Document:

Contract of Sale Security Agreement

 EXHIBIT 10.1 
  
 CONTRACT OF SALE 
 SECURITY AGREEMENT 
  
 This Contract of Sale and Security
Agreement dated for purposes of reference May 14, 2003; is between the undersigned, Jones Soda Co., hereinafter called “CLIENT”, and CAPCO Financial Company, a division of Cupertino National Bank hereinafter called “CAPCO”, agree
as follows: 
  
 PURPOSE OF AGREEMENT:

  

	1.	 	CLIENT desires to obtain short-term financing by selling, to CAPCO ALL Accounts receivable. CAPCO agrees to Purchase CLIENTs Accounts from time to time at a discount below
face value, utilizing an advance formula for the purchase of ALL Accounts based upon advances against Acceptable/Eligible Accounts. It is clearly understood by both parties that ALL Accounts of CLIENT are to be sold to CAPCO.

  
 DEFINITIONS: 

 

	2.	 	“Account” means any right of payment for goods sold, or leased, and delivered, or services rendered, any specific transaction, or any right of payment

  

	3.	 	“Advance Formula” means the maximum amount available to CLIENT from CAPCO for the purchase of All Accounts will not exceed 80% of Acceptable/Eligible Accounts.

  

	4.	 	“Acceptable/Eligible Account” means an Account conforming to the Warranties and terms set forth herein that has not been outstanding for more than 90 DAYS from the date of
invoice, has been underwritten and approved by CAPCO, and has not been reduced from the original amount billed by, credit memo, offset, adjustment of any kind, or partial payment subsequent to invoice date. 

  

	5.	 	“Customer” means CLIENT’S Customer or the Account debtor. 

  

	6.	 	“CLIENT” means the seller of All Accounts. 

  

	7.	 	“Collateral” means the intangible or tangible property given as security to CAPCO by CLIENT for any obligations and liabilities of CLIENT to CAPCO under the Agreement.

  

	8.	 	“Warrant” means to guarantee, as a material element of this Agreement. 

  

	9.	 	“Credit Problem” means Customer is unable to pay his debts because of problems or insolvency. 

  

	10.	 	“Customer Dispute” means any claim by Customer against CLIENT, of any kind whatsoever, valid or invalid, that reduces the amount collectible from Customer by CAPCO.

  
 CLIENT COVENANTS:

  

	11.	 	CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop notice(s), or bonded stop notice(s) securing
payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and verification by CAPCO. CAPCO is not obligated to
advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide the original Assigned Account (Invoice) together with one copy thereof, a copy of the bill of lading contract,
purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT. 

  

	12.	 	CLIENT shall prepare and give to CAPCO proper written assignments of Accounts, mechanic’s lien(s) on forms provided by CAPCO. The execution of said assignments shall transfer
to CAPCO all of CLIENTs right, title and ownership to ALL Accounts. CLIENT or CAPCO by this agreement, will properly mark Accounts, as assigned and sold to CAPCO, and CAPCO is authorized to notify Customer of said sale and assignment.

  

	13.	 	CLIENT represents and Warrants to CAPCO that: 

  
 a. CLIENT is sole and absolute owner of any and all Accounts and mechanic’s liens and rights to payment under any stop notices, or bonded stop
notices, sold and assigned hereunder, and CLIENT has full legal right to make said sale, assignment, and/or transfer. 
  
 b. all Accounts sold to CAPCO are an accurate statement of a bonafide sale, delivery and acceptance of merchandise, or performance of service by CLIENT to
/ for Account-debtor. Accounts are not contingent upon the fulfillment by CLIENT and each Account-debtor’s business is believed to be solvent. The terms for payment of said Accounts are Net 30 days or as expressly set forth on the face of
said sold and assigned Accounts, and the payment of said Accounts are not continent upon the fulfillment by CLIENT of any further performance of any nature whatsoever. CLIENT shall accept no returns and shall grant no allowances or credits to any
sold and Assigned Account of any Account-debtor without the prior written approval of CAPCO. 
  
 c. There are no known setoffs, Customer Disputes, adverse claims, defenses, and/or liens whatsoever against the payment of Accounts, and Account’s
mechanic’s liens have not been previously assigned or encumbered by 
  

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 CLIENT in any manner whatsoever. CLIENT will, immediately upon sale of Accounts to CAPCO make proper
entries on its books and records disclosing the absolute sale of Accounts to CAPCO and CLIENT will post no payment unless it is reflected in a payment report from CAPCO. 
  
 d. CLIENT will promptly notify CAPCO in writing of any proposed change in
CLIENT’S place of business, name, legal entity, corporate structure, record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or
proposed change in ownership in excess of twenty five percent, (25%), of outstanding shares; 
  
 e. CLIENT does not own, control, manage, participate in management; or have any involvement and/or association whatsoever with the business of any Account-debtor related to any Accounts sold and assigned hereunder;

  
 f. There are no financing statements now on file in any
public office governing, any Account, Inventory or work in process of CLIENT in which CLIENT is named in or has signed as the debtor, except the financing statement or statements filed or to be filed in respect to this Agreement, or those statements
now on file that have been disclosed in writing by CLIENT to CAPCO. CLIENT will not execute any financing statements pledging Accounts receivables, inventory or work in process, in favor of any other person or entity, excepting CAPCO, for the term
of this Agreement; 
  
 g. CLIENT’S taxes are not delinquent
nor has CLIENT been subject to a tax levy by any governmental entity nor are there now on file in any public office tax liens affecting CLIENT other than those delinquencies, levies and/or liens which have been disclosed by CLIENT to CAPCO;

  
 h. All records, statements, books, or other documents shown
to CAPCO by CLIENT at any time, either before, or after the signing of the Agreement are true and accurate; 
  
 i. CLIENT has served or caused to be served any and all preliminary 10-day notices required by law to perfect or enforce any mechanic’s lien for All
Accounts to insure perfection of ownership for CAPCO and the information contained on those preliminary 10-day notices is true, correct, and properly recorded, to Seller’s knowledge and belief; 
  
 j. Waivers and releases for all labor, services, equipment, or material of
CLIENT and others will be submitted on CAPCO’s form concurrent with Accounts. 
  

	14.	 	CLIENT and CAPCO agree that CAPCO will have FULL RECOURSE against CLIENT and CLIENT shall be liable to repay to CAPCO any amount paid by CAPCO to CLIENT in consideration for
the sale, transfer, and assignment of Accounts. 

