Document:

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                                                                    EXHIBIT 4.12

                                    EXHIBIT B
                                    ---------

                       RESTRICTED STOCK PURCHASE AGREEMENT

      This Restricted Stock Agreement is made as of November 6, 2001, by DAOU
Systems, Inc., a Delaware corporation (the "Company"), and Daniel J. Malcolm
                                            -------
("Malcolm").
  -------

                              Background Statement

      In connection with Malcolm providing services to the Company pursuant to
an Employment Agreement dated November 6, 2001 and effective retroactively to
July 24, 2001 (the "Employment Agreement"), the Company's Board of Directors has
                    --------------------
granted to Malcolm the right to purchase 150,000 restricted shares of Common
Stock of the Company, which are subject to a limited repurchase right (such
shares, as adjusted for stock splits, recapitalizations, combinations and the
like, are hereinafter referred to as the "Restricted Shares"), at a purchase
                                          -----------------
price of $0.52 per share.

                                    Agreement

      The parties, intending to be legally bound, agree as follows:

1.    Grant of Award Subject to Right of Repurchase.

      1.1 Stock Award. The Company hereby agrees to issue to Malcolm 150,000
          -----------
Restricted Shares of its Common Stock upon his payment to the Company of the
purchase price therefor of $0.52 per share, which shall be paid through his
execution and delivery of the promissory note attached hereto. The Restricted
Shares shall be subject to the limitations provided below in this Section 1.

      1.2 Scope of Repurchase Right. The Restricted Shares shall be subject to a
          -------------------------
limited right (but not an obligation) of repurchase by the Company (the "Right
                                                                         -----
of Repurchase"). Malcolm shall not transfer, assign, encumber or otherwise
-------------
dispose of any unvested Restricted Shares, except as provided in the following
sentence. Malcolm may transfer any Restricted Shares, subject to the Right of
Repurchase, (i) by beneficiary designation, will or intestate succession or (ii)
to Malcolm's spouse, children or grandchildren or to a trust or family limited
partnership established by Malcolm for the benefit of Malcolm or Malcolm's
spouse, children or grandchildren, provided in either case that the Transferee
agrees in writing on a form prescribed by the Company to be bound by all
provisions of this Agreement. If Malcolm transfers any Restricted Shares, then
this Section 1 shall apply to the Transferee to the same extent as to Malcolm.

      1.3 Condition Precedent to Exercise. The Right of Repurchase may be
          -------------------------------
exercised at any time during the term hereof and for up to sixty (60) days
following the termination of Malcolm's Employment as that term is defined in the
Employment Agreement.

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     1.4  Lapse of Repurchase Right. Malcolm shall acquire a vested interest in
          -------------------------
and the Company's Right of Repurchase shall lapse with respect to 1/36th of the
Restricted Shares upon Malcolm's completion of each of the next thirty six (36)
months of continuous employment after the date hereof, such that Malcolm would
be fully vested in the Restricted Shares at the expiration of thirty six (36)
months from the date hereof. The Right of Repurchase shall lapse in the event
the Company terminates Malcolm's Employment without Cause (as defined in the
Employment Agreement). In addition, the Right of Repurchase shall lapse with
respect to all remaining Restricted Shares if the Company is subject to a Change
in Control (as defined in the Employment Agreement) before Malcolm's Employment
terminates.

     1.5  Repurchase Cost. If the Company exercises the Right of Repurchase, it
          ---------------
shall pay Malcolm an amount in cash or Cash Equivalents equal to $.52 per share
(equal to the purchase price) for each of the Restricted Shares being
repurchased. "Cash Equivalents" for purposes of this Agreement includes a
              ----------------
reduction of all or part of any unpaid interest and principal of the above
referenced promissory note.

     1.6  Exercise of Repurchase Right. The Right of Repurchase shall be
          ----------------------------
exercisable only by written notice delivered to Malcolm prior to the expiration
of the sixty (60) day period specified in Section 1.3 above. The notice shall
set forth the date on which the repurchase is to be effected. Such date shall
not be more than thirty (30) days after the date of the notice. The
certificate(s) representing the Restricted Shares to be repurchased shall, prior
to the close of business on the date specified for the repurchase, be delivered
to the Company properly endorsed for transfer. The Company shall, concurrently
with the receipt of such certificate(s), pay to Malcolm the purchase price
determined according to Subsection 1.5 above. Payment shall be made in cash (or,
in the Company's sole discretion, by a reduction of any accrued and unpaid
interest or unpaid principal outstanding pursuant to the promissory note). The
Right of Repurchase shall terminate with respect to any Restricted Shares for
which it has not been timely exercised pursuant to this Subsection 1.6.

