In this task, you're given a passage that represents a legal contract or clause between multiple parties. Your job is to write questions that ask the basic details corresponding to the legal contracts or clauses. Avoid questions that can be answered correctly without actually understanding the paragraph, and which might have multiple answers. The answer to each question should be unambiguous.

[EX Q]: Exhibit 10.1

Redactions with respect to certain portions hereof denoted with ***

COLLABORATION AGREEMENT

This Collaboration Agreement (the Agreement) is made as of April 14th, 2020 (the Effective Date) by and between Anixa Biosciences, Inc., a Delaware corporation, located at 3150 Almaden Expressway, Suite 250, San Jose, CA 95118, U.S.A. (Anixa), and OntoChem GmbH, a German limited liability company, located at Blucherstr. 24, D-06120 Halle (Saale), Germany (OntoChem). Anixa and OntoChem are referred to herein individually as a Party and collectively as the Parties.

WHEREAS, the Parties wish to collaborate in the discovery and development of novel drug candidates for the treatment of COVID-19 in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual promises set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Defined Terms.

1.1 Affiliate means, with respect to a Party, any entity directly or indirectly controlled by, controlling or under common control with such Party. For purposes of this definition, control means (a) ownership of fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign entity or investor in a particular jurisdiction) or more of the outstanding voting stock or other ownership interest of an entity, or (b) possession of the power to (i) elect, appoint, direct or remove fifty percent (50%) or more of the members of the board of directors or other governing body of an entity or (ii) otherwise direct or cause the direction of the management or policies of an entity by contract or otherwise.

1.2 Hit Compound means any chemical entity that is determined in performing the Research Plan to meet the Hit Criteria.

1.3 Hit Criteria means the criteria identified as Hit Criteria as set forth in the Research Plan.

1.4 Invention means any invention, know-how, data, discovery or proprietary information, whether or not patentable, that is made or generated solely by the Representatives of Anixa or OntoChem or jointly by the Representatives of Anixa and OntoChem in performing the Research Plan, including all intellectual property rights in the foregoing.

1.5 Representative means, with respect to a Party, an officer, director, employee, agent or permitted subcontractor of such Party.

1.6 Research Plan means the research plan attached hereto as Exhibit A.

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1.7 SAR means the relationship between the chemical or three-dimensional structure of a compound and its biological activity, and includes the determination of the chemical groups responsible for evoking a target biological effect.

1.8 Target means: (a) any protease of any coronavirus, including Mpro; (b) the Nsp15-pRB ribonuclease protein- protein interaction; (c) all mutants and variants of any molecule or component referenced in clauses (a) or (b); and (d) all truncated forms (including fragments) of any molecule or component referenced in clauses (a) or (b) or mutant or variant referenced in clause (c).

1.9 Variant means, with respect to any Hit Compound: (a) all compounds within the genus of compounds to which such Hit Compound would belong under United States patent laws as referenced in the Selection Notice (as defined below); and (b) any base form, metabolite, ester, salt form, racemate, stereoisomer, polymorph, hydrate, anhydride or solvate of such Hit Compound or any other compound described in clause (a) (in the case of this clause (b), without regard to whether such compound is referenced in the Selection Notice).

2. Research Program.

2.1 Performance. The Parties will diligently perform their respective activities set forth in the Research Plan (such activities, collectively, the Research Program) in accordance with the timelines set forth therein, with the objective of identifying Hit Compounds and Lead Scaffolds that modulate the applicable Target. Without limiting the foregoing, OntoChem will (a) provide all deliverables set forth in the Research Plan (each, a Deliverable) and (b) obtain any authorizations, approvals and licenses required for performance of the Research Plan. If any terms set forth in the Research Plan conflict with the terms set forth in this Agreement, the terms of this Agreement will control unless expressly indicated to the contrary in the Research Plan. The Research Plan may not be amended without the prior written consent of both Parties. If, from time to time, the Parties desire to expand the scope of the Research Program, then they will negotiate in good faith a potential amendment of the Research Plan in regard to such expanded scope, on commercially reasonable terms, but neither Party will be obligated to enter into any such amendment.

2.2 Weekly Updates. OntoChem will provide Anixa with weekly (or more frequently as requested) updates regarding its progress under the Research Program via teleconference, videoconference or e-mail, and the Parties will make appropriate personnel available in a timely manner to discuss and provide feedback in regard to such updates.

2.3 Delivery of Data. In conjunction with each weekly update described in Section 2.2, OntoChem will deliver to Anixa all data generated under the Research Plan since the preceding update. In addition, Anixa will have the right to reasonably request additional information relating to such data, and OntoChem will respond to such requests promptly with any such additional information in its possession or control, provided that, for clarity, OntoChem will not be required to perform any new or additional research in order to generate any such additional information.

