EXHIBIT 10.1

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

CO-PACKER AND DISTRIBUTION AGREEMENT

This Co-Packer And Distribution Agreement is entered into by and among Jones
Soda Co. (“Jones”), National Retail Brands, Inc. (“National”) and Shasta
Beverages, Inc. (“Shasta” and, collectively with National, “Producer”).

WHEREAS the parties intend that the nature of the relationship is that Jones
will identify and negotiate with large retailers in the U.S. for the products
described below. National Retail Brands, Inc. / Shasta Beverages, Inc. will
manufacture the products using concentrate supplied by Jones Soda Co (“Jones”),
and then sell the Jones branded finished products directly to the retailer
pursuant to orders or commitments secured by Jones.

In consideration for the mutual agreements, representations and covenants of the
parties set forth herein, and subject to the conditions set forth herein, the
parties hereby agree as follows:

1. Jones hereby grants National Retail Brands, Inc./Shasta Beverages, Inc.
(collectively, “Producer”), the exclusive right in the United States to
(i) manufacture Jones Soda in 8 ounce and 12 ounce cans and 1 liter PET bottles
of carbonated soda and Jones Energy in 16 ounce cans (collectively, “Products”)
with formulas supplied by Jones and utilizing trademarks owned or used by Jones
(“Trademarks”), and (ii) sell the Products to all accounts [XXX] purchasing
through warehouse distribution. Jones will be responsible for obtaining retail
authorization for the sale of the Products and upon obtaining authorization,
will authorize Producer in writing to sell Products to such accounts. Currently,
Producer is authorized to sell 8 ounce and 12 ounce cans of Jones Soda
carbonated soda to Target and 16 ounce cans of Jones Energy to Costco. [XXX].
Producer will have the right to audit the calculation [XXX]. Jones can
manufacture the Products at Producer or any other co-packer for distribution
outside of the United States [XXX].

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS PAGE, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SEC.

 

-1-

--------------------------------------------------------------------------------

2. The Products will incorporate the Trademarks and design work as supplied by
Jones and all such Trademarks and design work for Products will remain the
exclusive property of Jones. Jones represents that it has the right to use the
Trademarks, design work and product formula in the manner contemplated herein.
Jones will be responsible for the development and related development costs of
all graphic designs, artwork, plate charges and the ingredients/formula of all
Products.

3. Jones will supply to Producer concentrate necessary for the Products at the
prices currently established for packages as set forth on EXHIBIT A. [XXX]. All
amounts not paid within thirty (30) days shall bear interest at the lesser of
one percent per month (12% per annum) or the highest rate allowed by applicable
law. Producer will pay all invoices on a net thirty (30) day basis. Producer
will not have the right to offset against such invoiced amounts any sums
allegedly owed by Jones to Producer; except that Producer may withhold payments
solely for deductions taken by retailers related to marketing/promotional
obligations of Jones that have previously been agreed upon in writing between
Jones and Producer. Producer and Jones will coordinate to mitigate losses
relative to aged Products. [XXX]. Producer will be responsible for the
manufacture, storage, inventory, delivery, invoicing, customer credit review and
approval, and receivables collection with respect to sales of Products to Jones’
authorized accounts. All credit terms granted to retailers by Producer, if any,
will be determined by Producer in its sole discretion. [XXX]. The maximum sku’s
per package size at any one time (unless otherwise agreed) are as follows:

 

12 oz. cans            [XXX] 8 oz. cans            [XXX] 16 oz. cans   
        [XXX]

4. Jones will provide Producer with a ninety (90) day written rolling forecast
of anticipated purchases by retailers of the Products, updated monthly. Producer
agrees to produce sufficient Product to meet the requirements for Product as set
forth in such rolling forecasts with the intention that annual case volume for
all Products is not expected to exceed the number of cases set forth on EXHIBIT
A. If case volume is expected to exceed this amount in any calendar year, the
parties will mutually agree on a plan to satisfy the requirements for production
of Product. Additionally, in the event Producer is unable to meet Jones’
requirements, and in order to avoid Product shortages, Jones shall have the
right to use an alternate co-packer to meet the excess demand. Jones shall use
its commercially reasonable best efforts to secure the lowest possible minimum
commitment in such event, and as soon as commercially reasonable, will resume
its full requirements for Product pursuant to the terms of this Agreement by
agreement with Producer. Jones agrees to maintain, and make available to
Producer, sufficient concentrate to cover the quantities contained in its
forecasts. Producer will be responsible for maintaining concentrate inventory
for upcoming thirty (30) day forecasted requirements. Producer will provide to
Jones sufficient information on a monthly basis to ensure accuracy of rolling
forecasts, including monthly and cumulative sales of Products to all customers
and finished goods inventory on hand at month end by Product sku by location.

