Document:

Licensing and Distribution Agreement, dated July 16, 2004

 EXHIBIT 10.13 
  
 CERTAIN INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT, AS INDICATED BY “XXX”, PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
THAT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 
  
 LICENSING AND DISTRIBUTION AGREEMENT 
  
 This Licensing and Distribution Agreement is dated effective this 16th day of July, 2004 (the “Effective Date”) by and between Jones Soda Co., a Washington corporation (“Jones”) and Target Corporation, a Minnesota
corporation (“Target”). 
  
 RECITALS

  

	A.	Jones markets and sells Jones Soda and other products through its distribution network in select markets across North America. 

  

	B.	Target is a national general merchandise retailing company. 

  

	C.	The parties desire to enter into a business relationship whereby Jones will license to Target certain of its proprietary trade names, trademarks and design work, and Target will
market and sell to consumers certain Jones products. 

  
 AGREEMENT 
  
 In consideration of the foregoing recitals
and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
  

	1.	Definitions. 

  
 “Advertising Materials” means advertising, sales and promotional materials for the Products. 
  
 “Can” means 12-ounce cans of Jones Soda. 
  
 “Case” means a package containing twenty-four (24) Cans, or 288
ounces. 
  
 “Co-Packer” means the company selected by
Jones and approved by Target to manufacture, can, package and arrange for delivery of the Products for sale by Target. 
  
 “Design Work” means all artwork, photographs, designs, drawings, and sketches produced by Jones in connection with the Products, and all
writings or other documentation produced by Jones in connection with such artwork, photographs, designs, drawings, and sketches. 
  
 “Pack” means a package containing twelve (12) Cans. 
  
 “Packaging” means any carton, enclosure or other package used to segregate the Cans into Packs. Cases or other assemblage of Cans, together with
any appurtenant wraps, promotions or advertising. 
  
 “Products” means the Cans, Packs and Cases. 
  
 “Samples” means the Cans, Packs, and Cases purchased by Jones from Target in order to promote the sale of the Products, as more fully set forth in Section 7(e) below. 
  
 “Term” has the meaning set forth in Section 11 below. 
  

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	2.	License. 

  
 (a) Grant. Jones is the owner of certain trade names, trademarks and service marks (collectively, “Marks”) which constitute valuable
intellectual property of Jones and through substantial investments by Jones have attached to them substantial goodwill and consumer recognition. The Marks that are the subject of this Agreement are shown in Exhibit A attached hereto and
incorporated by this reference. Jones hereby grants to Target a license to use the Marks and the Design Work in accordance with the terms and conditions set forth in this Agreement. 
  
 (b) Scope. Target agrees that it shall use the Marks and the Design Work only for the purposes contemplated by this
Agreement, including the promotion and sale of the Products. The Marks will not be used by Target as the name, or any part of any name, of any corporation, partnership or other entity or proprietorship under which Target transacts any business.

  
 (c) Jones’s control. Target’s use of the
Marks and Design Work is subject to the control and approval of Jones in every respect, and any unauthorized use shall constitute an infringement of Jones’s rights. 
  
 (d) Advertisements. All Advertising Materials or other use of the Marks or Design Work, whether in written,
electronic or other form, shall be approved in writing by an authorized representative of Jones before release to members of the public. For the purpose of providing such approval, Jones shall designate an authorized representative to whom Target
shall forward such items, and Jones shall be obligated to respond to any request for approval within three (3) business days, including the day upon which notice is delivered via e-mail, fax or hand-delivery if before 12:00 p.m. at the location of
Jones’s designee. In the event no response is received from Jones by 5:00 p.m. on the third business day, the materials shall be deemed approved. Notwithstanding anything herein to the contrary, (i) Jones agrees that it shall have no right of
pre-approval with respect to any advertisement of the Products in Target’s circular; and (ii) Target agrees that any such advertisement in its circular shall be consistent with Target’s standards with respect to circular advertising.

  
 (e) No disparagement. Target will not take any action
that will impugn the reputation of Jones or in any way denigrate or adversely affect the Marks, Design Work, or associated goodwill. Target will use commercially reasonable measures to care for the Products while in its possession in accordance with
its normal procedures. 
  
 (f) Infringement claims. If
Target receives notice of a threatened or actual claim asserted by any third party with respect to a prior use or other infringement of any of the Marks or Design Work, Target shall promptly give notice to Jones of such claim. In such event, Jones
shall defend, indemnify and hold harmless Target from and against any and all liabilities, loses, claims, suits, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) which may be sustained or
suffered by or secured against Target based upon or arising out of any such claim and take such further actions as it deems appropriate in its sole discretion. 
  

(g) Sole property of Jones. Target expressly understands and acknowledges that the Marks and Design Work are the sole property of Jones, along
with the goodwill associated with and symbolized by the Marks and Design Work, and are used for the benefit of Target under license. Target shall not directly or indirectly contest the validity of Jones’s ownership of the Marks or the Design
Work. Target’s use of the Marks and Design Work pursuant to this Agreement does not give Target any ownership interest or any other interest in the Marks or Design Work, beyond the license granted by this Agreement, and upon expiration or
termination of this Agreement, no monetary value shall be assigned as attributable to any goodwill associated with Target’s use of the Marks and Design Work. 
  
 (h) Exclusivity. The license granted herein shall be exclusive with regard to Products produced and sold in the
United States, and not with respect to any other Jones product or territory. Except as expressly provided in the preceding sentence, the license granted to Target is non-exclusive, and Jones retains the right to use the Marks and the Design Work on
its own behalf, grant others licenses to use the Marks and Design Work, develop and establish other products using the same or similar Marks and Design Work, and grant licenses without providing any rights in such licenses to Target. 
  

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 (i) Substitution of Marks. Jones reserves the right to substitute different Marks for use in
connection with the Products if Jones’s currently owned Marks no longer can be used, or if Jones determines that substitution of different Marks is otherwise necessary under the circumstances. In such event, Target reserves the right to
terminate this Agreement immediately. 
  
 (j) License Fee.
Target shall pay Jones a license fee (the “License Fee”) for the license granted herein in the amounts and on the terms and conditions set forth in Exhibit C attached hereto and incorporated by this reference. 
  
 (k) Third Parties. The license granted herein does not include the
right to grant sublicenses to third parties; provided, however, Jones acknowledges and agrees that the use by Target of third parties to create Advertising Materials related to the Products pursuant hereto is permitted by the terms and conditions of
this Agreement and shall not be deemed to be a grant of a sublicense by Target to such third parties. 
  

	3.	Production of Products. 

  
 (a) Co-Packer. Subject to Target’s approval, Jones shall select a Co-Packer to manufacture, can, package and arrange for delivery of the
Products. The initial Co-Packer shall be [XXX] and approval of such initial Co-Packer is hereby granted by Target. The Co-Packer shall be responsible for production of all Products sold by Target in the United States. 
  
 (b) Packages. The Cans shall be packaged and sold in Packs or Cases
unless otherwise agreed upon in writing by the parties. 
  