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2.4 Selection of Lead Scaffolds. Within one year following completion of all activities under the Research Plan (the Selection Deadline), Anixa, in good faith consultation with OntoChem, will have the right to select up to two hundred (200) Hit Compounds (each, a Selected Hit Compound), by providing OntoChem with written notice of such Selected Hit Compound(s) (the Selection Notice), and each Selected Hit Compound, along with all Variants of such Selected Hit Compound referenced in the Selection Notice, is hereby designated as a Lead Scaffold under this Agreement. Commencing upon selection of a Selected Hit Compound, Anixa (itself and through its Affiliates and designees) will have sole authority over and control of the further development, manufacture, and commercialization of the corresponding Lead Scaffold and any product candidate or product incorporating a compound from such Lead Scaffold. Following the Selection Deadline, Anixa will have no further rights with respect to any Hit Compound that is not a Selected Hit Compound or included within a Lead Scaffold (each, a Rejected Hit Compound), provided that, during the period of two (2) years following the Selection Deadline, neither OntoChem nor any of its Affiliates will use or disclose to any third party any Rejected Hit Compound or any Variant thereof, including the identity, structure or SAR information of any such compound, for application as anti-viral agents or protease inhibitors, for purposes of modulating any Target or for treatment of virus-related conditions. In case OntoChem finds a novel and unexpected antiviral use of those Rejected Hit Compounds during this 2-years period, it will notify Anixa about these findings and Anixa has the right of first negotiation during a period of 6 months after this notification. If Anixa decides to not license those uses or compounds for this novel antiviral use, OntoChem is free to develop those molecules further as its own intellectual property without any further restrictions.

2.5 Subcontractors. OntoChem may engage one or more subcontractors to perform its activities under the Research Plan with the prior written approval of Anixa and provided that, with respect to any such subcontractor, OntoChem will (a) be responsible and liable for the performance of such subcontractor and (b) enter into a written agreement (i) consistent with terms and conditions of this Agreement, including with respect to confidentiality and intellectual property, and (ii) prohibiting such subcontractor from further subcontracting. For clarity, vendors where commercial building blocks or compounds will be purchased are nor regarded as subcontractors.

2.6 Target Exclusivity. During the term of this Agreement, except in the performance of its obligations or exercise of its rights under this Agreement, neither OntoChem nor any of its Affiliates will discover, research, develop, manufacture or commercialize any compound or product directed to any Target, either independently or for or in collaboration with a third party (including the grant of a license to any third party), or have any of the foregoing activities performed on behalf of OntoChem or any of its Affiliates by a third party. For clarity, the foregoing includes the screening (including via computational methods) of any compound library or virtual compound library against any Target.

2.7 Records. Each Party will maintain complete and accurate records of all activities performed by or on behalf of such Party under the Research Program and all Inventions made or generated by or on behalf of such Party in the performance of the Research Program. Such records will be in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Each Party will provide the other Party with the right to inspect such records, and upon request will provide copies of all such records, to the extent reasonably required for the exercise or performance of such other Party's rights or obligations under this Agreement, provided that any information disclosed under this Section 2.7 will be subject to the terms and conditions of Section 5. Each Party will retain such records for at least three (3) years following expiration or termination of this Agreement or such longer period as may be required by applicable law or regulation.

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2.8 Debarment. Each Party hereby represents and warrants to the other Party that neither it nor any of its Affiliates or personnel has been debarred under any health care laws or regulations and that, to its knowledge, no investigations, claims or proceedings with respect to debarment are pending or threatened against such Party or any of its Affiliates or personnel. Neither Party nor any of its Affiliates will use in any capacity, in connection with the Research Program, any person or entity who has been debarred. Each Party agrees and undertakes to promptly notify the other Party if such Party or any of its Affiliates or personnel becomes debarred or proceedings have been initiated against any of them with respect to debarment, whether such debarment or initiation of proceedings occurs during or after the term of this Agreement.

3. Financial Terms.

3.1 Research Program Payments. In consideration for OntoChem's performance of its activities under the Research Plan, Anixa will:

(a) pay OntoChem 100,002 Euros in six (6) equal installments as follows: (i) 16,667 Euros within five (5) days after the Effective Date; and (ii) five (5) installments in the amount of 16,667 Euros on each one-month anniversary of the Effective Date, except that the last such payment will be due within thirty (30) days after completion of all activities under the Research Plan; and

(b) reimburse OntoChem for its out-of-pocket expenses incurred in performing the Research Plan on a pass- through basis without mark-up, within thirty (30) days after delivery of an invoice therefore (including reasonable supporting documentation), provided that Anixa has approved such expenses in advance and in writing (including in regard to the selection of specific Hit Compounds to be synthesized and analyzed in biological assays). It is estimated that OntoChem's out-of-pocket expenses under the Research Plan will include 110,000 Euros payable to Tube Pharmaceuticals GmbH as a subcontractor of OntoChem, subject to Section 2.5.

(c) High-throughput screening compounds

OntoChem will forward a commercial proposal to acquire these compounds at the sole discretion of Anixa. Both parties will agree on payment conditions.

(d) Extra custom synthesis

OntoChem will forward a commercial proposal to have synthesized these compounds at the sole discretion of Anixa. Both parties will agree on payment conditions.

(e) Biological testing

OntoChem will forward a commercial proposal to have biologically test these compounds at the sole discretion of Anixa. Both parties will agree on payment conditions.

3.2 Lead Scaffold Payments. For each Lead Scaffold selected by Anixa, Anixa will pay OntoChem an annual fee of 10,000 U.S. Dollars, payable within thirty (30) days following each anniversary of the date of the Selection Notice, until five (5) years after the first commercial sale of the first product incorporating a compound from such Lead Scaffold, subject to Section 4.3 with respect to any Terminated Scaffold (as defined below).

3.3 Milestone Payment. Anixa will pay OntoChem a one-time milestone payment of 300,000 U.S. Dollars within thirty (30) days following the dosing of the first patient in the first human clinical trial for the first product incorporating a compound from a Lead Scaffold.

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3.4 Payment Terms. Payments to OntoChem will be made by check or by wire transfer of immediately available funds to such bank account as designated in writing by OntoChem from time to time. Taxes (and any penalties and interest thereon) imposed on any payment made by Anixa to OntoChem will be the responsibility of OntoChem. The fees for the respective bank transfers will be borne by Anixa.