  

	15.	 	All Accounts shall be the sole property of CAPCO, but if for any reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of such payment,
shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear the address of
CAPCO’s LOCK BOX as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on ALL Accounts shall be made to the CAPCO LOCK BOX or other repository authorized in writing by CAPCO.

  

	16.	 	CLIENT will furnish CAPCO periodic statements, accounts receivable agings, journals, bank records, and other information as requested by CAPCO from time to time.

  

	17.	 	CLIENT will not pledge the credit of CAPCO to any other person, or business for any purpose whatsoever. 

  

	18.	 	CLIENT is properly licensed and authorized to operate the business of Jones Soda Co., under the trade name of same, and CLIENT’S trade name has been properly filed and
published as required by the laws of the State of Washington. 

  

	19.	 	CLIENT’S business is solvent. 

  

	20.	 	CLIENT will not sell Accounts, or pledge Accounts to any party, except to CAPCO for the period of this Agreement unless specific Accounts are subordinated and released by CAPCO in
writing. 

  

	21.	 	CLIENT will not transfer, pledge, or give a security interest of the Assets sold or Collateral granted to CAPCO to any other party. 

  

	22.	 	CLIENT will not change, or modify the terms of the original sold and assigned Account with Customer unless CAPCO first consents to such change in writing. CAPCO agrees to provide a
prompt response to CLIENT request for modification or change with respect to an Assigned Account. For example, CLIENT may not extend credit to a Customer beyond Net 30 days or the time set forth on the face of the sold and Assigned Account
without prior written consent from CAPCO. 

  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $400.00 in total for any one Customer. 

  
  

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	24.	 	POWER OF ATTORNEY: In order to carry out this Agreement and avoid unnecessary notification of Customers. CLIENT irrevocably appoints CAPCO, or any person designated by CAPCO, as its
special attorney in fact, or agent, with power to: 

  
 a. strike out CLIENT’S address on all Accounts mailed to Customers and put on CAPCO’s address. 
  
 b. receive, direct and forward, open, and dispose of all mail addressed to CLIENT, or to CLIENT’S fictitious trade name via CAPCO’s address.

  
 c. endorse the name of CLIENT, or CLIENT’S fictitious
trade name on any checks or other evidences of payment that may come into the possession of CAPCO on Accounts purchased by CAPCO and on any other documents relating to any of the Accounts or to assigned Collateral. 
  
 d. in CLIENT’S name, or otherwise, demand, sue for, collect, and give
release for any and all monies due, or to become due on Accounts sold and assigned hereunder. 
  
 e. do any and all things necessary and proper to carry out the purpose intended by this Agreement. 
  
 f. execute any documents necessary to perfect or to continue any Security interest and without further authorization from CLIENT file a carbon,
photograph, facsimile, or other reproduction of any financing statement for use as a financing statement 
  
 The authority granted CAPCO shall remain in full force and effect until all Accounts are paid in full and any indebtedness of CLIENT to CAPCO is
discharged. 
  
 CAPCO COVENANTS:

  

	25.	 	CAPCO reserves the sum of ($3,000,000.00) Three Million and 00/100 for the purchase of ALL of CLIENT’S Accounts. These funds are available daily at CLIENT’S option,
subject to restriction as governed by the Advance Formula. Daily availability will be communicated to CLIENT via CAPCO’S Availability / Advance Request. 

  

	25.	 	This Agreement shall have an initial term ending with the first full (12) Twelve calendar months and unless terminated by either party giving not less than thirty (30) days prior
written notice. 

  

	27.	 	STATEMENT OF Acceptable/Eligible Accounts: CAPCO shall identify in writing all Acceptable/Eligible Accounts and provide to CLIENT, upon request, a written statement thereof (Weekly
Aging Report). 

  
 ACCOUNTING
& FEES 
  

	28.	 	Funds advanced by CAPCO to CLIENT are subject to daily fee of Cupertino National Bank Prime Rate + 4.000% /360 (equivalent to a monthly discount fee of Cupertino National Bank Prime
Rate + 4.000% /12 ) per cent calculated on the daily balance (as reported an the CLIENT Liability Detail Report) owing to CAPCO. This period will usually be 1 calendar day except for weekends and or weeks where holidays or other non-operating
days prevent the fee from being taken on a daily basis. 

  

	29.	 	CAPCO will provide to the CLIENT daily, via fax, an advance and availability request. This report must be acknowledged and returned, via fax, to CAPCO no later than 11:30AM if a
deposit or wire transfer is to be made the same date as the request form was issued to the CLIENT by CAPCO. 

  

	30.	 	PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s Outstanding Balance daily following a 3 (Three) business day hold to allow for the application of
collected funds. 

  

	31.	 	DISPUTED ACCOUNT: CLIENT will immediately notify CAPCO of any Account subject to a Customer Dispute (See Paragraph 10 for definition) of any kind whatsoever and said Account shall
be removed as an Acceptable/Eligible Account. 

  

	32.	 	INVOICING ERRORS: Mistaken, incorrect and/or erroneous invoicing, submitted by CLIENT to CAPCO may at CAPCO’s discretion be deemed a Customer Disputed sold and Assigned Account
and shall be removed as an Acceptable/Eligible Account. 

  
 COLLATERAL: 
  

	33.	 	As Collateral for the payment of any indebtedness now owing, or in the future owing, by CLIENT to CAPCO, CLIENT hereby grants to CAPCO a security interest in the following property:

  
 a. See Exhibit A attached. 

 

	34.	 	CLIENT will maintain such insurance covering CLIENT’S business and/or the property of CLIENT’S Customers as is customary for businesses similar to the business of CLIENT.

  

	35.	 	CLIENT shall complete any and all documents required to provide CAPCO a perfected security interest/lien in the Collateral pledged to CAPCO. 