 (c)
Purchases. Target agrees that all its purchases of the Products shall be made from Jones’s designated Co-Packer at prices as negotiated by Target and Co-Packer. 
  
 (d) Inventory. Maintaining inventory of the Products shall be Co-Packer’s sole responsibility. Co-Packer shall
be permitted to share with Jones any forecasts, projections, purchase orders, or like information provided to Co-Packer by Target with respect to the Products, provided that all such forecasts, projections, purchase orders or like information shall
be treated by Jones as Confidential Information subject to the Mutual Non-Disclosure Agreement (as more fully discussed in Section 8 below). 
  
 (e) Flavors. The parties anticipate that the Co-Packer will initially manufacture Products in the flavors described in Exhibit B attached
hereto and incorporated by this reference, which flavors represent the best-selling flavors of Jones Soda as of the Effective Date. New or existing flavors maybe added upon further agreement of the parties. Such flavors may or may not be offered in
connection with other products sold by Jones. 
  
 (f)
Products. The amounts purchased, purchase price, payment terms, scheduling and all other terms associated with orders for Products by Target, and delivery of such Products to Target, shall be negotiated by and between Co-Packer and Target.
Jones shall have no obligation to pay for any Products ordered by Target from Co-Packer unless otherwise agreed in writing by the parties. 
  

	4.	Product Design and Packaging. 

  
 Jones will be responsible for and have final approval rights with respect to all creative design in connection with the Products and Packaging. Without
limiting the foregoing, Jones shall (a) design all Cans and Packaging, and (b) collect, sort, and select all photographs submitted for use on or used in connection with the Cans and Packaging (which photographs shall be considered to be “Design
Work” hereunder), provided that Target shall have the right to approve such photographs before their use on the Products to ensure that they are not likely to be regarded as offensive or in poor taste by Target’s customers, and such
approval shall not be unreasonably withheld. For the 
  
 Certain information
has been omitted from this page, as indicated by “XXX”, pursuant to a request for confidential treatment that has been filed separately with the SEC. 
  

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 purpose of providing such approval, Target shall designate an authorized representative to whom Jones shall forward
photographs, and Target shall be obligated to respond to any request for approval within three (3) business days, including the day upon which notice is delivered via e-mail, fax or hand-delivery if before 12:00 p.m. at the location of Target’s
designee. In the event no response is received from Target by 5:00 p.m. on the third business day, the photographs shall be deemed approved. 
  

	5.	Marketing. 

  
 (a) Exclusive Rights. Target shall have the exclusive right to market and sell the Products within the United States (including Alaska and Hawaii)
during the Term of this Agreement. 
  
 (b) Promotions.
Target shall promote the Products in its weekly circular and in other manners consistent with its internal standards two (2) times during the 12-month period commencing when the Products are first offered for retail sale by Target. 
  
 (c) Jones Assistance. Target agrees to consult with Jones, and Jones
agrees to provide reasonable assistance to Target in connection with all marketing activities promoting the Products, including all in-store promotions, media advertising, and public relations events and press releases. 
  
 (d) Advertising Materials. Target shall own all right, title and
interest in and to the Advertising Materials produced by or for it hereunder, including, but not limited to, any artwork, copyrights and logos developed by or for it in connection therewith, to the extent that such Advertising Materials can be
separated from the Products, Marks and the Design Work and are not based upon, derived from or confusingly similar to the Marks or the Design Work. Jones will not claim any rights or title in, or otherwise attack Target’s ownership rights in
the Advertising Materials, excluding therefrom any and all uses therein of the Design Work and Marks. 
  
 (e) Target’s Trademarks. Jones recognizes and acknowledges that the trademarks and logos of Target and the goodwill associated therewith inure
solely and exclusively to Target. Jones shall not acquire, directly or indirectly, during the Term of this Agreement or thereafter, any proprietary rights in or to the trademarks and logos of Target by virtue of this Agreement. 
  

	6.	Additional Obligations of Jones. 

  
 (a) Promotion by Jones. Jones will use its commercially reasonable best efforts to promote the Products to vending companies, schools, independent
businesses and consumers who have made inquiries to Jones about the availability of Cans. Jones will identify Target as the sole supplier of Cans and direct purchase inquiries to Target. 
  
 (b) Consumer Data. Jones will collect consumer data from individuals submitting photographs for use on the Products.
Consistent with waivers from such individuals and applicable privacy laws, Jones will submit such consumer data to Target for use in the marketing and sale of the Products. 
  
 (c) Promotional Activities. Jones will notify Target regarding events (e.g., X Games) where Jones will promote the
Products through use of its recreational vehicles, booths and similar promotional activities. Jones will also promote the Products on its web site. Jones shall have the right to advertise and promote other Jones products in addition to or in lieu of
the Products in connection with any promotional event or activity. 
  

	7.	Additional Obligations of Target. 

  
 (a) Sale of Products. Target intends to sell the Products on a nationwide (United States) basis to consumers from its Target stores; provided, the
parties acknowledge that not all flavors will be sold in all Target stores; provided, further, the parties acknowledge that the quantities of Products purchased by Target from the Co-Packer and sold in its stores and the locations in which such
Products are sold shall be at the sole discretion of Target. Target shall not resell the Products to any wholesale or other retail business (it being agreed by the parties that Target has no control over the resale of Products by its retail
customers). 
  

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 (b) Laws and Regulations. Target shall comply with all applicable laws and regulations, including
but not limited to laws regarding deposits on Cans, relating to the marketing and retail sale of the Products. Target shall immediately notify Jones in the event of the material violation of any law, regulation or ordinance that arises out of or
relates to Target’s storage, marketing or retail sale of the Products. Jones shall comply with all applicable laws and regulations relating to its obligations under this Agreement. 
  
 (c) Storage. Target shall store the Products in its possession in accordance with retail industry standards,
including but not limited to preventing freezing or excessive heating of the Cans. 
  
 (d) Defective Products. In the event that Target is aware or should have been aware that any Product sold or otherwise distributed by Target is altered so as to deteriorate its quality in any way, is otherwise
defective, or is in violation of applicable laws, rules or regulations, Target shall cease selling such Product in accordance with its standard procedures and in compliance with all applicable laws, rules and regulations. 
  
 (e) Samples. In order to assist Jones’s promotion of the
Products, the Co-Packer shall sell a reasonable number of Samples to Jones at the rate charged to Target by the Co-Packer. The Samples will not be resold by Jones. 
  
 (f) Sales Reports. Target shall provide to Jones sales reports setting forth, by flavor, region and as otherwise
reasonably agreed by the parties, the sales volumes of Products sold by Target. In the event Target provides on-line access to such sales information, it shall provide Jones with access to such information, subject to Target’s ordinary and
customary terms and conditions for vendors that use such on-line access. 
  
 (g) Sales Tax. Target shall collect and pay any and all sales, excise and like taxes, as applicable, in connection with the sale of the Products. 
  

