code of Conduct.
Also, by signing this agreement, you represent that you are under no contractual
commitments inconsistent with your obligations to Jones Soda Co.

Final Conditions

If you accept employment with the Company by performing all of the above steps,
this offer letter will set forth the terms of your employment. This letter
supersedes any previous discussions or offers, no matter what their source. Any
future modifications of or additions to the terms set forth in this letter will
be of no effect unless in writing and signed by you and an authorized member of
the Compensation Committee of the Board of Directors of the Company. This
letter, as well as the Confidentiality Agreement and the Noncompetition
Agreement, may be executed and delivered (including by facsimile transmission)
in one or more counterparts, and by the different parties hereto and thereto in
separate counterparts, each of which when executed and delivered shall be deemed
to be an original but all of which taken together shall constitute one and the
same agreement.

I hope that you will accept this offer and look forward to a productive and
mutually beneficial working relationship. Please let me know if I can answer any
questions for you about any of the matters outlined in this letter.

 

Sincerely, /s/ Michael Fleming Michael Fleming Member, Compensation Committee of
the Board of Directors of Jones Soda Co.

ACCEPTANCE

I accept employment with Jones Soda Co. under the terms set forth in this
letter:

 

/s/ Stephen C. Jones     June 3, 2008 Signature     Date

Printed Name: Stephen C. Jones

 

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