  
 DEFAULT: 
  

	36.	 	Any one or more of the following shall constitute an event of default: 

  
 a. If CLIENT shall fail to pay any amount of indebtedness to CAPCO when owing; 
  

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 b. If CLIENT shall be in breach of any term, provision, Warranty, or representation under this Agreement,
or any other agreement related hereto; 
  
 c. If bankruptcy or
insolvency proceedings shall be instituted by or against CLIENT. 
  
 d. If the Collateral shall be attached, levied upon, seized in any legal proceeding, and not released within 5 working days thereof; 
  
 e. If CLIENT shall cease doing business and there shall exist any indebtedness or commitments by CLIENT to CAPCO; 
  
 f. Any Accounts, documents, statements, or other writings submitted by
CLIENT to CAPCO prove false or inaccurate in any material respect; 
  
 g. If CLIENT has contributed to, or aggravated Account debtor’s problem, insolvency, and/or said Account debtor’s ability and/or willingness to pay any Accounts; 
  
 h. If any unpaid judgment or tax lien exists against CLIENT; 
  
 i. If CAPCO with reasonable cause and in good faith determines that it’s purchased asset or collateral is impaired for
any reason whatsoever; 
  
 j. Terminating prior to end of initial
term; 
  
 k. Any change in CLIENT’S place of business, name,
legal entity, corporate structure, record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or proposed change in ownership in excess of
twenty five percent, (25%), of outstanding shares. 
  
 REMEDIES AFTER DEFAULT: 
  

	37.	 	In the event of any default CAPCO may do any one or more of the following: 

  
 a. Declare any indebtedness secured hereby immediately due and payable; 
  
 b. Notify any and all Customers and take possession of the Accounts and Collateral and collect any receivables or funds paid
to CLIENT all without judicial process; 
  
 c. Require CLIENT to
assemble the Collateral and the records pertaining to receivables or other assets pledged as collateral, and make them available to CAPCO, at a place designated by CAPCO; 
  
 d. Enter the premises of CLIENT and take possession of the Collateral and of the records pertaining to the receivables and
any other Collateral; 
  
 e. Grant extensions, compromise claims
and settle receivables for less than face value, all without prior notice to CLIENT; 
  
 f. Use, in connection with any assembly or disposition of the Collateral, any trademark, trade name, trade style, copyright, patent right or technical process used or utilized by CLIENT; 
  
 g. Return any surplus realized to CLIENT after deduction of reasonable
expenses, attorney’s fees, attorney’s fees on appeal, collection costs, independent third party auditors, incurred by CAPCO in resolving said default; 
  
 h. Hold CLIENT liable for any deficiency. 
  
 i. Establish a reserve from the collection of Accounts to meet reasonable legal expenses associated with a future defense
resulting from an action brought against CAPCO by CLIENT, CLIENT’s customer, or other third party, as a result of an action of default. 
  
 j. Injunction against CLIENT taking any action with regard to the Accounts or Collateral. 
  
 k. CAPCO is authorized by CLIENT to receive, direct and forward, open, and dispose of all mail addressed to CLIENT at any
address used by CLIENT to receive mail. 
  
 GENERAL: 
  

	38.	 	After termination CLIENT remains fully responsible to CAPCO for any indebtedness existing, or which may yet arise in connection with Accounts that remain unpaid.

  

	39.	 	If during the term hereof CLIENT fails to make any payment required, CAPCO may at its discretion pay the same and charge CLIENT therefore. 

  

	40.	 	CLIENT will not, under any circumstances, or in any manner whatsoever, interfere with any of CAPCO’s rights under this Agreement. 

  

	41.	 	TAX COMPLIANCE: CLIENT will furnish CAPCO upon request satisfactory proof of payment and/or compliance with all Federal, State and/or Local tax requirements.

  

	42.	 	NOTICE OF LEVY: CLIENT will promptly notify CAPCO of any attachment or any other legal process levied against CLIENT. 

  

	43.	 	LEGAL FEES: The losing party will pay any and all legal expenses and reasonable attorney’s fees, paralegal fees, staff overtime expense, travel costs, costs on appeal, or other
reasonable collection costs, that the prevailing party may incur as a result of either CLIENT or CAPCO enforcing this Agreement one against the ‘ other. 

  

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	44.	 	HOLD HARMLESS: CLIENT shall hold CAPCO harmless against any liability, damages; toss, attorneys’ fees and costs of any type due to any action by a Customer arising from
CAPCO’S collecting or attempting to collect any Accounts so long as these collections are performed in a commercially reasonable manner and in compliance with all applicable laws, rules and regulations. CLIENT maintains the primary
responsibility for collections efforts, until the occurrence of an event of default. 

  

	45.	 	BINDING ON FUTURE PARTIES: This Agreement inures to the benefit of and is binding upon the heirs, executors, administrators, successors and assigns of the parties thereto.

  

	46.	 	CUMULATIVE RIGHTS: All rights, remedies and powers granted to CAPCO in this Agreement, or in any note, or other agreement given by CLIENT to CAPCO, are cumulative and may be
exercised singularly or concurrently with such other rights as CAPCO may have. These rights may be exercised from time to time as to all or any part of the pledged Collateral as CAPGO in its discretion may determine. 

  

	47.	 	WRITTEN WAIVER: CAPCO may not waive its rights and remedies unless the waiver is in writing and signed by CAPCO. A waiver by CAPCO of a right, or remedy under this Agreement on one
occasion is not a waiver of the right, or remedy on any subsequent occasion. 

  

	48.	 	WASHINGTON LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. CLIENT hereby consents to the exclusive jurisdicfon of the
State of Washington in any dispute arising hereunder or related hereto, Venue for any actions shall be in King Co. Washington. 

  

	49.	 	INVALID PROVISIONS: If any provision of this Agreement shall be declared illegal or contrary to law, it is agreed that such provision shall be disregarded and this Agreement shall
continue in force as though such provision had not been incorporated herein. 

  

	50.	 	ENTIRE AGREEMENT: This instrument contains the entire Agreement between the parties. Any addendum or modification hereto will be signed by both parties and attached hereto.

  

	51.	 	EFFECTIVE: This Agreement becomes effective when it is accepted and executed by the authorized officers of CAPCO. 

  

	52.	 	Execution of this document may contain multiple signature pages; each shall be considered, when combined, as one signed and executed document. 

  
 Executed the 14th day of May, 2003 at Seattle, Washington. 
  

	JONES SODA CO.
		