     1.7  Additional Shares or Substituted Securities. In the event of the
          -------------------------------------------
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) that by reason of such transaction are
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. After each such transaction, appropriate adjustments shall
also be made to the price per share to be paid upon the exercise of the Right of
Repurchase in order to reflect any change in the Company's outstanding
securities effected without receipt of consideration therefor; provided,
however, that the aggregate purchase price payable for the Restricted Shares
shall remain the same.

     1.8  Termination of Rights as Stockholder. If the Company makes available,
          ------------------------------------
at the time and place and in the amount and form provided in this Agreement, the
consideration for the Restricted Shares to be repurchased in accordance with
this Section 1, then after such time the

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person from whom such Restricted Shares are to be repurchased shall no longer
have any rights as a holder of such Restricted Shares (other than the right to
receive payment of such consideration in accordance with this Agreement). Such
Restricted Shares shall be deemed to have been repurchased in accordance with
the applicable provisions hereof, whether or not the certificate(s) therefor
have been delivered as required by this Agreement.

     1.9  Escrow. The certificate(s) for Restricted Shares shall be deposited in
          ------
escrow with the Company to be held in accordance with the provisions of this
Agreement. Any new, substituted or additional securities or other property
described in Section 1.7 above shall immediately be delivered to the Company to
be held in escrow, but only to the extent the Shares are at the time Restricted
Shares. All regular cash dividends on Restricted Shares (or other securities at
the time held in escrow) shall be paid directly to Malcolm and shall not be held
in escrow. Restricted Shares, together with any other assets or securities held
in escrow hereunder, shall be (i) surrendered to the Company for repurchase and
cancellation upon the Company's exercise of its Right of Repurchase or (ii)
released to Malcolm, within ten days of Malcolm's request, to the extent the
Shares are vested, no longer subject to the repurchase right herein and no
longer pledged pursuant to that certain Stock Pledge Agreement, dated of even
date herewith by and between Malcolm and the Company (the "Pledge Agreement")
                                                           ----------------
(but not more frequently than once every six (6) months). In any event, all
Shares that have vested (and any other vested assets and securities attributable
thereto) and are no longer subject to the repurchase right and no longer pledged
pursuant to the Pledge Agreement, shall be released within sixty (60) days after
Malcolm's cessation of Employment.

2.   Representations of Malcolm.  Malcolm hereby represents, warrants,
acknowledges, and agrees that Malcolm has the power and authority to execute and
deliver this Agreement and to perform its obligations.

3.   Representations of the Company.  The Company hereby represents, warrants,
acknowledges, and agrees that:

     3.1  The Company has full corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Company, enforceable
in accordance with its terms and conditions. The Company need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.

     3.2  Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company is subject.

     3.3  When issued upon the terms and conditions of this Agreement (and paid
for as contemplated by this Agreement), the Shares will be validly issued and
fully paid and non-assessable, with no personal liability attached to the
ownership thereof and not subject to any preemptive rights, rights of first
refusal or other similar rights of the stockholders of the Company.

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4.   Miscellaneous.

     4.1  Market Stand-Off. In connection with any underwritten public offering
          ----------------
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, Malcolm shall not, without the prior
written consent of the Company's managing underwriter, (i) lend, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock of the Company ("Stock") or any securities convertible into or exercisable
                       -----
or exchangeable for Stock (whether such shares or any such securities are then
owned by Malcolm or are thereafter acquired), or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Stock or
such other securities, in cash or otherwise. Such restriction (the "Market
                                                                    ------
Stand-Off") shall be in effect for such period of time following the date of the
---------
final prospectus for the offering as may be requested by the Company or such
underwriters. In no event, however, shall such period exceed ninety (90) days.
In the event of the declaration of a stock dividend, a spin-off, a stock split,
an adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of consideration,
any new, substituted or additional securities that are by reason of such
transaction distributed with respect to any shares of Stock subject to the
Market Stand-Off, or into which such shares thereby become convertible, shall
immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect to the
Stock until the end of the applicable stand-off period. The Company's
underwriters shall be beneficiaries of the Agreement set forth in this Section
4.1. Malcolm shall be subject to this Subsection 4.1 only if all of the
directors, officers and any five percent (5%) or greater shareholders of the
Company are subject to similar arrangements.