3.5 Financial Records. OntoChem will maintain complete and accurate books and accounting records related to all out-of-pocket expenses incurred in performing the Research Plan. These records will be available for inspection during regular business hours upon reasonable notice by Anixa, or its duly authorized representative, at Anixa's expense, for three (3) years following the end of the calendar year in which such expenses are invoiced. If it is determined that Anixa has overpaid for any expenses passed through by OntoChem under this Agreement, OntoChem will promptly reimburse Anixa for the amount of such overpayment and, if such overpayment represents more than five percent (5%) of the corresponding amount due, OntoChem will pay Anixa's reasonable fees and expenses incurred in connection with such inspection.

4. Term and Termination.

4.1 Term. Unless earlier terminated in accordance with Section 4.2 or 4.3, this Agreement will be in effect from the Effective Date until completion of the Research Program.

4.2 Termination by Anixa. This Agreement may be terminated by Anixa, without cause, upon at least thirty (30) days written notice to OntoChem.

4.3 Termination of Lead Scaffolds. For each Lead Scaffold, if (a) neither Anixa nor any of its Affiliates, licensees or assignees has dosed the first patient in a human clinical trial for a product incorporating a compound from such Lead Scaffold by the fifth (5th) anniversary of the date of the Selection Notice, or (b) Anixa earlier provides written notice of termination of such Lead Scaffold referencing this Section 4.3, then such Lead Scaffold (each, a Terminated Scaffold) will thereupon cease to be a Lead Scaffold under this Agreement and thereafter, notwithstanding anything to the contrary in this Agreement: (i) Anixa will promptly assign to OntoChem all right, title and interest in and to any patents and patent applications owned by Anixa that claim such Terminated Scaffold (including the composition, use or manufacture thereof) and, following such assignment, OntoChem will exclusively control the filing, prosecution, maintenance and enforcement of such patents and patent applications; (ii) the identity, structure and SAR information of such Terminated Scaffold will be deemed to be the Confidential Information of OntoChem; (iii) Anixa will not owe any further annual fees under Section 3.2 for such Terminated Scaffold; and (iv) this Agreement will otherwise remain in full force and effect.

4.4 Termination for Cause. This Agreement may be terminated by either Party for material breach by the other Party, provided that the terminating Party has given the breaching Party written notice of the breach and at least sixty (60) days to cure the breach prior to the effective date of termination.

4.5 Effects of Termination. Promptly following expiration or termination of this Agreement, OntoChem will provide Anixa with an invoice (including reasonable supporting documentation) for any pre-approved out-of-pocket expenses (including non- cancellable commitments) incurred by OntoChem in performing the Research Plan and not yet reimbursed by Anixa, and Anixa will pay such invoice within thirty (30) days after receipt thereof. In addition, if this Agreement is terminated prior to completion of the Research Program, OntoChem will promptly furnish to Anixa any Deliverable or other work product generated to date and not previously provided to Anixa, including work in process.

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4.6 Survival. Expiration or termination of this Agreement will not affect the rights and obligations of the Parties that accrued prior to the effective date of such expiration or termination. The following provisions will remain in effect following expiration or termination of this Agreement and the Parties will continue to be bound thereby: Sections 2.4 (last three sentences), 2.7, 2.8 (last sentence only), 3.2, 3.3, 3.4, 3.5, 4.5, 4.6, 5, 6, 8 and 9.

5. Confidentiality.

5.1 Definition. Confidential Information means any information disclosed (directly or indirectly) by a Party (in such capacity, Discloser) to the other Party (in such capacity, Recipient) in connection with this Agreement whether in written, graphic, electronic, tangible or any other form. Confidential Information will not, however, include any information that: (a) was publicly known or generally available to the public prior to the time of disclosure by Discloser to Recipient; (b) becomes publicly known or generally available to the public after disclosure by Discloser to Recipient through no wrongful action or inaction of Recipient; (c) is in the rightful possession of Recipient without confidentiality obligations at the time of disclosure by Discloser to Recipient as shown by Recipient's then-contemporaneous written files and records kept in the ordinary course of business; (d) is obtained by Recipient from a third party without an accompanying duty of confidentiality and without (to Recipient's knowledge) a breach of such third party's obligations of confidentiality; or (e) is independently developed by Recipient without use of or reference to Discloser's Confidential Information. Notwithstanding anything to the contrary in this Agreement, except as expressly provided in Section 4.3 with respect to a Terminated Scaffold, the identity, structure and SAR information of: (i) the Hit Compounds will be deemed to be the Confidential Information of both Parties until the Selection Deadline, provided that, during such period, Anixa (itself or through one or more third party service providers on its behalf under a written agreement consistent with terms and conditions of this Agreement, including with respect to confidentiality and intellectual property) may perform biological assays and other analyses to evaluate the Hit Compounds solely for purposes of selecting Lead Scaffolds pursuant to Section 2.4; (ii) the Lead Scaffolds will be deemed to be Anixa's Confidential Information commencing upon the date of the Selection Notice; (iii) the Rejected Hit Compounds will be deemed to be OntoChem's Confidential Information commencing upon the date of the Selection Notice, subject to the last sentence of Section 2.4.