5. Jones will be solely and exclusively responsible for all sales efforts,
marketing, advertising and promotion, including all slotting payments, if any.
Jones intends to position its 12 oz. soft drink product as a premium priced soft
drink product. Producer may elect, at its sole and absolute discretion, to
participate in marketing and other promotional activities at its sole cost
provided that (i) all marketing, advertising, and promotional materials using
any of the Trademarks or design work of Jones shall be approved in writing by
Jones in its sole discretion, and (ii) all other sales and marketing efforts
shall be coordinated with Jones and the terms of all orders for Products shall
be subject to approval by Jones.

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS PAGE, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SEC.

 

-2-

--------------------------------------------------------------------------------

6. All Products will be of good and merchantable quality, manufactured, stored,
and shipped in all material respects in accordance with beverage industry
standards, and according to the specifications set forth in the Co-Packer Manual
as previously agreed to by the parties in connection with product for sales to
Target and Costco. All concentrate will be in all material respects of good and
merchantable quality and meet the specifications set out in the Co-Packer
Manual. All specifications for concentrate and formula shall remain the sole and
exclusive property of Jones, and Producer will keep such specifications strictly
confidential. Subject to execution of a standard visitor confidentiality
agreement, Jones will have the right to inspect that portion of Producer’s
production facility used to manufacture Jones Products on reasonable notice and
only at such times that Jones Product is manufactured. Producer will supply
samples, at Jones expense, as reasonably requested by Jones for quality control
testing. Producer will also supply Product to Jones for promotional purposes
(and not for resale) at a cost to be agreed upon by Jones and Producer. Jones
will have no responsibility for deposits or returns of empty cans under any
“bottle bill” or similar federal, state, or local law or regulation; provided
that if Jones elects to sell any Product through other channels, and Producer
remains responsible for payment of all deposits or similar amounts on such
Products, then in such event, Jones shall be required to collect all deposits
and similar amounts, where applicable, and remit such collections to Producer
promptly following receipt as reimbursement to Producer.

7. Each party shall maintain in force at all times during the term of this
Agreement a comprehensive commercial general liability and products liability
insurance policy in an amount not less than Ten Million Dollars ($10,000,000)
per occurrence and in the aggregate, and shall name the other party as an
additional insured on its policy, with proof of insurance to be supplied upon
request by such party.

8. Producer agrees to indemnify and hold harmless Jones and its employees,
officers and directors from and against any loss, liability, damages, costs or
expenses (including interest, penalties, expense, attorney’s fees and costs)
arising out of or resulting from: (i) Producer’s breach of this Agreement;
(ii) manufacturing defects in Product furnished by or on behalf of Producer; and
(iii) the claims of any customer, vendor or supplier of Producer; provided, that
Producer shall not have any indemnification obligation to the extent of any
fault on the part of Jones.

9. Jones agrees to indemnify and hold harmless Producer and its respective
employees, officers, directors and affiliates from and against any loss,
liability, damages, costs or expenses (including interest, penalties, expense,
attorney’s fees and costs) arising out of or resulting from: (i) Jones’ breach
of this Agreement; (ii) defects in materials or supplies furnished by or on
behalf of Jones and (iii) the claims of any customer, vendor or supplier of
Jones, provided, that Jones shall not have any indemnification obligation to the
extent of any fault on the part of Producer.

10. In no event shall either party be liable to the other party under any
circumstances whatsoever for consequential, incidental, special or punitive
damages or claims for loss of profits or business interruption, except in the
case of willful misconduct by a party.

11. Jones will afford Producer the first right to pack and distribute any new
(i.e., not commercially produced as of the date of this Agreement) products that
Jones desires to sell through warehouse distribution. The parties will work in
good faith to reach agreement on the basis of the business relationship
established under this Agreement, but if no agreement can be reached despite
such good faith negotiations (which shall be terminated after thirty (30) days
if unsuccessful), Jones shall have the right to enter into agreements with third
parties without penalty or reimbursement of costs.