     4.2  Rights of the Company. The Company shall not be required to (i)
          ---------------------
transfer on its books any Shares that have been sold or transferred in
contravention of this Agreement or (ii) treat as the owner of Shares, or
otherwise to accord voting, dividend or liquidation rights to, any transferee to
whom Shares have been transferred in contravention of this Agreement.

     4.3  Successors and Assigns. Except as otherwise expressly provided to the
          ----------------------
contrary, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the Company and its successors and assigns and be binding upon
Malcolm and Malcolm's legal representatives, heirs, legatees, distributees,
assigns and transferees by operation of law, whether or not any such person has
become a party to this Agreement or has agreed in writing to join herein and to
be bound by the terms, conditions and restrictions hereof.

     4.4  No Retention of Rights. Nothing in this Agreement shall confer upon
          ----------------------
Malcolm any right to continue his employment for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining Malcolm) to terminate Malcolm's
employment at any time and for any reason, with or without cause, or of Malcolm
under any other Agreement between Malcolm and the Company, which rights are
hereby expressly reserved by each.

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     4.5  Tax Election. Subjecting the Shares to a Right of Repurchase may
          ------------
result in adverse tax consequences that may be avoided or mitigated by filing an
election under Code Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code"). Such election may be filed only within thirty (30) days
              ----
after the date of purchase. Malcolm should consult with his tax advisor to
determine the tax consequences of subjecting the Shares to a Right of Repurchase
and the advantages and disadvantages of filing the Code Section 83(b) election.
Malcolm acknowledges that it is Malcolm's sole responsibility, and not the
Company's, to file a timely election under Code Section 83(b), even if Malcolm
requests the Company or its representatives to make this filing Malcolm's
behalf.

     4.6  Legend. All certificates evidencing Restricted Shares shall bear the
          ------
following legends:

          "THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
          TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT
          IN COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN
          COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
          PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT
          GRANTS TO COMPANY CERTAIN REPURCHASE RIGHTS UPON TERMINATION
          OF EMPLOYMENT WITH COMPANY. THE SECRETARY OF COMPANY WILL
          UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE
          HOLDER HEREOF WITHOUT CHARGE."

     4.7  Notice. Any notice required by the terms of this Agreement shall be
          ------
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to Malcolm at the address that Malcolm most
recently provided to the Company.

     4.8  Entire Agreement. This Agreement constitutes the entire contract
          ----------------
between the parties hereto with regard to the subject matter hereof. It
supersedes any other agreements, representations or understandings (whether oral
or written and whether express or implied) relating to the subject matter
hereof.

     4.9  Governing Law. This Agreement shall be governed by, and construed in
          -------------
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and to be performed entirely within such State.

     4.10 Amendments and Waivers. Any term of this Agreement may be amended and
          ----------------------
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the holders of a majority of the then
outstanding shares of the Company's capital stock that is not owned by Malcolm.

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     4.11 Severability. If one or more provisions of this Agreement are held to
          ------------
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision was so excluded and shall be enforceable in accordance with its terms.

     4.12 Counterparts. This Agreement may be executed in two or more
          ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

COMPANY:

DAOU SYSTEMS, INC.

By:  /s/ James Roberto
     -----------------
Name: James Roberto
Its:  Chief Executive Officer

MALCOLM:

/s/ Daniel J. Malcolm
---------------------
Daniel J. Malcolm

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                     EXHIBIT 1 to RESTRICTED STOCK AGREEMENT
                     ---------------------------------------

                               SPOUSE'S AGREEMENT

The undersigned, being the spouse ("Spouse") of Daniel J. Malcolm (the
                                    ------
"Investor"), agrees to be bound by the provisions of this Agreement to the
 --------
extent applicable to the undersigned.