5.2 Non-Use and Non-Disclosure. Neither Party will use any Confidential Information of the other Party for any purpose except as reasonably necessary to fulfill its obligations or exercise its rights under this Agreement. Neither Party will disclose any Confidential Information of the other Party nor permit any such Confidential Information to be disclosed, either directly or indirectly, to any third party or its personnel without the other Party's prior written consent, except as expressly permitted hereunder. Each Party may disclose Confidential Information of the other Party to its Representatives who are required to have the information in order for such Party to fulfill its obligations or exercise its rights under this Agreement, provided that such Representatives are subject to legally binding non-use and non-disclosure obligations consistent with this Agreement, prior to any disclosure of Confidential Information to such Representatives. If Recipient becomes legally compelled to disclose any Confidential Information of Discloser, Recipient will provide Discloser prompt written notice of such disclosure obligation, if legally permissible, and upon request will reasonably assist Discloser in seeking a protective order or other appropriate remedy. If Discloser waives Recipient's compliance with this Agreement or fails to obtain a protective order or other appropriate remedy, Recipient will furnish only that portion of the Confidential Information that is legally required to be disclosed, provided that any Confidential Information so disclosed will maintain its confidentiality protection for all purposes other than such legally compelled disclosure.

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5.3 Maintenance of Confidentiality. Recipient will take commercially reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information of Discloser. Without limiting the foregoing, Recipient will take at least those measures that it employs to protect its own confidential information of a similar nature. Recipient will promptly notify Discloser in writing of any unauthorized use or disclosure, or suspected unauthorized use or disclosure, of Discloser's Confidential Information of which Recipient becomes aware.

5.4 Confidential Terms. Except as otherwise required by applicable law or regulation, neither Party will disclose the existence or terms of this Agreement to any third party without the prior written consent of the other Party, except that (a) each Party may disclose this Agreement or its terms to its advisors and to existing and potential investors, acquirers, lenders and, in the case of Anixa, licensees on a reasonable need-to-know basis under circumstances that reasonably ensure the confidentiality thereof, and (b) Anixa may issue press releases, make investor and other public presentations and post content on its website from time to time regarding the existence and terms of this Agreement and progress regarding the development, manufacture and commercialization of Lead Scaffolds (including the identity of any permitted subcontractors under this Agreement), to the extent deemed appropriate for purposes of investor relations in its capacity as a publicly traded company and compliance with securities laws and regulations.

5.5 Equitable Relief. Recipient agrees that any violation or threatened violation of this Article 5 may cause irreparable injury to Discloser, entitling Discloser to seek to obtain injunctive relief in addition to all legal remedies without showing or proving any actual damage and without any bond required to be posted.

5.6 Return of Confidential Information. Upon expiration or termination of this Agreement, or upon written request, each Party will promptly return to the other Party, or upon written request of such other Party destroy, all materials containing such other Party's Confidential Information, provided, however, that the Recipient may retain in confidence (a) one archival copy of the Confidential Information of the Discloser in its legal files solely to permit the Recipient to determine compliance with this Agreement and (b) any portion of the Confidential Information of the Discloser which the Recipient is required by applicable law or regulation to retain. Notwithstanding the return or destruction of the materials described above, the Parties will continue to be subject to the terms of this Section 5.

6. Intellectual Property.

6.1 Background Intellectual Property. All inventions, know-how, data, discoveries and proprietary information, including all intellectual property rights in the foregoing, owned or controlled by a Party as of immediately prior to the Effective Date are and will remain the sole property of such Party.

6.2 Inventions Owned by OntoChem. OntoChem will own, and Anixa hereby assigns to OntoChem, all right, title and interest in and to all Inventions directed to (a) any methods of generating or screening compound libraries and (b) the Rejected Hit Compounds (including the composition, use or manufacture thereof), in the case of this clause (b), effective as of the Selection Deadline (collectively (clauses (a) and (b)), OntoChem Inventions). As between the Parties, OntoChem will exclusively control the filing, prosecution, maintenance and enforcement of any patents and patent applications claiming OntoChem Inventions.

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6.3 Inventions Owned by Anixa. Anixa will own, and OntoChem hereby assigns to Anixa, all right, title and interest in and to all Inventions other than OntoChem Inventions, including, for clarity, Inventions directed to the Lead Scaffold(s) (including the composition, use or manufacture thereof) (collectively, Anixa Inventions). As between the Parties, Anixa will exclusively control the filing, prosecution, maintenance and enforcement of any patents and patent applications claiming Anixa Inventions.

6.4 License Grant. OntoChem hereby grants to Anixa a non-exclusive, fully paid-up, royalty-free, perpetual, irrevocable, transferable, worldwide license (with the right to grant and authorize sublicenses through multiple tiers) under any patents which OntoChem or any of its Affiliates own or control during the term of this Agreement, to make, have made, use, sell, offer for sale and import the Lead Scaffold(s) and products that incorporate compounds from the Lead Scaffold(s). OntoChem will not incorporate any invention, discovery or other proprietary information owned by any third party into any Anixa Inventions or Deliverables without Anixa's prior written consent.

6.5 Invention Disclosure and Implementation. Each Party will notify the other Party promptly in writing of each Invention made or generated by such Party. The determination of inventorship with respect to all Inventions will be made in accordance with United States patent law. Each Party will assign, and does hereby assign, to the other Party rights with respect to the applicable Inventions as necessary to achieve ownership as provided in Sections 6.2 and 6.3. Each assigning Party will execute and deliver all documents and instruments reasonably requested by the other Party to evidence or record such assignment or to file for, perfect or enforce the assigned rights. Each assigning Party will make its relevant Representatives (and their assignments and signatures on such documents and instruments) reasonably available to the other Party for assistance in accordance with this Section 6.5 at no charge. However, out of pocket expenses such as travel or communication costs shall be reimbursed. Each Party will have the sole right to file and prosecute patent applications claiming any Inventions of which such Party is the sole owner pursuant to this Agreement without the consent of the other Party, and such other Party will provide, and will cause its Representatives to provide, reasonable cooperation and assistance with such filing and prosecution upon request. To the extent OntoChem is obligated by reason of mandatory provisions of the Gesetz uber Arbeitnehmererfindungen (ArbNErfG) (German law covering employee inventions) to make payments to its employees, OntoChem will be solely responsible, and indemnify Anixa, for any and all such payments to OntoChem's employees.