12. The term of the Agreement will be effective on the date hereof and continue
through December 31, 2011 (the “Initial Term”). Thereafter, this Agreement will
automatically renew in perpetuity for successive additional five (5) year
periods (each such renewal being referred to herein as a “Renewal Term”) unless
terminated as provided below. Jones may terminate the Agreement if Producer
fails to cure any material default within thirty (30) days following written
notice from Jones, specifying the nature of the default and the commercially
reasonable method of cure. Producer may terminate the Agreement if Jones fails
to cure any material default within thirty (30) days following written notice
from Producer, specifying the nature of the default and the commercially
reasonable method of cure. Notwithstanding the foregoing, if a breach of this
Agreement cannot reasonably be cured within such thirty (30) day period, then
the party in breach shall have up to an additional sixty (60) days (or a total
of ninety (90) days) to cure such breach, provided that the breaching party
diligently pursues such cure and advises the non-

 

-3-

--------------------------------------------------------------------------------

breaching party of its efforts to cure. At any time after December 31, 2009,
Producer may terminate this Agreement, for any reason or for no reason, upon six
(6) months advance written notice to Jones; in such event, Producer shall not be
entitled to any termination fee as set forth in EXHIBIT B or otherwise.

13. Jones also has the option to terminate this Agreement with Producer and
reaquire the exclusive rights granted to Producer hereunder at the end of the
Initial Term or any Renewal Term by delivering written notice (“Termination
Notice”) to Producer (with a copy sent to National Beverage Corp., One North
University Drive, Fort Lauderdale, Florida 33324 Att: President or such other
address designated by Producer from time to time; provided, however, that
failure to provide such copy shall not render the notice ineffective) indicating
an election to terminate the Agreement and purchase the exclusive right granted
hereunder. Such notice shall be sent by certified mail or reputable overnight
courier or by such other method that receipt of such notice may be reasonably
verified. In order for such Termination Notice to be effective, Jones shall
deliver such notice no earlier than ninety (90) days and no later than thirty
(30) days prior to the expiration of the Initial Term or any Renewal Term. If
Jones delivers an effective Termination Notice prior to the expiration of the
Initial Term or any Renewal Term as provided herein, then Producer and Jones
shall mutually arrange for an orderly transition relative to the exclusive
manufacture and sale of Product by Producer. Such transition shall be over a
period not to exceed eighteen (18) months following expiration of the Initial
Term or any Renewal Term, as applicable, and shall be undertaken to minimize the
disruption to the manufacturing facilities, customer relationships, inventory
management and financial reporting of Producer and Jones. Jones will pay the
termination fee set forth in EXHIBIT B to the Producer [XXX]. [XXX].

14. Notwithstanding paragraph 13 above, in the event of a sale of all or
substantially all of the assets or stock of Jones or merger or other business
combination transaction involving Jones in which Jones is not the surviving
entity (a “Material Transaction”), Jones may terminate this Agreement and
reacquire the exclusive rights granted hereunder on six (6) month prior written
notice to Producer; provided however that in such event, Jones shall pay
Producer the amount set forth on EXHIBIT B. Notice shall be sent by certified
mail or overnight courier or by any method that receipt of such notice may be
reasonably verified, with a copy to National Beverage Corp. at the address
provided above. Such right for Jones to deliver notice and terminate this
Agreement upon the occurrence of a Material Transaction may not be exercised
prior to December 31, 2009, even if the Material Transaction occurs prior to
such date. [XXX]

15. During the term of this Agreement and for a period of three (3) years
thereafter, neither party to this Agreement shall hire any person as an
employee, consultant, board member or otherwise who is an employee of the other
party hereto (including employees of any affiliate or subsidiary) or who has
been employed by such party (or any of its affiliates or subsidiaries) within
the prior twelve (12) month period.

16. Except as otherwise provided herein, nothing contained in this Agreement is
intended to restrict or otherwise limit each party from continuing to engage in
the ordinary course of its business which may include developing, selling or
manufacturing products competitive with products of the other party.

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS PAGE, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SEC.