Name: _______________________

IF THE INVESTOR IS AN INDIVIDUAL WHO IS LEGALLY DOMICILED OR A RESIDENT IN THE
STATE OF CALIFORNIA, OR ANY OTHER "COMMUNITY PROPERTY" STATE, THE SPOUSE OF THE
INVESTOR MUST CHECK ONE OF THE FOLLOWING:

  X
_____  The Investor is acquiring the   ____  The Investor is acquiring the
       Shares as community property          Shares as separate property (the
       in one or both names (both            Investor should consult independent
       spouses must sign)                    counsel in making a determination
                                             as to whether he isusing separate
                                             property to purchase the Shares)

/s/ Daniel J. Malcolm
_____________________________________
Signature of the Investor

Daniel J. Malcolm
_____________________________________
Type or print name of the Investor

/s/ Kathleen M. Malcolm
_____________________________________
Signature of Spouse

Kathleen M. Malcolm
_____________________________________
Type or print name of Spouse

IF SEPARATE PROPERTY IS BEING USED TO PURCHASE THE SHARES, THE SPOUSE OF THE
INVESTOR MUST SIGN THE FOLLOWING ACKNOWLEDGEMENT:

I hereby acknowledge that my Spouse is making this investment in the Shares with
his separate property and funds.

_____________________________________
Signature of the Investor's Spouse

_____________________________________
Type or print name of the Investor's Spouse

                                        7<PAGE>

                                                                    Exhibit 4.13

                     EXHIBIT 4 to RESTRICTED STOCK AGREEMENT
                     ---------------------------------------

                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement, dated as of November 6, 2001, is among
DAOU Systems, Inc., a Delaware corporation (the "Company"), and Daniel J.
                                                 -------
Malcolm (the "Investor").
              --------

                                    RECITALS

     WHEREAS, the Company and the Investor are parties to that certain
Restricted Stock Agreement, dated November 6 and retroactive to July 24, 2001
(the "Purchase Agreement"); and
      ------------------

     WHEREAS, the Parties desire to enter into an agreement concerning the
registration of the shares of common stock, par value $.001 per share (the
"Common Stock"), to be issued pursuant to the Purchase Agreement.
 ------------

     NOW, THEREFORE, the parties hereby agree as follows:

                                   ARTICLE I
                               REGISTRATION RIGHTS

1.1. Definitions.  For purposes of this Agreement:
     -----------

(a)  the term "Register," "Registered," and "Registration" refer to a
     registration effected by preparing and filing a registration statement or
     similar document in compliance with the Securities Act of 1933, as amended
     (the "Act"), and the declaration or ordering of effectiveness of such
           ---
     registration statement or document;

(b)  the term "Registrable Securities" means the Common Stock issued pursuant to
     the Purchase Agreement and pursuant to the exercise of that certain
     Executive Stock Option Agreement, dated of even date herewith, which grants
     Daniel Malcolm options to purchase 850,000 shares of Common Stock,
     excluding in all cases, however, any Registrable Securities sold by a
     person in a transaction in which such person's rights under this Article I
     are not assigned;

(c)  the number of shares of "Registrable Securities then outstanding" will be
     the number of shares of Common Stock outstanding which are Registrable
     Securities;

(d)  the term "Holder" means any person owning or having the right to acquire
     Registrable Securities or any permitted assignee thereof; and

(e)  the term "Form S-1" means such form under the Act as in effect on the date
     of this Agreement or any registration form under the Act subsequently
     adopted by the Securities and Exchange Commission ("SEC") which permits
                                                         ---
     inclusion or incorporation of substantial information by reference to other
     documents filed by the Company with the SEC.

                                     1

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1.2.     Form S-1 Registration.
         ---------------------

         As soon as reasonably practicable after the written request of the
Holders of a majority of the Registrable Securities, the Company shall file with
the SEC one or more Registration Statements on Form S-1 (or other similar form)
covering the continuous sale of the Registrable Securities pursuant to Rule 415
under the Securities Act or any successor thereto (each, a "Shelf Registration
                                                            ------------------
Statement"), in the manner specified therein. The Company shall use all
---------
reasonable efforts to cause each Shelf Registration Statement to be declared
effective by the SEC as soon as reasonably practicable after its filing with the
SEC, and upon reasonable notice from a Holder (and in any event no less than ten
(10) days) that the Holder intends to sell pursuant to a Shelf Registration
Statement, the Company will file such amendments and supplements as necessary to
update the Shelf Registration Statement so that it will be effective for any
such sale of Registrable Securities until the earlier of (x) such time as all of
the Registrable Securities are sold pursuant to such Shelf Registration
Statement or (y) each Holder is able to sell within any ninety (90) day period
all Registrable Securities owned by such Holder pursuant to SEC Rules as then in
effect, including Rule 144 under the Securities Act, or any successor thereto
("SEC Rule 144") (the "Effective Period"); provided that in the event that
  ------------         ----------------
Company determines in good faith that, because it has under consideration a
significant (as defined under Regulation S-X of the SEC) acquisition or
disposition or other material transaction or corporate event that has not been
publicly disclosed or that it is in the process of preparing for filing with the
SEC an Annual Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current
Report on Form 8-K or other form, a Shelf Registration Statement may contain a
material misstatement or omission, the Company may cause such Shelf Registration
Statement to not be used during the period in question. The Company agrees it
will use its best efforts to ensure that such deferral will be for the shortest
period of time reasonably required not exceeding, in the aggregate, ninety (90)
days in any twelve (12) month period.