	8.	Confidential Information. 

  
 Jones and Target have previously entered into a Mutual Non-Disclosure Agreement, which shall continue to remain in full force and effect according to its
terms; provided, however, that with respect to Confidential Information (as defined in the Mutual Non-Disclosure Agreement) relating to Jones’s formulas, specifications, production methods and other proprietary aspects of producing the
Products, such nondisclosure obligations shall be permanent and not limited to the three-year term for nondisclosure. 
  

	9.	Indemnification. 

  
 (a) By Jones. Jones shall defend, hold harmless and indemnify Target and its affiliates, and its and their respective directors, officers, agents
and employees against any loss, claim, liability, suit, action, or expense (including, without limitation, court costs, litigation expenses and attorney fees), relating to or arising out of any claim or demand of any kind or nature which any buyer
or user of the Products, or any other person, whether in privity to Target or not, may make against Target, based upon or arising out of: (i) Jones’s performance or failure to perform in accordance with the terms of this Agreement; (ii)
Jones’s negligent act, omission, misconduct, or violation of any law relating to this Agreement; (iii) Jones’s violation of any law relating to this Agreement or the Products; and (iv) patent, copyright or other intellectual property right
infringement by Jones or its agents, except to the extent that the separate intervening negligence or misconduct of Target or its agents is the sole and proximate cause of such loss, liability or expense. Target agrees to provide Jones with prompt
notice of its receipt of any claim for which Target claims the right to indemnification under this Agreement, and Jones shall have the right and opportunity to defend or resolve the claim with its own counsel and with the reasonable cooperation of
Target. In the event a claim is brought or demand made with respect to an alleged defect in any of the Products, then Target shall, to the extent it has retained any of such allegedly defective Product or has been provided with such Product by the
claimant or other third party, promptly provide to Jones a sample of the allegedly defective Product. 
  
 (b) By Target. Target shall defend, hold harmless and indemnify Jones and its affiliates, and its and their respective directors, officers, agents
and employees against any loss, claim, liability, suit, action, or expense (including, without limitation, court costs, litigation expenses and attorney fees), relating to or arising out of any claim or demand of any kind or nature which any person,
whether in privity to Jones or not, may make against 
  

 - 5 - 

 Jones, based upon or arising out of: (i) Target’s negligence or misconduct in the storing, handling, transportation,
sale or use of the Products; (ii) Target’s performance or failure to perform in accordance with the terms of this Agreement; and (iii) Target’s violation of any law relating to this Agreement or Target’s sale or use of the Products,
except to the extent that the separate intervening negligence or misconduct of Jones or its agents is the sole and proximate cause of such loss, liability or expense. Jones agrees to provide Target with prompt notice of its receipt of any claim for
which Jones claims the right to indemnification under this Agreement, and Target shall have the right and opportunity to defend or resolve the claim with its own counsel and with the reasonable cooperation of Jones. In the event a claim is brought
or demand made with respect to an alleged defect in any of the Products, then Jones shall, to the extent it has retained any of such allegedly defective Product or has been provided with such Product by the claimant or other third party, promptly
provide to Target a sample of the allegedly defective Product. 
  

	10.	Insurance. 

  
 Target and Jones shall each maintain in full force all insurance required by law, including worker’s compensation, and as required by any lease for
business premises, and in addition (to the extent not required by the lease for such premises), shall maintain Commercial General Liability insurance, including broad form contractual liability, broad form property damage, personal injury, and
products liability in an amount not less than Five Million Dollars ($5,000,000) per occurrence and in the aggregate for bodily injury, and Five Million Dollars ($5,000,000) per occurrence and in the aggregate for property damage. 
  

	11.	Term. 

  
 This Agreement shall become effective upon the Effective Date, and shall remain in full force and effect for a term of twenty-four (24) months from such
date (“Term”), subject to earlier termination pursuant to the terms of this Agreement. Not less than thirty (30) days prior to the expiration of the Term (provided there has been no early termination), either party may give notice to the
other party that it wishes to extend the Term of the Agreement on such terms and conditions as may be agreed upon by the parties. During the thirty (30) day period after receipt of such notice, the parties shall meet and negotiate in good faith the
terms and conditions of any such renewal; provided that, for the avoidance of doubt, neither party shall be bound to renew or extend this Agreement if it does not agree to the terms and conditions of such renewal or extension in a writing executed
by both parties hereto. During this 30-day period of negotiations, neither party shall initiate or continue any discussions or negotiations with third parties regarding the subject matter of this Agreement. 
  

	12.	Termination. 

  
 (a) Termination for convenience. On or after [XXX], either party hereto shall have the right to terminate this Agreement for convenience upon
ninety (90) days written notice to the other party hereto. 
  
 (b)
Termination for cause. If a party hereto (the “Defaulting Party”) (i) breaches, defaults or fails to perform under any provision of this Agreement; (ii) files a petition in bankruptcy; (iii) executes an assignment for the benefit of
creditors (each instance described in subsections (i), (ii) and (iii), a “Default”); or (iv) is in Default on three or more occasions during the Term of this Agreement, whether or not cured after notice in accordance with this section
12(b), the other party hereto (the “Non-defaulting Party”) shall have all rights and remedies permitted by law or equity, including, but not limited to, the right to terminate this Agreement sixty (60) days after giving the Defaulting
Party written notice specifying the defaults or breaches if such default or breach is not cured by the Defaulting Party within thirty (30) days after the date of the notice of default. 
  
 (c) Obligations Upon Termination or Expiration. In addition to the rights and duties specified elsewhere in this
Agreement, upon the expiration, unauthorized transfer or termination of this Agreement for any reason, the following provisions shall immediately apply: 
  
 Certain information has been omitted from this page, as indicated by “XXX”, pursuant to a request for confidential treatment that has been filed separately
with the SEC. 
  

 - 6 - 

	 	i.	Target shall have the right to continue to sell all Products in its possession and all Products which it had committed to purchase from the Co-Packer pursuant to the applicable
terms of this Agreement governing the sale of Products; and 

  

	 	ii.	Target’s use of the Marks and Design Work shall be limited to the sale of Products in accordance with subsection (i). 

  

	13.	Representations and Warranties. 

  
 (a) No Default/Conflict. Jones and Target each represents and warrants to the other that its signing, delivery, and performance of this Agreement
shall not constitute (i) a violation of any judgment, order, or decree, (ii) a violation of applicable local, state or federal law, or (iii) a material default under any material contract by which it or any of its material assets are bound. Jones
and Target each further represents and warrants to the other that the performance of this Agreement will not conflict with or be hindered by any obligation of Jones or Target, respectively, under any other material agreement, whether in effect as of
the Effective Date or entered into thereafter. 
  
 (b)
Authorization. Jones and Target each represents and warrants to the other that (i) it has the requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement; and (ii) the
signing, delivery, and performance of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized through requisite corporate action. 
  
 (c) Disclaimer of Warranty. EXCEPT FOR THE WARRANTIES EXPRESSLY PROVIDED FOR IN THIS AGREEMENT, BOTH PARTIES HERETO
DISCLAIM ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE. 
  