	 By:
	 	 /s/    PETER VAN STOLK
        

	 Title:
	 	 CEO / President         

		
	 By:
	 	 /s/    JENNIFER CUE
        

	 Title:
	 	 COO / CFO         

  
 CAPCO Financial Company, a division
of Cupertino National Bank 
  
 Accepted this
19th day of May, 2003 at Bellevue, Washington 
  

	 By:
	 	 /s/    JENNIFER
DAILY        

	 Title:
	 	 Vice President         

  

 Page 5 

 Line of Credit 
 Jones Soda Co. 
 EXHIBIT “A” 
  
 All Accounts, contract rights, chattel paper, documents, instruments and general intangibles
now owned or hereafter acquired and proceeds, thereof: 
  
 All right, title, and
interest in inventory, raw materials, work in progress and finished goods now owned or hereafter acquired and products and proceeds thereof: 
  

 Page 6 

 AMENDMENT #1 
 TO CAPCO SECURITY AGREEMENT 
 May 14, 2003 
  
 DEFINITIONS: 
 Paragraph 3 as follows: 
 3. “Advance Formula” means the
maximum amount available to Client from CAPCO for the purchase of All Accounts will not exceed 80.00% of acceptable/eligible accounts. 
  
 Is replaced by: 
  
 3. “Advance Formula” means the maximum amount available to Client from CAPCO for the purchase of All Accounts will not exceed 80.00% of acceptable/eligible accounts PLUS up to 50% against acceptable
inventory not to exceed 110% of acceptable/eligible accounts. 
  
 Add Paragraph
4.1 as follows: 
 4.1 “Eligible Inventory” shall be defined as: Finished goods Inventory reported to CAPCO on a monthly basis, and
certified to CAPCO in accordance with paragraph 12.1 below. 
  
 CLIENT COVENANTS: 
 Paragraph 11 as follows: 
  
 CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop
notice(s), or bonded stop notice(s) securing payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and
verification by CAPCO. CAPCO is not obligated to advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide the original Assigned Account (Invoice) together with one copy
thereof, a copy of the bill of lading contract, purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT. 
  
 Is replaced by: 
  
 CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop
notice(s), or bonded stop notice(s) securing payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and
verification by CAPCO. CAPCO is not obligated to advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide a copy of the original Assigned Account (Invoice) a copy of the
bill of lading contract, purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT, as requested by CAPCO. 
  
 Add Paragraph 12.1 as follows: 
 12.1 CLIENT agrees to provide CAPCO with monthly certifications of the quantity and value (based on the lower of cost or market applied on a first in first out basis) of
Eligible Inventory in a form satisfactory to CAPCO. 
  
 Paragraph 15 as
follows: 
  
 All Accounts shall be the sole property of CAPCO, but if for any
reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of such payment, shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or
draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear the address of CAPCO’S LOCK BOX as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on
ALL Accounts shall be made to the CAPCO LOCK BOX or other repository authorized in writing by CAPCO. 
  

 Page 1 

 Is replaced by: 
  
 All Accounts shall be the sole property of CAPCO, but if for any reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of
such payment, shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear
the address of a Bank Lock Box acceptable to CAPCO; as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on ALL Accounts shall be made to the Bank Lock Box or other repository authorized in
writing by CAPCO. 
  
 Paragraph 20 as follows: 
  
 CLIENT will not sell Accounts, or pledge Accounts to any party, except to CAPCO for the
period of this Agreement unless specific Accounts are subordinated and released by CAPCO in writing. 
  
 Is replaced by: 
  
 CLIENT will not sell
Accounts, or pledge Accounts to any party, except to CAPCO for the period of this Agreement unless specific Accounts are subordinated and released by CAPCO in writing. CAPCO agrees not to resell CLIENT’s accounts except in the event of a
default by CLIENT. 
  
 Paragraph 23 as follows: 
  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $400.00 in total for any one Customer. 

  
 Is replaced by: 
  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $2500.00 in total for any one Customer. 

  
  
 ACCOUNTING & FEES: 
 Paragraph 30 as follows: 
  
 PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s
Outstanding Balance daily following a 3 (Three) business day hold to allow for the application of collected funds. 
  
 Is replaced by: 
  
 PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s Outstanding Balance daily following a 3 (Three) business day hold to allow for the application of collected funds. Funds received via
wire transfer will be applied the day after receipt. 
  
 In the event CLIENT has
fully paid all amounts due CAPCO under this agreement including but not limited to fees, expenses and advances, CAPCO agrees to promptly remit any funds collected in excess of the amounts due to CAPCO to CLIENT at CLIENT’s request. 

 
 At CLIENTS request (and subject to payment of all amounts fees due to CAPCO) CAPCO agrees
to promptly terminate the agreement and re convey all right title and interest in the Accounts to CLIENT. In the event CLIENT notifies CAPCO of its intention to terminate the agreement and CAPCO has been fully paid all amounts due CAPCO, said notice
of termination shall not be considered an event of default. 
  
 DEFAULT: 
 Paragraph 36k as follows: 
  
 k. Any change in CLIENT’S place of business, name, legal entity, corporate structure, record-keeping location, and/or as to any
additional place of business, or expiration of any special license(s), or transfer of assets, or 
  

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 technology, to a third party, or proposed change in ownership in excess of twenty five percent, (25%), of outstanding
shares. 
  
 Is replaced by: 
  
 k. Any change in CLIENT’S place of business, name, legal entity, corporate structure,
record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or change in ownership in excess of twenty five percent, (25%), of outstanding
shares. CLIENT will not be deemed to be in default, if CLIENT pays to CAPCO all amounts due, concurrent with any ownership change in excess of twenty-five percent (25%) of outstanding shares. 
  
 This amendment is effective and applicable to invoices purchased after May 14, 2003. All
other terms, covenants and conditions will remain in effect and unchanged. 
  

	 JONES SODA CO.

		
	 By:
	 	 JENNIFER CUE

	 Title:
	 	 CFO / COO

  
  

	 CAPCO Financial Company, a
 division of Cupertino National Bank

		
	 By:
	 	 JENNIFER DAILY

	 Title:
	 	 Vice President

  
  

 Page 3Contract of Sale Security Agreement

 EXHIBIT 10.2 
  
 CONTRACT OF SALE 
 SECURITY AGREEMENT 
  
 This Contract of Sale and Security
Agreement dated for purposes of reference May 14, 2003; is between the undersigned, Jones Soda (USA), Inc., hereinafter called “CLIENT”, and CAPCO Financial Company, a division of Cupertino National Bank hereinafter called
“CAPCO”, agree as follows: 
  
 PURPOSE OF AGREEMENT: 
  

	1.	 	CLIENT desires to obtain short-term financing by selling, to CAPCO ALL Accounts receivable. CAPCO agrees to Purchase CLIENTs Accounts from time to time at a discount below
face value, utilizing an advance formula for the purchase of ALL Accounts based upon advances against Acceptable/Eligible Accounts. It is clearly understood by both parties that ALL Accounts of CLIENT are to be sold to CAPCO.