6.6 No Implied Rights. Except as otherwise expressly provided herein, nothing in this Agreement is intended to grant to either Party any rights under any intellectual property right of the other Party.

7. Representations and Warranties.

7.1 Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party that: (a) it is duly organized, validly existing, and in good standing under the laws and regulations of the jurisdiction in which it is organized; (b) it has the requisite power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; (c) it has taken all requisite action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; (d) this Agreement has been duly executed and delivered by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms; and (e) the execution, delivery and performance of this Agreement by it do not conflict with any agreement, instrument or understanding, oral or written, to which it is a party, or to which it is bound, and it will not enter into any agreement, instrument or understanding, oral or written, that conflicts with the rights and obligations of this Agreement during the term of this Agreement.

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7.2 Additional Representations and Warranties of OntoChem. OntoChem hereby further represents and warrants to Anixa that: (a) to OntoChem's knowledge, OntoChem's performance of its activities under the Research Plan does not infringe or constitute misappropriation of the intellectual property rights of any third party; (b) no licenses, permissions or releases from any third party are necessary for OntoChem's performance of its activities under the Research Plan; (c) OntoChem has obtained rights to use any third-party compound libraries and software referenced in the Research Plan under terms and conditions consistent with this Agreement; and (d) OntoChem's performance of its activities under the Research Plan will not result in any third party acquiring any right, title or interest in or to any Anixa Invention or Deliverable.

7.3 Mutual Covenants. Each Party hereby covenants that: (a) all Representatives of such Party who participate in the performance of the activities contemplated by this Agreement will be subject to written obligations regarding the treatment of Confidential Information and the assignment of Inventions that are consistent with such Party's obligations under this Agreement, as of the commencement of such activities by such Representatives; and (b) such Party will comply with applicable laws and regulations in connection its performance of this Agreement.

8. Indemnification and Insurance.

8.1 Indemnification by Anixa. Anixa will indemnify, defend and hold harmless OntoChem, its Affiliates and their respective Representatives from and against any liability, demand, damage, cost or expense (including reasonable attorney's fees) arising from any third-party claim, action or proceeding arising from (a) Anixa's breach of this Agreement or (b) Anixa's negligence or willful misconduct in connection with this Agreement, except with respect to any matter for which OntoChem is obligated to provide indemnification under Section 8.2.

8.2 Indemnification by OntoChem. OntoChem will indemnify, defend and hold harmless Anixa, its Affiliates and their respective Representatives from and against any liability, demand, damage, cost or expense (including reasonable attorney's fees) arising from any third-party claim, action or proceeding arising from (a) OntoChem's breach of this Agreement or (b) OntoChem's negligence or willful misconduct in connection with this Agreement, except with respect to any matter for which Anixa is obligated to provide indemnification under Section 8.1. Financial reimbursements claimed according to such indemnification shall not exceed payments received by OntoChem under this contract.

8.3 Indemnification Procedure. A Party (the Indemnitee) that intends to claim indemnification under this Section 8 will promptly notify the other Party (the Indemnitor) in writing of any claim, action or proceeding in respect of which the Indemnitee intends to claim such indemnification (each a Claim), and the Indemnitor will have the right to control the defense and/or settlement of such Claim, provided that the Indemnitee will have the right to participate, at its own expense, with counsel of its own choosing in the defense and/or settlement of such Claim. The Indemnitor will not, without the prior written consent of the Indemnitee, enter into any settlement or agree to any disposition of the applicable Claim that imposes any conditions or obligations on the Indemnitee. The failure to deliver written notice to the Indemnitor within a reasonable period of time after the commencement of any such Claim will not relieve such Indemnitor of any liability to the Indemnitee under this Section 8 except to the extent such failure is prejudicial to the Indemnitor's ability to defend such Claim. The Indemnitee and its Representatives, at the Indemnitor's request and expense, will provide full information and reasonable assistance to the Indemnitor and its legal representatives with respect to the applicable Claim subject to indemnification. It is understood that only a Party may claim indemnification under this Section 8 (on its own behalf or on behalf of its Affiliates or their respective Representatives), and such Party's Affiliates and their respective Representatives may not directly claim indemnification hereunder.

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8.4 Insurance. Each Party will maintain liability insurance, with reputable and financially secure insurance carriers, at levels consistent with industry standards based upon such Party's respective activities and indemnification obligations under this Agreement. Upon request, each Party will furnish to the other Party certificates issued by the applicable insurance company(ies) evidencing such insurance.

9. Miscellaneous.

9.1 Relationship of the Parties. The Parties are independent contractors and nothing contained in this Agreement will be construed to place them in the relationship of partners, principal and agent, employer/employee or joint venturer. Neither Party will have the power or right to bind or obligate the other Party, nor will either Party hold itself out as having such authority.

9.2 Use of Name. Neither Party will use the name, logo or trademark of the other Party in any advertising, publicity or other promotional activities without such other Party's prior written consent, unless such use is reasonably necessary to comply with applicable laws or regulations and subject to clause (b) of Section 5.4.