	14.	Limitation of Liability. 

  
 Neither party shall have the right to recover consequential or punitive damages, or claim lost profits based upon a breach by the other party. 

 

	15.	Miscellaneous. 

  
 (a) Dispute Resolution. In the event of a dispute between the parties with respect to the subject matter of this Agreement, the parties shall first
meet, through designated representatives with the authority to resolve such dispute, and use their good faith best efforts to resolve such dispute within ten (10) days of notice of such dispute. If these negotiations are not successful, then prior
to initiating any court or arbitration proceedings, the parties shall attempt to resolve any such dispute in an amicable manner by mediation with a mutually acceptable mediator, to be held within thirty (30) days of notice of such dispute.

  
 (b) Counsel Review. Each party has had the opportunity
to consult with its attorney, and understands and accepts the terms of this Agreement. Neither party shall be deemed the drafter of this Agreement for the purposes of any presumptions with regard to such drafting. 
  
 (c) Independent Contractor. Target is an independent contractor, and
nothing in this Agreement shall be construed as creating, as between Jones and Target, the relationship of fiduciary, partner, joint venturer, agent, subsidiary or employer-employee. Neither party shall have any authority to bind the other party to
any contractual or other obligation except as stated herein. 
  
 (d) Notices. All notices or consents referenced in this Agreement are to be in writing, and mailed or delivered to each party at the address set forth below, unless written notice of change of address is supplied to the other party
effective not less than ten (10) days from the date of such notice. Notice shall be deemed effective on the date of delivery, when delivered personally or by overnight courier or by fax, or two (2) business days after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed or telecopied, as follows: 
  

			
	Jones:	  	Jones Soda Co.
	 	  	234 9th Ave North
	 	  	Seattle, WA 98109
	 	  	Attn:    Peter van Stolk
	 	  	             Jennifer Cue
	 	  	Fax: 206/624-6857

  

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	Target:	  	Target Corporation
	 	  	1000 Nicollet Mall, TPS-1355
	 	  	Minneapolis, MN 55410
	 	  	Attn: Vice President, Hardlines C
	 	  	Fax: 612/696-7832

  
 (e) Entire
Agreement. 
  

	 	i.	Merger. This Agreement (together with the Mutual Non-Disclosure Agreement) constitutes the sole agreement between the parties with respect to the subject matter thereof,
except to the extent otherwise expressly provided, and replaces all prior oral or written agreements between them. 

  

	 	ii.	Warranties. Neither party shall be bound by any warranty or representation except to the extent expressly contained in this Agreement. 

  

	 	iii.	Modifications. Neither this Agreement nor any provision of this Agreement may be modified, waived, discharged or terminated orally. A waiver of any provision shall be valid
only in the instance for which given and shall not be deemed continuing, nor shall any waiver be construed as a waiver of any other provision. 

  

	 	iv.	Bottles. Nothing herein shall affect or alter either party’s rights or obligations with respect to the current sale of 4-pack bottles of Jones Soda (“Bottles”)
or other Jones Soda products other than the Products in Target Stores and Jones agrees that it shall not take any action to prevent any distributor from selling Bottles to Target. 

  
 (f) Severability. If any provision of this Agreement is held to be
invalid under any applicable statute or rule of law, the remainder of the Agreement shall not be affected thereby and shall remain in full force and effect. 
  
 (g) Choice of Law. This Agreement shall be governed by the laws of the State of Minnesota, without regard to conflict of laws doctrine. 

 
 (h) Attorneys’ Fees. if any suit or action is instituted to
enforce any of the terms of this Agreement, the prevailing party shall be entitled to recover from the other party its reasonable attorneys’ fees and costs incurred in connection with any such suit or action, in addition to all other remedies
provided by law. 
  
 (i) Binding Effect. This Agreement is
binding upon, and references to Jones or Target include, such successors, assigns or transferees as are permitted under this Agreement. 
  
 (j) Assignment. Neither party hereto shall assign this Agreement without the written consent of the other party hereto; provided, however, either
party hereto may assign this Agreement to an affiliate (as such term is defined in Rule 12b-2 of the General Rules of Regulations under the Securities Exchange Act of 1934, as amended) or a purchaser of all or substantially all of its assets.

  

							
	JONES SODA CO.	 	TARGET CORPORATION
				
	By	 	 /s/ Peter van Stolk

	 	By	 	 /s/

	 	 	Peter van Stolk, President and CEO	 	Title	 	  

  
  

 - 8 - 

 EXHIBIT A 
  

MARKS 
  
 FUFU Berry Soda 
 Go There 
 I’m Jonesin’ 
 I’ve Got A Jones For A Jones 
 It May Not Be Your Thing 
 J & Design 
 Jones Soda
Co. 
 Jones Soda Co. & Design 
 Jonesin’ 
 Miscellaneous Design (Beverage Container Trade Dress) 
 Miscellaneous Design
(Can) 
 Miscellaneous Flame Design 
 Run With The Little Guy

 Sugar Free Jones 
 WWW.Jonessoda.com 
  

 - 9 - 

 EXHIBIT B 
  

FLAVORS 
  
 Cream Soda 
 Sugar Free Black Cherry 
 Strawberry Lime 
 Green Apple 
 Blue Bubble Gum

 Rootbeer 

 EXHIBIT C 
  

LICENSE FEES AND TERMS 
  
 The License Fee pursuant Section 2(j) of the Agreement shall be [XXX] per Pack sold by Target from its stores, less a [XXX] per Pack credit for each Pack returned by a
Target customer to a Target store for a refund. The License Fee shall be paid for each month during which Target sells any Product at retail, and shall be payable sixty (60) days following the last day of such month. 
  
 By way of example and not limitation, if Target sold 5000 Packs at retail in September and 10
Packs were retuned by Target customers, the License Fee would be [XXX] and would be payable by Target to Jones 60 days after September 30. By way of further example and not limitation, if Target sold no Packs at retail in January and 1 Pack was
returned, no License Fee would be owed by Target for the month of January, and a [XXX] credit would be assessed against any future License Fees owed by Target to Jones. 
  
 Certain information has been omitted from this page, as indicated by “XXX”, pursuant to a request for confidential treatment
that has been filed separately with the SEC.Form of Master Services Agreement

					
	 	 	 Daou Systems, Inc.
 Master Services Agreement
	 	

  

			
	 Daou Systems, Inc.
	  	{Full Client Name}
	 412 Creamery Way, Suite 300
	  	{Client Address 1}
	 Exton, PA 19341
	  	{Client Address 2}

  
 This Master Services Agreement is made
and entered into by and between {Full Client Name} (“{Client Abbrv.}”) and Daou Systems, Inc. (“Daou”) this {Date}th day of {Month}, 2005 (“Effective Date”). 
  