  
 DEFINITIONS: 

 

	2.	 	“Account” means any right of payment for goods sold, or leased, and delivered, or services rendered, any specific transaction, or any right of payment

  

	3.	 	“Advance Formula” means the maximum amount available to CLIENT from CAPCO for the purchase of All Accounts will not exceed 80% of Acceptable/Eligible Accounts.

  

	4.	 	“Acceptable/Eligible Account” means an Account conforming to the Warranties and terms set forth herein that has not been outstanding for more than 90 DAYS from the date of
invoice, has been underwritten and approved by CAPCO, and has not been reduced from the original amount billed by, credit memo, offset, adjustment of any kind, or partial payment subsequent to invoice date. 

  

	5.	 	“Customer” means CLIENT’S Customer or the Account debtor. 

  

	6.	 	“CLIENT” means the seller of All Accounts. 

  

	7.	 	“Collateral” means the intangible or tangible property given as security to CAPCO by CLIENT for any obligations and liabilities of CLIENT to CAPCO under the Agreement.

  

	8.	 	“Warrant” means to guarantee, as a material element of this Agreement. 

  

	9.	 	“Credit Problem” means Customer is unable to pay his debts because of problems or insolvency. 

  

	10.	 	“Customer Dispute” means any claim by Customer against CLIENT, of any kind whatsoever, valid or invalid, that reduces the amount collectible from Customer by CAPCO.

  
 CLIENT COVENANTS:

  

	11.	 	CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop notice(s), or bonded stop notice(s) securing
payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and verification by CAPCO. CAPCO is not obligated to
advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide the original Assigned Account (Invoice) together with one copy thereof, a copy of the bill of lading contract,
purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT. 

  

	12.	 	CLIENT shall prepare and give to CAPCO proper written assignments of Accounts, mechanic’s lien(s) on forms provided by CAPCO. The execution of said assignments shall transfer
to CAPCO all of CLIENTs right, title and ownership to ALL Accounts. CLIENT or CAPCO by this agreement, will properly mark Accounts, as assigned and sold to CAPCO, and CAPCO is authorized to notify Customer of said sale and assignment.

  

	13.	 	CLIENT represents and Warrants to CAPCO that: 

  
 a. CLIENT is sole and absolute owner of any and all Accounts and mechanic’s liens and rights to payment under any stop notices, or bonded stop
notices, sold and assigned hereunder, and CLIENT has full legal right to make said sale, assignment, and/or transfer. 
  
 b. all Accounts sold to CAPCO are an accurate statement of a bonafide sale, delivery and acceptance of merchandise, or performance of service by CLIENT to
/ for Account-debtor. Accounts are not contingent upon the fulfillment by CLIENT and each Account-debtor’s business is believed to be solvent. The terms for payment of said Accounts are Net 30 days or as expressly set forth on the face of
said sold and assigned Accounts, and the payment of said Accounts are not continent upon the fulfillment by CLIENT of any further performance of any nature whatsoever. CLIENT shall accept no returns and shall grant no allowances or credits to any
sold and Assigned Account of any Account-debtor without the prior written approval of CAPCO. 
  
 c. There are no known setoffs, Customer Disputes, adverse claims, defenses, and/or liens whatsoever against the payment of Accounts, and Account’s
mechanic’s liens have not been previously assigned or encumbered by 
  

 Page 1 

 CLIENT in any manner whatsoever. CLIENT will, immediately upon sale of Accounts to CAPCO make proper
entries on its books and records disclosing the absolute sale of Accounts to CAPCO and CLIENT will post no payment unless it is reflected in a payment report from CAPCO. 
  
 d. CLIENT will promptly notify CAPCO in writing of any proposed change in CLIENT’S place of business, name, legal
entity, corporate structure, record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or proposed change in ownership in excess of twenty
five percent, (25%), of outstanding shares; 
  
 e. CLIENT does
not own, control, manage, participate in management; or have any involvement and/or association whatsoever with the business of any Account-debtor related to any Accounts sold and assigned hereunder; 
  
 f. There are no financing statements now on file in any public office
governing, any Account, Inventory or work in process of CLIENT in which CLIENT is named in or has signed as the debtor, except the financing statement or statements filed or to be filed in respect to this Agreement, or those statements now on file
that have been disclosed in writing by CLIENT to CAPCO. CLIENT will not execute any financing statements pledging Accounts receivables, inventory or work in process, in favor of any other person or entity, excepting CAPCO, for the term of this
Agreement; 
  
 g. CLIENT’S taxes are not delinquent nor has
CLIENT been subject to a tax levy by any governmental entity nor are there now on file in any public office tax liens affecting CLIENT other than those delinquencies, levies and/or liens which have been disclosed by CLIENT to CAPCO; 
  
 h. All records, statements, books, or other documents shown to CAPCO by
CLIENT at any time, either before, or after the signing of the Agreement are true and accurate; 
  
 i. CLIENT has served or caused to be served any and all preliminary 10-day notices required by law to perfect or enforce any mechanic’s lien for All
Accounts to insure perfection of ownership for CAPCO and the information contained on those preliminary 10-day notices is true, correct, and properly recorded, to Seller’s knowledge and belief; 
  
 j. Waivers and releases for all labor, services, equipment, or material of
CLIENT and others will be submitted on CAPCO’s form concurrent with Accounts. 
  

	14.	 	CLIENT and CAPCO agree that CAPCO will have FULL RECOURSE against CLIENT and CLIENT shall be liable to repay to CAPCO any amount paid by CAPCO to CLIENT in consideration for
the sale, transfer, and assignment of Accounts. 

  

	15.	 	All Accounts shall be the sole property of CAPCO, but if for any reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of such payment,
shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear the address of
CAPCO’s LOCK BOX as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on ALL Accounts shall be made to the CAPCO LOCK BOX or other repository authorized in writing by CAPCO.

  

	16.	 	CLIENT will furnish CAPCO periodic statements, accounts receivable agings, journals, bank records, and other information as requested by CAPCO from time to time.

  

	17.	 	CLIENT will not pledge the credit of CAPCO to any other person, or business for any purpose whatsoever. 

  

	18.	 	CLIENT is properly licensed and authorized to operate the business of Jones Soda (USA), Inc., under the trade name of same, and CLIENT’S trade name has been properly filed and
published as required by the laws of the State of Washington. 