1.3.     Company Registration.
         --------------------

         In the event that (i) the Company fails to satisfy its obligations
pursuant to Section 1.2 or (ii) for any period of not less than thirty (30)
consecutive days a Shelf Registration Statement may not be used for any reason,
and if (but without any obligation to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Act in connection with the public offering of such securities solely for
cash (other than a registration relating solely to the sale of securities to
participants in a Company stock plan, or a registration on any form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company will, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company in
accordance with Section 2.5, the Company will cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.

                                        2

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1.4. Obligations of the Company.
     --------------------------

     Except as otherwise expressly specified in this Agreement, whenever
required under this Article I to effect the registration of any Registrable
Securities, the Company will, as expeditiously as reasonably practicable:

(a)  Prepare and file with the SEC such amendments and supplements to such
     registration statement and the prospectus used in connection with such
     registration statement as may be necessary to comply with the provisions of
     the Act with respect to the disposition of all securities covered by such
     registration statement.

(b)  Furnish to the Holders such number of copies of a prospectus, including a
     preliminary prospectus, in conformity with the requirements of the Act, and
     such other documents as they may reasonably request in order to facilitate
     the disposition of Registrable Securities owned by them.

(c)  Use its best efforts to register and qualify the securities covered by such
     registration statement under such other securities or Blue Sky laws of such
     jurisdictions as will be reasonably requested by the Holders, provided that
     the Company will not be required in connection therewith or as a condition
     thereto to qualify to do business or to file a general consent to service
     of process in any such states or jurisdictions.

1.5. Furnish Information.
     -------------------

     It will be a condition precedent to the obligations of the Company to take
any action pursuant to this Article I with respect to the Registrable Securities
of any selling Holder that such Holder will furnish to the Company such
information regarding itself, the Registrable Securities held by it, the
intended method of disposition of such securities and all of the other pertinent
information as will be required to effect the registration of such Holder's
Registrable Securities.

1.6. Expenses of Registration.
     ------------------------

     Subject to restrictions under applicable state securities laws, all
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Sections
1.2 and 1.3, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, and fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
representing the Holders will be borne by the Company.

1.7. Indemnification.  If any Registrable Securities are included in a
     ---------------
registration statement under this Article I:

(a)  To the extent permitted by law, the Company will indemnify and hold
     harmless each Holder, each of its directors and each of its officers, any
     underwriter (as defined in the Act) for such Holder and each person, if
     any, who controls such Holder or underwriter within the meaning of the Act
     or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
                                                              ------------
     against any losses, claims, damages, or liabilities (joint or several) to
     which they may become subject under the Act, or the Exchange Act, insofar
     as such losses, claims, damages,

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     or liabilities (or actions in respect thereof) arise out of or are based
     upon any of the following statements, omissions or violations (collectively
     a "Violation"): (i) any untrue statement or alleged untrue statement of a
        ---------
     material fact contained in such registration statement, including any
     preliminary prospectus or final prospectus contained therein or any
     amendments or supplements thereto, (ii) the omission or alleged omission to
     state therein a material fact required to be stated therein, or necessary
     to make the statements therein not misleading, or (iii) any violation or
     alleged violation by the Company of the Act, the Exchange Act, or any rule
     or regulation promulgated under the Act, or the Exchange Act; and the
     Company will pay to each such Holder, director, officer, underwriter or
     controlling person, any legal or other expenses reasonably incurred by them
     in connection with investigating or defending any such loss, claim, damage,
     liability, or action; provided, however, that the indemnity agreement
     contained in this Subsection 1.7(a) will not apply to amounts paid in
     settlement of any such loss, claim, damage, liability, or action if such
     settlement is effected without the consent of the Company (which consent
     will not be unreasonably withheld), nor will the Company be liable in any
     such case for any such loss, claim, damage, liability, or action to the
     extent that it arises out of or is based upon a Violation which occurs in
     reliance upon and in conformity with written information furnished
     expressly for use in connection with such registration by any such Holder,
     director, officer, underwriter or controlling person.