 BACKGROUND 
  
 Daou provides consulting, project management and software solution services to healthcare and other organizations in the design, deployment,
and support of IT infrastructure and applications systems, as well as integration and related services. {Client Abbrv.} desires to obtain and Daou agrees to provide such services as specified herein in accordance with this Agreement and the
Attachments, Exhibits, and Statement(s) of Work (“SOW(s)”) attached and made part of this Agreement. {Client Abbrv.} and Daou agree that the following terms and conditions shall govern Daou’s provision of such services and {Client
Abbrv.}’s acceptance of those services. This Agreement will supersede the Master Services Agreement (MSA) between {Client Abbrv.} and Daou dated {Date}, including all related or attached SOW(s). 
  
 TERMS AND CONDITIONS 
  

	1.	Definitions. 

  

	 	1.1.	“Deliverables” shall mean the hardware solutions, software solutions, reports, workpapers, plans, designs, programming or other designated work product specified in the
applicable SOW. 

  

	 	1.2.	“Fees” shall mean Daou’s fees to be paid Daou by {Client Abbrv.} for Daou’s performance of the Services and/or provision of the Deliverables as specified in the
applicable SOW. 

  

	 	1.3.	“Services” shall mean those services (e.g., consultative, implementation, design, programming, installation) to be provided to {Client Abbrv.} by Daou as specified in the
applicable SOW. 

  

	 	1.4.	“Agreement” shall mean this Master Services Agreement, including its attachments, exhibits, and SOWs, and including any future SOWs executed between the parties in
accordance herewith. 

  

	 	1.5.	“Statement of Work” or “SOW” shall mean an addendum to this Agreement executed by {Client Abbrv.} and Daou that specifies the Services and/or Deliverables to be
provided to {Client Abbrv.} by Daou, including any additional terms and conditions specific to that SOW. 

  

	2.	Term and Termination. 

  

	 	2.1.	The term of this Agreement shall be from the Effective Date of the Agreement and continue for a period of forty-eight (48) months, unless earlier terminated by either party in
accordance with this Agreement; provided however, upon such termination, this Agreement shall continue to remain in effect with respect to any SOWs made a part hereunder during the term of this Agreement until such SOWs are themselves expired and
performance thereunder is completed. Thereafter, this Agreement shall automatically renew for additional one (1) year terms, unless either party terminates this Agreement by providing the other party written notice of termination at least ninety
(90) days prior to the termination date. 

  

			
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	 	2.2.	Each individual SOW may contain a provision governing the term, renewal, amendment, and extension options of that specific SOW. 

  

	 	2.3.	Either party may terminate this Agreement in whole or in part if the other party commits a material breach of the terms of this Agreement and fails to remedy, or take reasonable
steps to remedy, the material breach within thirty (30) days of receipt of written notice of the material breach from the non-defaulting party. Termination of this Agreement shall not affect rights and/or obligations of the parties which arose prior
to any such termination (unless otherwise provided herein) and such rights and/or obligations shall survive any such termination. This right of termination shall not be exclusive of any other remedies to which the non-defaulting party may be
entitled, including equitable and injunctive relief. 

  

	3.	Services. 

  

	 	3.1.	Daou shall provide the Services and/or Deliverables specified in the SOW(s) mutually entered into from time to time by and between {Client Abbrv.} and Daou and attached hereto as an
addendum. 

  

	 	3.2.	Each SOW shall describe the specific nature of the Services to be rendered to {Client Abbrv.} by Daou, and may include: (a) a description of the Services and/or Deliverables to be
provided, (b) work schedule and anticipated completion date, (c) schedule of Fees, (d) assumptions related to the SOW, (e) {Client Abbrv.}’s responsibilities, and (f) applicable terms and conditions specific to the SOW.

  

	 	3.3.	In the event of a conflict between the terms of this Agreement and the terms of any SOW, the terms of the SOW shall control. 

  

	4.	Fees and Payments. 

  

	 	4.1.	{Client Abbrv.} shall pay Daou’s Fees for the Services rendered and/or Deliverables provided by Daou per the terms of the applicable SOW. 

  

	 	4.2.	Customary and reasonable out-of-pocket expenses for travel, subsistence, certain communications, and similar business expenses incurred by Daou in the provision of the SOW will be
billed, at actual cost, to {Client Abbrv.}. 

  

	 	4.3.	Other costs to {Client Abbrv.} specified in the applicable SOW (e.g., equipment provided by Daou, third-party licensing fees, etc.) shall be billed to {Client Abbrv.} per the
payment terms specified therein. 

  

	 	4.4.	Unless otherwise specified in the applicable SOW, Daou may invoice {Client Abbrv.} on a monthly or semi-monthly basis as defined in the SOW for the Services rendered, Deliverables
provided, and out-of-pocket expenses incurred by Daou. Daou’s billings to Client shall be governed by Daou’s Billing Policies and Rate Structure attached as Attachment A to the SOW. 

  

	 	4.5.	Payment is due within thirty (30) days of the date of Daou’s invoice. Daou shall assess {Client Abbrv.} a late payment charge on any undisputed amount that remains unpaid after
it is due, computed at the lesser of one and one-half percent (11⁄2%) per month or the maximum rate permitted by law. {Client Abbrv.} shall not be assessed a late payment charge on amounts disputed in good faith for which {Client Abbrv.} submits
to Daou a written, detailed description of the dispute, provided {Client Abbrv.} pays all undisputed amounts within thirty (30) days of the date of Daou’s invoice. 

  

			
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	 	4.6.	{Client Abbrv.} shall be responsible for the payment or reimbursement of all sales, use, excise, and similar taxes, except for Daou income taxes, applicable to the Services rendered
and/or Deliverables provided by Daou under this Agreement. 

  

	 	4.7.	Daou’s obligations and {Client Abbrv.}’s rights under this Agreement are conditional upon {Client Abbrv.}’s timely payment of all fees and charges.

  

	5.	Confidentiality and Non-disclosure. 

  

	 	5.1.	“Confidential Information” shall mean, proprietary information and materials provided by one party (the “Disclosing Party”) to the other party (the
“Receiving Party”), which at the time of disclosure is designated as confidential by the Disclosing Party or which by its nature would be understood to be confidential information. This includes, but is not limited to, Daou Intellectual
Property (as defined in Section 6.1.1 herein), information concerning subsidiaries, affiliates and contractors, business plans, customers, employees, trading partners, trade secrets, new products and concepts, proprietary systems and technologies,
financial data and operating procedures, and patient information regardless of form or media. 

  

	 	5.2.	Information provided by the Disclosing Party shall not be considered Confidential Information if the Receiving Party can demonstrate the disclosed information: a) was known to the
Receiving Party prior to disclosure by the Disclosing Party, b) is or becomes publicly known in the public domain, c) is given to the Receiving Party by a third party who has the right to disclose the information, d) is independently created or
developed by the Receiving Party, or e) is required to be disclosed by law or court of competent jurisdiction. 