  

	19.	 	CLIENT’S business is solvent. 

  

	20.	 	CLIENT will not sell Accounts, or pledge Accounts to any party, except to CAPCO for the period of this Agreement unless specific Accounts are subordinated and released by CAPCO in
writing. 

  

	21.	 	CLIENT will not transfer, pledge, or give a security interest of the Assets sold or Collateral granted to CAPCO to any other party. 

  

	22.	 	CLIENT will not change, or modify the terms of the original sold and assigned Account with Customer unless CAPCO first consents to such change in writing. CAPCO agrees to provide a
prompt response to CLIENT request for modification or change with respect to an Assigned Account. For example, CLIENT may not extend credit to a Customer beyond Net 30 days or the time set forth on the face of the sold and Assigned Account
without prior written consent from CAPCO. 

  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $400.00 in total for any one Customer. 

  

 Page 2 

	24.	 	POWER OF ATTORNEY: In order to carry out this Agreement and avoid unnecessary notification of Customers. CLIENT irrevocably appoints CAPCO, or any person designated by CAPCO, as its
special attorney in fact, or agent, with power to: 

  
 a. strike out CLIENT’S address on all Accounts mailed to Customers and put on CAPCO’s address. 
  
 b. receive, direct and forward, open, and dispose of all mail addressed to CLIENT, or to CLIENT’S fictitious trade name via CAPCO’s address.

  
 c. endorse the name of CLIENT, or CLIENT’S fictitious
trade name on any checks or other evidences of payment that may come into the possession of CAPCO on Accounts purchased by CAPCO and on any other documents relating to any of the Accounts or to assigned Collateral. 
  
 d. in CLIENT’S name, or otherwise, demand, sue for, collect, and give
release for any and all monies due, or to become due on Accounts sold and assigned hereunder. 
  
 e. do any and all things necessary and proper to carry out the purpose intended by this Agreement. 
  
 f. execute any documents necessary to perfect or to continue any Security interest and without further authorization from CLIENT file a carbon,
photograph, facsimile, or other reproduction of any financing statement for use as a financing statement 
  
 The authority granted CAPCO shall remain in full force and effect until all Accounts are paid in full and any indebtedness of CLIENT to CAPCO is
discharged. 
  
 CAPCO COVENANTS:

  

	25.	 	CAPCO reserves the sum of ($3,000,000.00) Three Million and 00/100 for the purchase of ALL of CLIENT’S Accounts. These funds are available daily at CLIENT’S option,
subject to restriction as governed by the Advance Formula. Daily availability will be communicated to CLIENT via CAPCO’S Availability / Advance Request. 

  

	25.	 	This Agreement shall have an initial term ending with the first full (12) Twelve calendar months and unless terminated by either party giving not less than thirty (30) days prior
written notice. 

  

	27.	 	STATEMENT OF Acceptable/Eligible Accounts: CAPCO shall identify in writing all Acceptable/Eligible Accounts and provide to CLIENT, upon request, a written statement thereof (Weekly
Aging Report). 

  
 ACCOUNTING
& FEES 
  

	28.	 	Funds advanced by CAPCO to CLIENT are subject to daily fee of Cupertino National Bank Prime Rate + 4.000% /360 (equivalent to a monthly discount fee of Cupertino National Bank Prime
Rate + 4.000% /12 ) per cent calculated on the daily balance (as reported an the CLIENT Liability Detail Report) owing to CAPCO. This period will usually be 1 calendar day except for weekends and or weeks where holidays or other non-operating
days prevent the fee from being taken on a daily basis. 

  

	29.	 	CAPCO will provide to the CLIENT daily, via fax, an advance and availability request. This report must be acknowledged and returned, via fax, to CAPCO no later than 11:30AM if a
deposit or wire transfer is to be made the same date as the request form was issued to the CLIENT by CAPCO. 

  

	30.	 	PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s Outstanding Balance daily following a 3 (Three) business day hold to allow for the application of
collected funds. 

  

	31.	 	DISPUTED ACCOUNT: CLIENT will immediately notify CAPCO of any Account subject to a Customer Dispute (See Paragraph 10 for definition) of any kind whatsoever and said Account shall
be removed as an Acceptable/Eligible Account. 

  

	32.	 	INVOICING ERRORS: Mistaken, incorrect and/or erroneous invoicing, submitted by CLIENT to CAPCO may at CAPCO’s discretion be deemed a Customer Disputed sold and Assigned Account
and shall be removed as an Acceptable/Eligible Account. 

  
 COLLATERAL: 
  

	33.	 	As Collateral for the payment of any indebtedness now owing, or in the future owing, by CLIENT to CAPCO, CLIENT hereby grants to CAPCO a security interest in the following property:

  
 a. See Exhibit A
attached. 
  

	34.	 	CLIENT will maintain such insurance covering CLIENT’S business and/or the property of CLIENT’S Customers as is customary for businesses similar to the business of CLIENT.

  

	35.	 	CLIENT shall complete any and all documents required to provide CAPCO a perfected security interest/lien in the Collateral pledged to CAPCO. 

  

	DEFAULT:	 	

  

	36.	 	Any one or more of the following shall constitute an event of default: 

  
 a. If CLIENT shall fail to pay any amount of indebtedness to CAPCO when owing; 
  

 Page 3 

 b. If CLIENT shall be in breach of any term, provision, Warranty, or representation under this Agreement,
or any other agreement related hereto; 
  
 c. If bankruptcy or
insolvency proceedings shall be instituted by or against CLIENT. 
  
 d. If the Collateral shall be attached, levied upon, seized in any legal proceeding, and not released within 5 working days thereof; 
  
 e. If CLIENT shall cease doing business and there shall exist any indebtedness or commitments by CLIENT to CAPCO; 
  
 f. Any Accounts, documents, statements, or other writings submitted by
CLIENT to CAPCO prove false or inaccurate in any material respect; 
  
 g. If CLIENT has contributed to, or aggravated Account debtor’s problem, insolvency, and/or said Account debtor’s ability and/or willingness to pay any Accounts; 
  
 h. If any unpaid judgment or tax lien exists against CLIENT; 
  
 i. If CAPCO with reasonable cause and in good faith determines that it’s purchased asset or collateral is impaired for
any reason whatsoever; 
  
 j. Terminating prior to end of initial
term; 
  
 k. Any change in CLIENT’S place of business, name,
legal entity, corporate structure, record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or proposed change in ownership in excess of
twenty five percent, (25%), of outstanding shares. 
  