(b)  To the extent permitted by law, each selling Holder will indemnify and hold
     harmless the Company, each of its directors, each of its officers who has
     signed the registration statement, each person, if any, who controls the
     Company within the meaning of the Act, any other Holder selling securities
     in such registration statement and any controlling person of any such
     underwriter or other Holder, against any losses, claims, damages, or
     liabilities (joint or several) to which any of the foregoing persons may
     become subject, under the Act or the Exchange Act insofar as such losses,
     claims, damages, or liabilities (or actions in respect thereto) arise out
     of or are based upon any Violation, in each case to the extent (and only to
     the extent) that such Violation occurs in reliance upon and in conformity
     with written information furnished by such Holder expressly for use in
     connection with such registration; and each such Holder will pay any legal
     or other expenses reasonably incurred by any person intended to be
     indemnified pursuant to this Subsection 1.7(a), in connection with
     investigating or defending any such loss, claim, damage, liability, or
     action; provided, however, that the indemnity agreement contained in this
     Subsection 1.7(a) will not apply to amounts paid in settlement of any such
     loss, claim, damage, liability or action if such settlement is effected
     without the consent of the Holder, which consent will not be unreasonably
     withheld; provided, that, in no event will any indemnity under this
     Subsection 1.7(a) exceed the proceeds from the offering net of sales
     commission, if any, received by such Holder.

(c)  Promptly after receipt by an indemnified party under this Section 1.7 of
     notice of the commencement of any action (including any governmental
     action), such indemnified party will, if a claim in respect thereof is to
     be made against any indemnifying party under this Section 1.7, deliver to
     the indemnifying party a written notice of the commencement thereof and the
     indemnifying party will have the right to participate in, and, to the
     extent the indemnifying party so desires, jointly with any other
     indemnifying party similarly noticed, to assume the defense thereof with
     counsel satisfactory to the indemnified party (which shall not unreasonably
     withhold its approval); provided, however, that an indemnified party

                                        4

<PAGE>

     (together with all other indemnified parties which may be represented
     without conflict by one counsel) will have the right to retain one separate
     counsel, with the reasonable fees and expenses to be paid by the
     indemnifying party, if representation of such indemnified party by the
     counsel retained by the indemnifying party is inappropriate due to actual
     or potential differing interests between such indemnified party and any
     other party represented by such counsel in such proceeding. The failure to
     deliver written notice to the indemnifying party within a reasonable time
     of the commencement of any such action, if prejudicial to its ability to
     defend such action, will relieve such indemnifying party of any liability
     to the indemnified party under this Section 1.7, but the omission so to
     deliver written notice to the indemnifying party will not relieve it of any
     liability that it may have to any indemnified party otherwise than under
     this Section 1.7.

(d)  If the indemnification provided for in this Section 1.7 is held by a court
     of competent jurisdiction to be unavailable to an indemnified party with
     respect to any loss, liability, claim, damage, or expense referred to
     therein, then the indemnifying party, in lieu of indemnifying such
     indemnified party to this Agreement, will contribute to the amount paid or
     payable by such indemnified party as a result of such loss, liability,
     claim, damage, or expense in such proportion as is appropriate to reflect
     the relative fault of the indemnifying party on the one hand and of the
     indemnified party on the other in connection with the statements or
     omissions that resulted in such loss, liability, claim, damage, or expense
     as well as any other relevant equitable considerations. The relative fault
     of the indemnifying party and of the indemnified party will be determined
     by reference to, among other things, whether the untrue or alleged untrue
     statement of a material fact or the omission to state a material fact
     relates to information supplied by the indemnifying party or by the
     indemnified party and the parties' relative intent, knowledge, access to
     information, and opportunity to correct or prevent such statement or
     omission.

(e)  The obligations of the Company and Holders under this Section 1.7 will
     survive the completion of any offering of Registrable Securities in a
     registration statement under this Article I, and otherwise.