  

	 	5.3.	Daou and {Client Abbrv.} agree that the Confidential Information made available to the Receiving Party by the Disclosing Party shall be used by the Receiving Party solely for the
purposes set forth in this Agreement and the applicable SOW(s), and that no license or grant, express or implied, in the Confidential Information is made by the Disclosing Party. Unless otherwise expressly authorized by either party or required by
law, all Confidential Information shall be kept in strict confidence. Daou and {Client Abbrv.} shall execute similar confidentiality and non-disclosure agreements with all officers, employees, agents, consultants and sub-contractors that may have
access to Confidential Information, and agree to be responsible for any breach of this Section 5. 

  

	 	5.4.	{Client Abbrv.} agrees and accepts that as part of Daou’s confidential client files Daou will retain copies of the Deliverables and other pertinent work papers generated as
part of the Services as evidence of the work performed for and the Deliverables provided to {Client Abbrv.} by Daou. Further, such Deliverables and other pertinent work papers may contain Confidential Information and such shall be retained in
confidence by Daou per the terms of this Section 5. 

  

	 	5.5.	Protected Health Information 

  

	 	5.5.1	 Background. Daou recognizes that from time to time {Client Abbrv.} may legitimately disclose to Daou Protected Health Information (as that term is defined in
§164.501 45 CFR Parts 160 and 164 Standards for Privacy of Individually Identifiable Health Information, commonly referred to as the HIPAA Privacy Standard) for Daou’s authorized use in the performance of the Services. In such
circumstances, Daou would meet the definition of a Business Associate (as that term is defined in §160.103 of 45 CFR Parts 160 and 164 Standards for Privacy of Individually Identifiable Health Information). Daou further understands {Client
Abbrv.}’ obligation to protect the confidentiality of such Protected Health Information pursuant to the Health Insurance Portability and Accountability Act 

  

			
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of 1996 (sections 1171 through 1179 of the Social Security Act), and the regulations promulgated thereunder by the Department of Health and Human Services.

  

	 	5.5.2	With respect to such Protected Health Information legitimately and properly disclosed to Daou by {Client Abbrv.} regarding Daou’s performance of the Services.

  

	 	5.5.2.1.	Permitted Uses and Disclosures. {Client Abbrv.} hereby authorizes Daou to use any Protected Health Information it discloses to Daou solely in a manner consistent with the
Services Daou is performing for {Client Abbrv.} as provided for in the applicable SOW. For example, Daou may use Protected Health Information in the testing of the configuration of an application system that Daou is implementing on {Client
Abbrv.}’s behalf; or, Daou may use Protected Health Information in the analysis of business/clinical processes it is performing on {Client Abbrv.}’s behalf. Additional restrictions, if any, regarding Daou’s authorized use of Protected
Health Information may be provided for in the applicable SOW. Further, Daou will not use or further disclose such Protected Health Information other than as permitted by this Agreement or as required by law. 

  

	 	5.5.2.2.	Appropriate Safeguards. Daou will use appropriate safeguards to reasonably prevent the improper use or disclosure of Protected Health Information disclosed to Daou by {Client
Abbrv.}. Such safeguards shall be designed, implemented, operated, and managed by Daou following Daou’s best professional judgment regarding such safeguards. Upon {Client Abbrv.}’s reasonable request, Daou will review such safeguards with
{Client Abbrv.}. 

  

	 	5.5.2.3.	Improper Disclosure. If Daou becomes aware of any instance in which such Protected Health Information in Daou’s direct possession or control is used or disclosed other
than as provided for in this Agreement, Daou will promptly report such use or disclosure to {Client Abbrv.}. Further, Daou will undertake commercially reasonable actions to mitigate any deleterious affects of such improper use or disclosure, and
improve Daou’s safeguards to minimize the recurrence of such improper use or disclosure. 

  

	 	5.5.2.4.	Subcontractors. Any subcontractors engaged by Daou to perform any of the Services under this Agreement and who would have authorized access to such Protected Health
Information will be governed by the same restrictions and conditions of this Agreement regarding Protected Health Information in accordance with Section 5.5. 

  

	 	5.5.2.5.	Access by Individuals to Protected Health Information. Daou acknowledges that in accordance with §164.524, §164.526, and §164.528 of 45 CFR Part 164 Standards
for Privacy of Individually Identifiable Health Information individuals for whom Daou has direct possession of their Protected Health Information have the right to inspect and amend their Protected Health Information, and have the right for an
accounting of uses and disclosures of such Protected Health Information except as otherwise provided in such subsections. Daou shall provide such right of inspection, amendment, and accounting of disclosures to such individuals upon reasonable
notice by {Client Abbrv.}. {Client Abbrv.} acknowledges that in most circumstances Daou will not have direct possession of such Protected Health Information (i.e., {Client Abbrv.} will have direct possession and disclose such Protected Health
Information to Daou for its use in the performance of the Services), in which case {Client Abbrv.} shall be responsible for such inspection, amendment, and accounting rights by individuals. Further, in most cases Daou’s use of such

  

			
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 Protected Health Information will be for {Client Abbrv.} Operations (as that term is defined in
§164.501 of 45 CFR Parts 160 and 164 Standards for Privacy of Individually Identifiable Health Information) and as such not subject to the accounting of disclosures requirement as referenced herein. 
  

	 	5.5.2.6.	Access to Records. Upon request from the Department of Health and Human Services, Daou shall make available to the Department of Health and Human Services Daou’s
internal practices, books, and records relating to the use and disclosure of Protected Health Information provided to Daou by {Client Abbrv.} or created by Daou or received by Daou on {Client Abbrv.}’s behalf. 

  

	 	5.5.2.7.	Return of Protected Health Information. Upon request by {Client Abbrv.} or upon termination of this Agreement or upon termination of a SOW under which {Client Abbrv.}
provided such Protected Health Information to Daou, Daou will, at {Client Abbrv.}’s option, either return, destroy, or de-identify all copies of such Protected Health Information in Daou’s possession. 

  

	 	5.6.	The terms and conditions of this Section 5 shall survive the termination of this Agreement. 

  

	6.	Ownership of Materials. 

  

	 	6.1.	Daou Proprietary Information 

  

	 	6.1.1	{Client Abbrv.} acknowledges that Daou and its suppliers retain all right, title, copyright, and proprietary interests in any and all development tools, know-how, trade secrets,
methodologies, processes, plans, technologies, materials, computer programs and software, vendor lists, and other proprietary information (collectively, “Daou Intellectual Property”) used in providing the Services under this Agreement.

  

	 	6.1.2	{Client Abbrv.} represents that any and all Daou Intellectual Property disclosed or provided to {Client Abbrv.} by Daou pursuant to Daou’s performance of the Services hereunder
shall not be used by {Client Abbrv.} in any manner inconsistent with the purpose for which such Daou Intellectual Property was so disclosed or provided to {Client Abbrv.}. 

  

	 	6.1.3	{Client Abbrv.} shall limit access to Daou Intellectual Property to its employees and such agents and consultants whose responsibilities to {Client Abbrv.} require such access in
accordance with Section 5 Confidentiality and Non-disclosure herein. {Client Abbrv.} shall exercise commercially reasonable safeguards over Daou Intellectual Property and shall treat Daou Intellectual Property in a manner consistent with {Client
Abbrv.}’ own most Confidential Information. 

