LICENSING AND DISTRIBUTION AGREEMENT

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

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:

“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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(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.

(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.

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.

(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 s