 REMEDIES AFTER DEFAULT: 
  

	37.	 	In the event of any default CAPCO may do any one or more of the following: 

  
 a. Declare any indebtedness secured hereby immediately due and payable; 
  
 b. Notify any and all Customers and take possession of the Accounts and Collateral and collect any receivables or funds paid
to CLIENT all without judicial process; 
  
 c. Require CLIENT to
assemble the Collateral and the records pertaining to receivables or other assets pledged as collateral, and make them available to CAPCO, at a place designated by CAPCO; 
  
 d. Enter the premises of CLIENT and take possession of the Collateral and of the records pertaining to the receivables and
any other Collateral; 
  
 e. Grant extensions, compromise claims
and settle receivables for less than face value, all without prior notice to CLIENT; 
  
 f. Use, in connection with any assembly or disposition of the Collateral, any trademark, trade name, trade style, copyright, patent right or technical process used or utilized by CLIENT; 
  
 g. Return any surplus realized to CLIENT after deduction of reasonable
expenses, attorney’s fees, attorney’s fees on appeal, collection costs, independent third party auditors, incurred by CAPCO in resolving said default; 
  
 h. Hold CLIENT liable for any deficiency. 
  
 i. Establish a reserve from the collection of Accounts to meet reasonable legal expenses associated with a future defense
resulting from an action brought against CAPCO by CLIENT, CLIENT’s customer, or other third party, as a result of an action of default. 
  
 j. Injunction against CLIENT taking any action with regard to the Accounts or Collateral. 
  
 k. CAPCO is authorized by CLIENT to receive, direct and forward, open, and dispose of all mail addressed to CLIENT at any
address used by CLIENT to receive mail. 
  

	GENERAL:	 	

  

	38.	 	After termination CLIENT remains fully responsible to CAPCO for any indebtedness existing, or which may yet arise in connection with Accounts that remain unpaid.

  

	39.	 	If during the term hereof CLIENT fails to make any payment required, CAPCO may at its discretion pay the same and charge CLIENT therefore. 

  

	40.	 	CLIENT will not, under any circumstances, or in any manner whatsoever, interfere with any of CAPCO’s rights under this Agreement. 

  

	41.	 	TAX COMPLIANCE: CLIENT will furnish CAPCO upon request satisfactory proof of payment and/or compliance with all Federal, State and/or Local tax requirements.

  

	42.	 	NOTICE OF LEVY: CLIENT will promptly notify CAPCO of any attachment or any other legal process levied against CLIENT. 

  

	43.	 	LEGAL FEES: The losing party will pay any and all legal expenses and reasonable attorney’s fees, paralegal fees, staff overtime expense, travel costs, costs on appeal, or other
reasonable collection costs, that the prevailing party may incur as a result of either CLIENT or CAPCO enforcing this Agreement one against the ‘other. 

  

 Page 4 

	44.	 	HOLD HARMLESS: CLIENT shall hold CAPCO harmless against any liability, damages; toss, attorneys’ fees and costs of any type due to any action by a Customer arising from
CAPCO’S collecting or attempting to collect any Accounts so long as these collections are performed in a commercially reasonable manner and in compliance with all applicable laws, rules and regulations. CLIENT maintains the primary
responsibility for collections efforts, until the occurrence of an event of default. 

  

	45.	 	BINDING ON FUTURE PARTIES: This Agreement inures to the benefit of and is binding upon the heirs, executors, administrators, successors and assigns of the parties thereto.

  

	46.	 	CUMULATIVE RIGHTS: All rights, remedies and powers granted to CAPCO in this Agreement, or in any note, or other agreement given by CLIENT to CAPCO, are cumulative and may be
exercised singularly or concurrently with such other rights as CAPCO may have. These rights may be exercised from time to time as to all or any part of the pledged Collateral as CAPGO in its discretion may determine. 

  

	47.	 	WRITTEN WAIVER: CAPCO may not waive its rights and remedies unless the waiver is in writing and signed by CAPCO. A waiver by CAPCO of a right, or remedy under this Agreement on one
occasion is not a waiver of the right, or remedy on any subsequent occasion. 

  

	48.	 	WASHINGTON LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. CLIENT hereby consents to the exclusive jurisdicfon of the
State of Washington in any dispute arising hereunder or related hereto, Venue for any actions shall be in King Co. Washington. 

  

	49.	 	INVALID PROVISIONS: If any provision of this Agreement shall be declared illegal or contrary to law, it is agreed that such provision shall be disregarded and this Agreement shall
continue in force as though such provision had not been incorporated herein. 

  

	50.	 	ENTIRE AGREEMENT: This instrument contains the entire Agreement between the parties. Any addendum or modification hereto will be signed by both parties and attached hereto.

  

	51.	 	EFFECTIVE: This Agreement becomes effective when it is accepted and executed by the authorized officers of CAPCO. 

  

	52.	 	Execution of this document may contain multiple signature pages; each shall be considered, when combined, as one signed and executed document. 

  
 Executed the 14th day of May, 2003 at Seattle, Washington.

  
 JONES SODA (USA), INC.

  

	 By:
	 	 /s/    PETER VAN
STOLK        

	 Title:
	 	 CEO / President

		
	 By:
	 	 JENNIFER CUE

	 Title:
	 	 COO / CFO

  
 CAPCO Financial Company, a division
of Cupertino National Bank 
  
 Accepted this
19th day of May, 2003 at Bellevue, Washington 
  

	 By:
	 	 /s/    JENNIFER DAILY
        

	 Title:
	 	 Vice President

  

 Page 5 

 Line of Credit 
 Jones Soda (USA), Inc. 
 EXHIBIT “A” 
  
 All Accounts, contract rights, chattel paper, documents, instruments and general intangibles
now owned or hereafter acquired and proceeds, thereof: 
  
 All right, title, and
interest in inventory, raw materials, work in progress and finished goods now owned or hereafter acquired and products and proceeds thereof: 
  

 Page 6 

 AMENDMENT #1 
 TO CAPCO SECURITY AGREEMENT 
 May 14, 2003 
  
 DEFINITIONS: 
 Paragraph 3 as follows: 
 3. “Advance Formula” means the
maximum amount available to Client from CAPCO for the purchase of All Accounts will not exceed 80.00% of acceptable/eligible accounts. 
  