  

	 	6.1.4	{Client Abbrv.} recognizes that Daou Intellectual Property is a valuable asset of Daou and is not to be used in an unauthorized manner or, except as expressly specified in this
Agreement, disclosed to any third party. {Client Abbrv.} acknowledges that a breach of the terms of this Section 6.1 would cause irreparable harm to Daou and Daou shall be entitled to immediate injunctive relief in addition to any and all other
rights which Daou may have under this Agreement, at law or in equity. 

  

	 	6.2.	Daou represents to {Client Abbrv.} that Daou has the rights to any and all Daou Intellectual Property used by Daou in the performance of the Services and/or replicated in whole or
part in the Deliverables. If any component of Daou Intellectual Property is owned by a third party and such component is to be embedded in or otherwise become part of the Deliverables, Daou shall obtain the right for {Client Abbrv.} to use such
component in a manner consistent with the terms and conditions of this Section. 

  

			
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	 	6.3.	{Client Abbrv.} represents to Daou that {Client Abbrv.} has the rights or license to use any and all materials provided to Daou by {Client Abbrv.} for Daou’s use under this
Agreement, including all materials produced by any third party. 

  

	 	6.4.	The terms and conditions of this Section 6 shall survive the termination of this Agreement. 

  

	7.	{Client Abbrv.} Responsibilities. 

  

	 	7.1.	{Client Abbrv.} understands and acknowledges that the obligations of Daou to perform in accordance with this Agreement are dependent upon, among other things, the accuracy of the
assumptions and representations made by {Client Abbrv.}, the timeliness of {Client Abbrv.} management decisions, and the performance of {Client Abbrv.} personnel in meeting their obligations in accordance with the {Client Abbrv.} Responsibilities
section of the applicable SOW. 

  

	 	7.2.	As appropriate and reasonably necessary for Daou’s performance of the Services, {Client Abbrv.} shall supply, without charge to Daou, on-site Daou personnel with suitable
office and storage space and use of other normal office equipment such as telephones and copiers, including supplies. 

  

	 	7.3.	For Services in which Daou requires access to {Client Abbrv.}’s computer systems, including but not limited to operating systems, applications, servers, network and network
equipment, circuits, physical access to data centers and wiring closets, or other information technology components (“IT Environment”), {Client Abbrv.} will provide Daou with proper access to its IT Environment, including the use of
appropriately configured workstations and printers as necessary. {Client Abbrv.} shall be responsible for all costs and expenses for any associated third-party consents, approvals, and authorizations necessary to allow Daou to access, operate, and
use {Client Abbrv.}’ IT Environment. 

  

	8.	Independent Contractor. 

  

	 	8.1.	Daou is an independent contractor as that term is commonly used and not an employee of {Client Abbrv.}. As such, Daou assumes complete responsibility for its own employees with
regard to federal or state employer’s liability and withholding tax, worker’s compensation, social security, unemployment insurance, and other federal, state, and local laws. 

  

	 	8.2.	Further, Daou is solely responsible for any and all taxes due for any and all compensation earned by Daou under this Agreement. 

  

	 	8.3.	Neither party shall be deemed to be a legal representative of the other. Daou has no authority, either express or implied, to bind or obligate {Client Abbrv.} in any way.

  

	9.	Sub-contracting. 

  
 {Client Abbrv.} acknowledges and agrees that from time to time Daou may use personnel that are not Daou employees and are independent contractors to Daou
to perform some of the Services and such independent contractors shall work under Daou’s direct supervision. 
  

	10.	Non-solicitation. 

  
 The parties agree that, unless otherwise agreed to by the parties in writing, during the term of each SOW and for a period of one (1) year thereafter,
neither party shall directly or indirectly solicit, hire, or otherwise retain as an employee or independent contractor an employee of the other party who was involved in the performance of any SOW. 
  

			
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	11.	Warranty, Indemnification and Limitation of Liabilities. 

  

	 	11.1.	Daou warrants that all Services shall be performed by personnel with relevant skill sets, familiar with the subject matter for the SOW, in a professional, competent and workman-like
manner. 

  

	 	11.2.	Each party shall indemnify, defend and hold the other harmless against any actions, loss, judgement, damage or expense associated with any third party claim for bodily injury or
personal property damage arising out of the indemnifying party’s performance within the scope of its responsibilities under this Agreement. 

  

	 	11.3.	It is understood by the parties that under the terms of this Agreement Daou is responsible for providing ideas, recommendations, and certain Deliverables (as identified in the
applicable SOW) to {Client Abbrv.}, and {Client Abbrv.} shall be responsible for how {Client Abbrv.} subsequently uses those ideas, recommendations, and Deliverables. Each party shall be liable only for damages that might arise from the performance
of its own responsibilities created herein. 

  

	 	11.4.	{Client Abbrv.} shall indemnify, defend, and hold harmless Daou and its officers, employees, partners, agents, principals, and sub-contractors, from any and all losses, liabilities,
and claims, including costs and expenses, arising out of or resulting from {Client Abbrv.}’s subsequent use of Daou’s ideas, recommendations, Deliverables, or other work provided to {Client Abbrv.} by Daou under this Agreement.

  

	 	11.5.	Intellectual Property Protection. 

  

	 	11.5.1	Daou warrants and represents that neither the Deliverables nor any Daou Intellectual Property used in the performance of the Services hereunder does or will violate or infringe upon
any US patent, copyright, trade secret, or other property right of any person. If a claim is made against {Client Abbrv.} that any Deliverable or component thereof infringes or is alleged to infringe a US patent, copyright, trade secret, or property
rights of any person, Daou will indemnify, defend, and hold {Client Abbrv.} harmless from such claim at Daou’s expense and will pay resulting costs, damages, and reasonable attorney’s fees finally awarded, provided: (i) {Client Abbrv.}
promptly notifies Daou in writing of such a claim; and, (ii) Daou has sole control of the defense and all related settlement negotiations. 

  

	 	11.5.2	If any Deliverable or component thereof rendered by Daou under this Agreement is, or in Daou’s opinion is likely to be, held to constitute an infringing product, Daou shall at
its expense and option immediately: (i) procure the right for {Client Abbrv.} to continue using it, (ii) replace it with a non-infringing equivalent, or (iii) modify it to make it non-infringing. If, in Daou’s judgement, none of the foregoing
alternatives are commercially reasonable, then upon written request by Daou, {Client Abbrv.} shall return any infringing Deliverable or component thereof to Daou and Daou shall credit or refund to {Client Abbrv.}, at {Client Abbrv.}’s option,
the actual cost of the infringing Deliverable or component thereof; if the actual cost of the infringing Deliverable or component thereof is not specifically identified in the associated SOW or specifically identified in Daou’s invoice to
{Client Abbrv.} regarding same, then the determination of the actual cost of the infringing Deliverable or component thereof shall be solely determined by Daou. 