9.3 Notices. Any notice required or permitted to be given under this Agreement by either Party will be in writing (in English) and will be delivered to the applicable Party at its respective address set forth below by personal delivery, e-mail, reputable international courier or registered or certified mail. Notices will be deemed given on the date received if delivered personally, on the next business day if sent by e-mail or international courier, or five (5) days after the date postmarked if sent by registered or certified mail, return receipt requested, postage prepaid.

If to OntoChem: OntoChem GmbH Blucherstr. 24, D-06120 Halle (Saale) Germany Attention: Chief Executive Officer E-mail: lutz.weber@ontochem.com

If to Anixa: Anixa Biosciences, Inc. 3150 Almaden Expressway, Suite 250 San Jose, CA 95118 U.S.A. Attention: Chief Executive Officer E-mail: ak@anixa.com 10

9.4 Governing Law. This Agreement and the rights and obligations of the Parties hereunder will be governed by the laws of the State of Delaware without regard to the conflict of laws provisions of any jurisdiction. The Parties agree that the 1980 United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

9.5 Arbitration. The Parties agree that any dispute arising out of, or in connection with, this Agreement, which cannot be amicably resolved between the Parties, will be finally settled by binding arbitration under the then current rules of the International Chamber of Commerce (ICC) by one (1) arbitrator appointed in accordance with ICC rules. Any such arbitration will be conducted in English in the State of Delaware. The arbitrator may grant injunctive or other relief in such dispute or controversy. The decision of the arbitrator will be final, conclusive and binding on the Parties. Judgment may be entered on the arbitrator's decision in any court of competent jurisdiction. The costs of the arbitration, including administrative and arbitrator's fees, will be shared equally by the Parties. Each Party will bear the cost of its own attorneys' fees and expert witness fees. Notwithstanding anything to the contrary in this Agreement, a Party may seek a temporary restraining order or a preliminary injunction from any court of competent jurisdiction in order to prevent immediate and irreparable injury, loss or damage on a provisional basis, pending the selection of the arbitrator or pending the arbitrator's determination of the merits of any dispute pursuant to this Section 9.5.

9.6 Severability. If any one or more provisions of this Agreement will be found to be invalid or unenforceable in any respect, the Parties will negotiate in good faith a valid and enforceable substitute provision that most nearly reflects the original intent of the Parties, and the validity and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby.

9.7 Amendment; Waiver. This Agreement may be amended or modified, and any of the terms of this Agreement may be waived, only by a written instrument executed by each Party or, in the case of waiver, by the Party or Parties waiving compliance. The delay or failure of either Party at any time or times to require performance of any provision will in no manner affect its rights at a later time to enforce the same. No waiver by either Party of any condition or of the breach of any term contained in this Agreement, in any one or more instances, will be deemed to be, or considered as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement.

9.8 Assignment. Neither Party may assign or otherwise transfer this Agreement (or any of its rights or obligations hereunder) without the prior written consent of the other Party, except that either Party may assign this Agreement without such consent to an entity that acquires all or substantially all of the business or assets of such Party to which this Agreement relates, whether by merger, consolidation, sale of assets or otherwise. Any assignment or transfer of this Agreement in violation of this Section 9.8 will be null and void. This Agreement will bind and inure to the benefit of the Parties and their respective successors and permitted assigns.

9.9 Entire Agreement. This Agreement represents the complete and entire understanding between the Parties regarding the subject matter hereof and supersedes all prior negotiations, representations or agreements, either written or oral, regarding such subject matter.

9.10 Counterparts. The Parties may execute this Agreement in multiple counterparts, all of which together will constitute one instrument. Signatures to this Agreement delivered by facsimile or other electronic transmission (e.g., portable document format (PDF)) will be deemed to be binding as original signatures.

(The remainder of this page is intentionally left blank. The signature page follows.)

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

ANIXA BIOSCIENCES, INC. ONTOCHEM GMBH

By: /s/ Amit Kumar By: /s/ Lutz Weber Amit Kumar, Ph.D. Name: Dr. Lutz Weber President and Chief Executive Officer Title: CEO 12

Exhibit A: Research Plan

***

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[EX A]: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?

[EX Q]: Exhibit 10.1

Confidential treatment has been requested for portions of this Exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are marked by brackets with asterisks, such as [***]. A complete version of this Exhibit has been filed separately with the Securities and Exchange Commission.

STRATEGIC ALLIANCE AGREEMENT THIS STRATEGIC ALLIANCE AGREEMENT (Agreement), entered into as of October 22, 2010 (the Effective Date) by and between PPD Development, LP, a Texas limited partnership, with its principal executive offices located at 929 North Front Street, Wilmington, North Carolina 28401 (PPD) and VirtualScopics, Inc., with an address of 500 Linden Oaks, Second Floor, Rochester, New York 14625 (VS). WHEREAS, PPD is a clinical research organization engaged in the business of managing clinical research programs and providing services regarding the development of pharmaceuticals, chemicals, biotechnology and other products through clinical testing; WHEREAS, VS is in the business of providing imaging services to the medical, pharmaceutical and related industries; WHEREAS, PPD and VS desire to enter into a mutually beneficial relationship with a mission to deliver a comprehensive set of clinical and medical imaging services that will enable biopharmaceutical companies to make faster, more confident decisions on the development of their compounds, creating time and cost efficiencies; and WHEREAS, the parties desire to develop, market, sell, and deliver those joint service offerings pursuant to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Term. The term of this Agreement shall begin on the Effective Date and shall continue for a period of two (2) years (Initial Term) unless terminated earlier in accordance with Section 11 of this Agreement. Upon expiration of the Initial Term, unless written notice to the contrary is provided by one party to the other party at least 30 days prior to the expiration of the then-current term, this Agreement shall be renewed for additional, successive periods of one (1) year each (each a Renewal and together with the Initial Term, collectively, the Term). In connection with any Renewal, the parties shall mutually agree upon and set forth in a written amendment signed by the parties (i) any changes to the Services constituting Preferred Services and (ii) any changes to the [***], VS Preferred Pricing, percentage Discount (defined in Section 4 below) or Bookings thresholds for all such Preferred Services. Upon any expiration or termination of this Agreement, all active Work Orders issued prior to such expiration or termination shall remain subject to the terms and conditions contained herein so long as such Work Order remains active. 2. Services. PPD or any of its subsidiaries or affiliates may engage VS to perform imaging services (the Services) for a specific sponsor's clinical research study (Sponsor) or for a particular project. The Services may be amended, supplemented, or replaced from time to time upon mutual agreement of VS and PPD.