1.8. Reports Under 1934 Act.
     ----------------------

     With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-1, the Company
will:

(a)  make and keep public information available, as those terms are understood
     and defined in SEC Rule 144, at all times;

(b)  file with the SEC in a timely manner all reports and other documents
     required of the Company under the Act and the Exchange Act; and

(c)  furnish to any Holder, so long as the Holder owns any Registrable
     Securities, forthwith upon request (i) a written statement by the Company
     that it has complied with the reporting requirements of SEC Rule 144, the
     Act and the Exchange Act, or that it qualifies as a

                                        5

<PAGE>

     registrant whose securities may be resold pursuant to Form S-3 (at any time
     after it so qualifies), (ii) a copy of the most recent annual or quarterly
     report of the Company and such other reports and documents so filed by the
     Company, and (iii) such other information as may be reasonably requested in
     availing any Holder of any rule or regulation of the SEC which permits the
     selling of any such securities without registration or pursuant to such
     form.

1.9. Rule 144 Availability.
     ---------------------

     Notwithstanding anything to the contrary above in this Article I, prior to
exercising any right provided for in this Article I each Holder will (i)
evaluate in good faith whether such Holder is otherwise permitted to sell the
entire amount of Registrable Securities it is then seeking to register within
the time period it desires to sell pursuant to Rule 144 of the Exchange Act, or
any successor regulation thereto and (ii) exercise such rights only in the case
that it determines in good faith that such rights are necessary to sell such
Registrable Securities in a timely manner.

                                   ARTICLE II
                                  MISCELLANEOUS

2.1. Successors and Assigns.
     ----------------------

     Except as otherwise provided in this Agreement, the terms and conditions of
this Agreement will inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any shares of
Registrable Securities). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties to this Agreement or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

2.2. Governing Law.
     -------------

     This Agreement will be governed by and construed under the laws of the
State of California.

2.3. Counterparts.
     ------------

     This Agreement may be executed in two or more counterparts, each of which
will be deemed an original, but all of which together will constitute one and
the same instrument.

2.4. Titles and Subtitles.
     --------------------

     The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.

2.5. Notices.
     -------

     Unless otherwise provided, any notice required or permitted under this
Agreement will be given in writing and will be deemed effectively given upon
personal delivery to the party to be notified, by telecopy upon the appropriate
answer-back, or upon deposit with the United States Post Office, by registered
or certified mail, postage prepaid and addressed to the party to be

                                        6

<PAGE>

notified at the address indicated for such party on Schedule 1 or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.

2.6.   Expenses.
       --------

       If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party will be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.

2.7.   Amendments and Waivers.
       ----------------------

       Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Holders of a majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this paragraph
will be binding upon each Holder of any Registrable Securities then outstanding,
each future Holder of all such Registrable Securities, and the Company.

2.8.   Severability.
       ------------

       If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision will be excluded from this Agreement and
the balance of the Agreement will be interpreted as if such provision were so
excluded and will be enforceable in accordance with its terms.

2.9.   Aggregation of Stock.
       --------------------

       All shares of Registrable Securities held or acquired by affiliated
entities or persons will be aggregated together for the purpose of determining
the availability of any rights under this Agreement.

2.10.  Entire Agreement, Amendment, Waiver.
       -----------------------------------

       This Agreement (including the Schedules to this Agreement, if any)
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects of this Agreement and thereof.

2.11.  Adjustments for Stock Splits.
       ----------------------------

       Wherever in this Agreement there is a reference to a specific number of
shares of Common Stock of the Company of any class or series, or a reference to
any amount of dollars per any such share, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares or the specific dollar amount so referenced in this
Agreement will automatically be proportionately adjusted to reflect the effect
on the outstanding shares of such class of series of stock by such subdivision,
combination or stock dividend.

                                        7

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

DAOU SYSTEMS, INC.

By: /s/ James Roberto
    -----------------
Name:  James Roberto
Title: Chief Executive Officer

THE INVESTOR:

/s/ Daniel J. Malcolm
---------------------
Daniel J. Malcolm

                                        8

<PAGE>

                                   SCHEDULE 1
                                    INVESTOR

                                    ---------

                                NAME AND ADDRESS

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

Daniel J. Malcolm

Facsimile No.: (   )

                                        9

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