  

	 	11.6.	 WARRANTY DISCLAIMER. ALL CONDITIONS AND WARRANTIES, EXPRESS OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE REGARDING THE SERVICES AND DELIVERABLES ARE HEREBY
DISCLAIMED AND EXCLUDED. DAOU DOES NOT WARRANT THAT THE SERVICES OR 

  

			
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DELIVERABLES PROVIDED UNDER THIS AGREEMENT WILL MEET {Client Abbrv.}’s REQUIREMENTS OR WILL PERFORM, OR BE PERFORMED, WITHOUT ERROR OR INTERRUPTION, AND
DAOU EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 
  

	 	11.7.	EXCLUSIVE REMEDY AND LIMITATION OF LIABILITY. UNLESS FURTHER LIMITED ELSEWHERE IN THIS AGREEMENT, THE ENTIRE LIABILITY OF DAOU, AND {Client Abbrv.}’s EXCLUSIVE REMEDY
FOR DAMAGES FROM ANY CAUSE RELATED TO OR ARISING OUT OF THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT OR IN TORT (INCLUDING BREACH OF WARRANTY, NEGLIGENCE AND STRICT LIABILITY IN TORT), WILL NOT IN THE AGGREGATE EXCEED THE
LESSER OF (a) THE FEES PAID TO DAOU BY {Client Abbrv.} PURSUANT TO THE SOW(S) (FOR WHICH SUCH SERVICES GAVE RISE TO THE LIABILITY) FOR THE TWELVE (12) MONTHS PRIOR TO THE MONTH IN WHICH THE MOST CURRENT EVENT GIVING RISE TO THE LIABILITY OCCURRED,
OR (b) THE FEES PAID TO DAOU BY {Client Abbrv.} PURSUANT TO THE SOW(S) FOR WHICH SUCH SERVICES GAVE RISE TO THE LIABILITY. THIS LIMITATION OF LIABILITY DOES NOT APPLY TO CLAIMS COVERED BY SECTION 11.2 AND SECTION 11.5. 

  

	 	11.8.	DISCLAIMER OF CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL DAOU BE LIABLE FOR INDIRECT OR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, OR SPECIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO,
LOSS OF USE, REVENUES, PROFITS OR SAVINGS, OR LOSS OF OR DAMAGE TO {Client Abbrv.} DATA FROM ANY CAUSE, EVEN IF DAOU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 

  

	 	11.9.	No action, regardless of form, arising out of the subject matter of this Agreement may be brought by either party more than one (1) year after the cause of action has occurred,
provided however that an action for non-payment may be brought within one (1) year of the date of the last payment. 

  

	12.	Force Majeure. Except for {Client Abbrv.}’s payment obligation to Daou, neither party shall be liable to the other for any delay or inability to perform its obligations
under this Agreement if such delay or inability arises from an act, event, or cause beyond its reasonable control. In the event of such a delay or inability to perform, the time for performance shall be extended for a period of time at least equal
in length of the delay. If a force majeure event occurs and upon mutual agreement between Daou and {Client Abbrv.}, Daou may assign performance of its responsibilities to a third party. 

  

	13.	Miscellaneous. 

  

	 	13.1.	Insurance.  

  

	 	13.1.1	Each party shall maintain comprehensive public liability and property damage insurance, insuring against liability for, among other things, bodily injury and property damage.

  

	 	13.1.2	During the term of this Agreement, Daou shall maintain General Liability insurance coverage at a minimum of $1,000,000 per occurrence and $3,000,000 in the aggregate.

  

	 	13.2.	Licenses and Permits. Daou and {Client Abbrv.} agree to obtain and maintain all applicable permits and licenses required to perform the SOW(s) contemplated by this Agreement.

  

	 	13.3.	 Examination of Records. Until the expiration of four years after the furnishing of any of the Services pursuant to this Agreement, or for such longer period
as required by law or regulation, Daou agrees to make available upon the written request of the Secretary of Health and Human Services or the Comptroller General, or their representatives, this 

  

			
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Agreement and such books, documents and records as may be necessary to verify the nature and extent of the costs of the services rendered hereunder to the
full extent required by the Health Care Financing Administration implementing Section 952 of the Omnibus Section 1395x(v)(1)(1), or by any applicable federal or state authority. 
  

	 	13.4.	Entire Agreement. This Agreement, including its attachments, exhibits, and SOW(s), sets forth the entire agreement and understanding of the parties relating to the subject
matter herein and supersedes any and all prior oral and written agreements, understandings or quotations regarding the subject matter of this Agreement. No amendment, alteration, modification or cancellation of the provisions of this Agreement shall
be binding unless made in writing and signed by both parties. Printed terms and conditions on {Client Abbrv.}’s purchase orders shall not apply to the Services or Deliverables provided under this Agreement. 

  

	 	13.5.	Severability. In the event a court of competent jurisdiction finds a provision of this Agreement to be invalid or unenforceable, the invalidity of that provision shall not
affect the validity of the remaining provisions of this Agreement, which shall remain in full force and effect as if the invalid provision had been omitted. 

  

	 	13.6.	Choice of Law. This Agreement shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania. Any suit or action arising under this Agreement
shall be brought in a State or Federal Court in Chester County, Commonwealth of Pennsylvania. 

  

	 	13.7.	Waiver. The failure of either party in one or more instances to insist upon strict performance of any of the terms of this Agreement will not be construed as a waiver or
relinquishment, to any extent, of the right to assert or rely upon any such terms on any future occasion. 

  

	 	13.8.	Assignment. Except as otherwise specified herein, this Agreement or any SOW, shall not be assigned by either party without the express prior written consent of the other
except to a parent or subsidiary, or to a successor by purchase merger or acquisition. No assignment shall relieve the assignor of its obligations under this Agreement. Any assignment not in accordance with these provisions shall be void.

  

	14.	Notice. 

  
 All notices, requests, demands or other communications to either party shall be in writing and will be deemed to have been duly given if personally
delivered, or if sent by overnight courier or mailed with package tracing capability, to the other party at: 
  

			
	 Daou:

	  	 {Client Abbrv.}:

	 	  	{Client Contact Name}
	 Chief Financial Officer
	  	{Client Contact Title}
	 Daou Systems, Inc.
	  	{Client Full Name}
	 412 Creamery Way, Suite 300
	  	{Client Address 1}
	 Exton, PA 19341
	  	{Client Address 2}

  
  

			
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 IN WITNESS WHEREOF, and intending to be legally bound, Daou and {Client Abbrv.} have executed this Agreement on the
Effective Date. 
  

			
	 Daou Systems, Inc.
 412 Creamery Way, Suite 300
 Exton, PA 19341
	  	 {Client Full Name}
 {Client Address
1}
 {Client Address 2}

		
	 By:
	  	By:
		
	  

	  	  

	 Authorized Signature
	  	Authorized Signature
	  

	  	  

	 Name (Type or Print)
	  	Name (Type or Print)
	  

	  	  

	 Title
	  	Title
	  

	  	  

	 Date
	  	Date

  

			
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