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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3. Services Commitment. Preferred Services shall be defined as those imaging services included within the service offerings of VS at the time of final execution of this Agreement which are specifically provided by VS in the therapeutic areas of hematology and oncology (Designated Therapeutic Areas) to the extent such imaging services are subject to the commitments of VS set forth in this Section 3 (the Commitments). PPD Services shall be defined as clinical research organization services regarding the management of clinical trials for the development of pharmaceuticals, chemicals, biotechnology and other products through clinical testing. Preferred Services and PPD Services shall be subject to all of the rights and obligations otherwise set forth in this Agreement. Nothing contained herein shall be construed to limit the provision of non-Preferred Services hereunder, however, such non-Preferred Services shall not be subject to the Commitments set forth in this Section 3. a. Joint Commitments (i) The parties acknowledge and agree that it is their intent and commitment to expand the Joint Solution (as defined below) to therapeutic areas beyond the Designated Therapeutic Areas. Upon mutual agreement regarding such expansion, it is the parties' further intent to make such additional Joint Solution services subject to substantially the same commitments as those set forth herein. (ii) The parties acknowledge and agree that each party has in place, or will develop, processes and procedures applicable to their performance hereunder as specified on Exhibit A (Integration Services). The Integration Services shall be reviewed and assessed by the parties from time to time and may be amended or updated from time to time. Exhibit A shall be used as a guide for developing integrated service offerings to meet the needs of each party's clients, as applicable (in each instance, a Joint Solution or collectively, the Joint Solution). (iii) Where either party determines that an opportunity exists and is appropriate for the offering of the Joint Solution to that party's customer or client, it is the parties' mutual intent and commitment to collaborate, as needed, to propose the Joint Solution to that customer or client. Each party agrees to make a good faith effort to promote a Joint Solution for a Sponsor seeking services that could reasonably be addressed by the Joint Solution. In connection with PPD's response to a request for proposal (an RFP) in which a Joint Solution is proposed, PPD shall be responsible for the preparation and submission of such RFP response; provided, however, that PPD shall provide VS an opportunity to review and provide approval on the Joint Solution framework, including, the scope of the Preferred Services and the pricing thereof. VS shall provide such review within two (2) business days following receipt by VS of such RFP response from PPD. Where reasonably appropriate for the proper defense of an RFP, PPD will use its reasonable efforts to provide VS an opportunity to participate in a call or bid defense meeting to the extent related to the Joint Solution. In the event PPD is awarded a clinical research study and such award includes selection by Sponsor of the Joint Solution, the parties shall mutually agree upon an applicable Work Order in accordance with Section 4 below.

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A. However, nothing contained herein shall be construed to impose upon PPD an obligation to offer the Joint Solution or to use VS for Preferred Services where: (1) Sponsor is not in agreement, (2) VS's pricing is not competitive, or (3) there have been advances in technology not offered by VS. B. Further, nothing contained herein shall enable either party to utilize the Joint Solution where the client has rejected the involvement of either party. For the avoidance of doubt, the Joint Solution shall only be utilized where both parties' services in furtherance of the Joint Solution have been retained by the client. Nonetheless, a client's selection or rejection of either party for services outside the Joint Solution shall in no way impact or impede a party from performing such services, regardless of the other party's selection or rejection by the client. C. In the event either party discovers, directly or indirectly, technology not currently in use by the other party but which could improve the Preferred Services, PPD Services or the Joint Solution, the discovering party may elect to share such technology with the other party with the intent of integration by the other party. However, to the extent such other party elects not to integrate or otherwise use such technology, the discovering party shall not be prohibited from using that technology without the other party's involvement. (iv) During the Term, VS acknowledges and agrees that, to the extent it is aware of an opportunity for clinical research services, it will refer such opportunity to PPD as soon as possible. VS shall not refer that opportunity to any other third party provider unless PPD declines to bid on such opportunity or does not offer the service in question. During the Term, PPD acknowledges and agrees that, to the extent it is aware of an opportunity for imaging services outside of the Joint Solution, it will refer such opportunity to VS as soon as possible. Unless otherwise required by a particular Sponsor, PPD shall not refer that opportunity to any other third party provider unless VS declines to bid on such opportunity or does not offer the service in question.