 Is replaced by: 
  
 3. “Advance Formula” means the maximum amount available to Client from CAPCO for the purchase of All Accounts will not exceed 80.00% of acceptable/eligible accounts PLUS up to 50% against acceptable
inventory not to exceed 110% of acceptable/eligible accounts. 
  
 Add Paragraph
4.1 as follows: 
 4.1 “Eligible Inventory” shall be defined as: Finished goods Inventory reported to CAPCO on a monthly basis, and
certified to CAPCO in accordance with paragraph 12.1 below. 
  
 CLIENT COVENANTS: 
 Paragraph 11 as follows: 
  
 CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop
notice(s), or bonded stop notice(s) securing payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and
verification by CAPCO. CAPCO is not obligated to advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide the original Assigned Account (Invoice) together with one copy
thereof, a copy of the bill of lading contract, purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT. 
  
 Is replaced by: 
  
 CLIENT agrees to sell to CAPCO ALL Accounts Receivable, (Accounts) mechanic’s lien(s), and rights to payment under any stop
notice(s), or bonded stop notice(s) securing payment of those Accounts created by CLIENT in the course of its business, existing as of the date of this agreement or thereafter created during the term of this agreement, subject to approval and
verification by CAPCO. CAPCO is not obligated to advance funds for the purchase of All Accounts from CLIENT. When CLIENT notifies CAPCO of it’s Accounts, CLIENT shall provide a copy of the original Assigned Account (Invoice) a copy of the
bill of lading contract, purchase order, purchase order number, and/or any other requisite supporting documentation corresponding to said Accounts and appropriate to the business of CLIENT, as requested by CAPCO. 
  
 Add Paragraph 12.1 as follows: 
 12.1 CLIENT agrees to provide CAPCO with monthly certifications of the quantity and value (based on the lower of cost or market applied on a first in first out basis) of
Eligible Inventory in a form satisfactory to CAPCO. 
  
 Paragraph 15 as
follows: 
  
 All Accounts shall be the sole property of CAPCO, but if for any
reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of such payment, shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or
draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear the address of CAPCO’S LOCK BOX as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on
ALL Accounts shall be made to the CAPCO LOCK BOX or other repository authorized in writing by CAPCO. 
  

 Page 1 

 Is replaced by: 
  
 All Accounts shall be the sole property of CAPCO, but if for any reason a payment owing on said Accounts shall be paid to CLIENT; CLIENT shall promptly notify CAPCO of
such payment, shall hold any check, draft or money so received in trust and for the benefit of CAPCO, and shall pay over such check or draft in-kind, or money, to CAPCO promptly and without delay. All of CLIENT’S invoices shall bear
the address of a Bank Lock Box acceptable to CAPCO; as the “REMIT TO” address, and CLIENT agrees that ALL remittances for payment on ALL Accounts shall be made to the Bank Lock Box or other repository authorized in
writing by CAPCO. 
  
 Paragraph 20 as follows: 
  
 CLIENT will not sell Accounts, or pledge Accounts to any party, except to CAPCO for the
period of this Agreement unless specific Accounts are subordinated and released by CAPCO in writing. 
  
 Is replaced by: 
  
 CLIENT will not sell
Accounts, or pledge Accounts to any party, except to CAPCO for the period of this Agreement unless specific Accounts are subordinated and released by CAPCO in writing. CAPCO agrees not to resell CLIENT’s accounts except in the event of a
default by CLIENT. 
  
 Paragraph 23 as follows: 
  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $400.00 in total for any one Customer. 

  
 Is replaced by: 
  

	23.	 	NOTICE OF DISPUTE: CLIENT must immediately notify CAPCO of Customer Disputes greater than $2500.00 in total for any one Customer. 

  
 ACCOUNTING & FEES: 
 Paragraph 30 as follows: 
  
 PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s Outstanding Balance daily following a 3 (Three) business day hold to allow for the
application of collected funds. 
  
 Is replaced by: 
  
 PAYMENT PROCESSING: All payments received by CAPCO will be applied to CLIENT’s
Outstanding Balance daily following a 3 (Three) business day hold to allow for the application of collected funds. Funds received via wire transfer will be applied the day after receipt. 
  
 In the event CLIENT has fully paid all amounts due CAPCO under this agreement including but not limited to fees, expenses and advances,
CAPCO agrees to promptly remit any funds collected in excess of the amounts due to CAPCO to CLIENT at CLIENT’s request. 
  
 At CLIENTS request (and subject to payment of all amounts fees due to CAPCO) CAPCO agrees to promptly terminate the agreement and re convey all right title and interest
in the Accounts to CLIENT. In the event CLIENT notifies CAPCO of its intention to terminate the agreement and CAPCO has been fully paid all amounts due CAPCO, said notice of termination shall not be considered an event of default. 
  
 DEFAULT: 
 Paragraph 36k as follows: 
  
 k. Any change in CLIENT’S place of business, name, legal entity, corporate structure, record-keeping location, and/or as to any additional place of business, or
expiration of any special license(s), or transfer of assets, or 
  

 Page 2 

 technology, to a third party, or proposed change in ownership in excess of twenty five percent, (25%), of outstanding
shares. 
  
 Is replaced by: 
  
 k. Any change in CLIENT’S place of business, name, legal entity, corporate structure,
record-keeping location, and/or as to any additional place of business, or expiration of any special license(s), or transfer of assets, or technology, to a third party, or change in ownership in excess of twenty five percent, (25%), of outstanding
shares. CLIENT will not be deemed to be in default, if CLIENT pays to CAPCO all amounts due, concurrent with any ownership change in excess of twenty-five percent (25%) of outstanding shares. 
  
 This amendment is effective and applicable to invoices purchased after May 14, 2003. All
other terms, covenants and conditions will remain in effect and unchanged. 
  

	 JONES SODA (USA), INC. 
	 	 	 	 
					
	By:	 	 /s/    JENNIFER CUE
        

	 	 	 	 	 	 
	 Title:
	 	 CFO / COO

	 	 	 	 	 	 

  

	 CAPCO Financial Company, a
 division of Cupertino National Bank
	 	 	 	 
					
	By:	 	 /s/    JENNIFER DAILY
        

	 	 	 	 	 	 
	 Title:
	 	 Vice President

	 	 	 	 	 	 

  

 Page 3

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