 

-4-

--------------------------------------------------------------------------------

17. This Agreement represents the entire and only agreement between the parties
relating to the grant of the exclusive rights by Jones for the manufacturing and
sale of the Products by Producer and supercedes all prior written or oral
agreements between the parties relating to the subject matter hereof. The terms
of this Agreement may not be changed, modified or amended in any manner except
by an instrument in writing signed by an authorized officer of Jones and the
President or Executive Vice President of Producer. Neither party is relying upon
any statement, representation or promise made by the other party or any of its
employees in entering into this Agreement. No purchase order, invoice or other
form shall amend or modify this Agreement. The illegality or unenforceability of
any provision of this Agreement shall not operate to impair the legality or
enforceability of any other provision of this Agreement. No waiver of any right
by a party shall be effective unless in writing, and such waiver shall be
limited to the particular events described in such writing. Each party
represents that it has had the opportunity to consult with counsel regarding the
terms of this Agreement. Each party is an independent contractor, and there is
no agency, partnership, joint venture or other such relationship between Jones
and Producer. This Agreement cannot be assigned by either party without the
prior written consent of the other party, which will not be unreasonably
withheld. Consent shall not be required in connection with an assignment to any
affiliated entity or in connection with any merger, sale of assets or other
business combination transaction. Notwithstanding the foregoing, Producer may
use co-packers during periods of unforeseen increased demand for Product,
provided such co-packers agree to strictly adhere to the Co-Packer Manual and to
the confidentiality provisions of this Agreement and the agreements regarding
ownership of all formulas by Jones. Any increased production costs or
manufacturing inefficiencies from using such outside co-packers shall be borne
completely by Producer with no reimbursement or other assistance from Jones.
This Agreement shall be binding upon the parties’ respective successors and
permitted assigns. The prevailing party in any court proceeding or arbitration
shall be entitled to recover its reasonably attorney’s fees, costs and expenses.
Prior to initiating any formal proceedings, the parties agree to mediate any
disputes in good faith. Each party shall designate in writing an authorized
representative for the purposes of giving notice and securing consents as
required under this Agreement.

18. Except as required by law, this Agreement and all terms and conditions
contained herein shall be confidential and shall not be disclosed to any person
or entity. No press release or other public announcement of this Agreement shall
be made without the prior written consent of the other party; provided that if
this Agreement is required to be publicly filed as a material agreement by
either party, such party shall seek confidential treatment under the applicable
rules and regulations.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

-5-

--------------------------------------------------------------------------------

EXECUTED as of the 18th day of September, 2006, by duly authorized
representatives of the undersigned, intending to be bound hereby.

 

JONES SODA CO. By:   /s/ Peter van Stolk   Peter van Stolk   President & CEO
NATIONAL RETAIL BRANDS, INC. By:   /s/ Joseph G. Caporella   Joseph G. Caporella
  President SHASTA BEVERAGES, INC. By:   /s/ Dean A. McCoy Name:   Dean A. McCoy
Title:   Vice President

 

-6-

--------------------------------------------------------------------------------

EXHIBIT A

[XXX]

 

288 oz.

   CSD    [XXX ]

Concentrate Pricing

 

288 oz.

   CSD    [XXX ]

384 oz.

   Energy    [XXX ]

8 oz.

   Halloween Can    [XXX ]

Concentrate Pricing is F.O.B. Producer co-packing facilities.

Producer will assume all costs related to manufacturing efficiencies, storage
and obsolescence upon receipt of concentrate.

Anticipated Annual Case Volume not to exceed [XXX] of cases of Product in the
aggregate.

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS PAGE, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SEC.

--------------------------------------------------------------------------------

EXHIBIT B

Payment to be made under Section 13 in the event of termination at the end of
the Initial Term or any Renewal Term or Section 14 in the event of a Material
Transaction involving Jones.

Jones shall pay to Producer an amount equal to [XXX]. By way of illustration but
not limitation, assume an effective written termination notice is given to
Producer at the end of the Initial Term and [XXX]. The payment due from Jones to
Producer under this EXHIBIT B would be [XXX].

 

Package

   Amount

12 oz. Can

   [XXX]

8 oz. CSD Can

   [XXX]

16 oz. Can / Energy

   [XXX]

288 oz. CSD

   [XXX]

CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS PAGE, AS INDICATED BY “XXX”,
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT THAT HAS BEEN FILED SEPARATELY
WITH THE SEC.