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(v) During the Term of this Agreement, except as otherwise permitted by this Section 3(a)(v), VS agrees that it shall not enter into the same or substantially similar Commitments with any other company or entity which performs clinical research services the same or similar to those provided by PPD or any PPD affiliate (collectively, PPD Competitor), nor shall VS provide preferred pricing to a PPD Competitor which is better than that provided by VS hereunder to PPD. Further, during the Term of this Agreement, PPD agrees that it shall not enter into commitments which are the same or substantially similar to the PPD commitments set forth in Section 3 with any other imaging vendor for the performance of Preferred Services. In the event that, during the Term of this Agreement, VS desires to enter into the same or substantially similar Commitments with a PPD Competitor for imaging services outside of the Designated Therapeutic Areas (defined herein or in any amendment hereto), VS shall first notify PPD regarding the same and PPD shall have a right, for a period of 45 days following receipt of such notice (the Election Period), to elect to include such imaging services as Preferred Services hereunder (the Right of First Refusal). In the event PPD either (i) fails to respond within the Election Period or (ii) declines to include such imaging services as Preferred Services prior to termination of the Election Period, then in either such event, VS shall be permitted to pursue such relationship without being considered in violation of the Commitments or this Agreement. Additionally, in the event that PPD enters into a relationship with a VS competitor which provides for commitments which are the same or substantially similar to the Commitments in a therapeutic area outside the Designated Therapeutic Areas (defined herein or in any amendment hereto), VS shall have the right, without violating the Commitments or this Agreement (including the Right of First Refusal), to enter into a relationship with a PPD Competitor which provides for commitments which are the same or substantially similar to the Commitments outside the Designated Therapeutic Areas (defined herein or in any amendment hereto). (vi) The parties shall form a Steering Committee comprised of high level personnel from each party which shall meet quarterly during the Term of this Agreement to oversee the implementation of this preferred relationship and the obligations set forth herein. The Steering Committee shall be comprised of an equal number of representatives from each party. PPD's Steering Committee representatives shall be comprised of: Director, Finance; Therapeutic Head; Relationship Manager; Executive Director, Business Development; Executive Director, Information Technology; Medical Director, Global Drug Development. VS's Steering Committee representatives shall be comprised of: Chief Financial Officer; Chief Executive Officer/President; Director of Operations and Director of Project Management. Each party shall provide prior written notice to the other party of any desired change in Steering Committee representatives. Each party's Steering Committee representatives shall hold a position of sufficient level within its respective company to be able to obtain timely resolution of disputes submitted to the Steering Committee.

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In the event a Sponsor shall raise concerns or issues with respect to any Preferred Services performed by VS in conjunction with Sponsor's selection of the Joint Solution, which Preferred Services are agreed upon by the parties in an executed Work Order, VS and PPD shall mutually evaluate such concerns or issues prior to any communication with Sponsor and shall mutually agree upon an appropriate response to Sponsor related to such concerns or issues. The resolution of any such matters shall be submitted first to the parties' respective Project Manager for the study, and in the event such persons are unable to agree upon resolution, then to each parties' Relationship Manager/Senior Director and finally to the Therapeutic Head or equivalent position. The foregoing paragraph shall not be deemed to restrict a PPD project manager from ordinary course discussions with a Sponsor in order to collect information related to the nature of any such concerns or issues raised by Sponsor. b. VS Commitment. VS agrees to continue to make investments in and improvements to those processes, technologies, techniques, software, hardware and methods which are integral or beneficial to the Services provided by VS, specifically but without limitation, to the Preferred Services. c. PPD Commitment. Where PPD is in a position to make a recommendation to Sponsor with regard to imaging services, and VS is able to provide such imaging services in accordance with Sponsor's specifications, PPD agrees to recommend VS to Sponsor. PPD also agrees to maintain, when present, VS's name and logo on all VS generated deliverables to the Sponsor. 4. Compensation. a. Each time VS is requested to perform Services, PPD shall provide VS with a work order or other similar written document mutually agreed upon by VS and PPD which shall set forth the specific services being requested, the compensation therefore and such other terms, conditions and specifications as VS and PPD may mutually agree (referred to herein as a Work Order). The parties acknowledge that no services shall be conducted by VS and no compensation shall be due and payable to VS without a Work Order. In the event PPD receives a change order from a Sponsor which includes changes to VS's Services as set forth in an executed Work Order or may otherwise impact the provision by VS of Services to PPD hereunder, PPD shall promptly notify VS. Thereafter, the parties shall negotiate, in good faith, for an amendment to the applicable Work Order, as appropriate, as a result of such Sponsor change order. b. VS shall be compensated for the Services in accordance with the Work Order. All pricing and rates used to establish the budget for Services set forth in each Work Order shall be in accordance with the pricing structures agreed upon by the parties herein and set forth in Exhibit B attached hereto and incorporated herein by reference. PPD acknowledges that VS customarily receives an advance payment in connection with the provision of imaging services to its clients. PPD agrees that, where appropriate and permitted by the Sponsor, PPD will provide for an advance payment mutually determined by PPD and VS (and acceptable to Sponsor) in connection with the provision of Preferred Services to such Sponsor. 5

c. Exhibit B sets forth the pricing and rates for Preferred Services [***]. The prices and rates set forth in Exhibit B and the Discount and Booking thresholds set forth in Exhibit C shall remain in effect, without adjustment, during the Initial Term of this Agreement and may thereafter be updated to reflect changes in connection with any Renewal of this Agreement, as specified in Section 1 herein. [*** 2.5 paragraphs omitted] Upon the termination of this Agreement for any reason, VS shall no longer have any obligation to provide PPD with any Discount with respect to Preferred Services nor shall VS be required to offer VS Preferred Pricing [***]. The parties acknowledge and agree that the VS Preferred Pricing [***] shall apply to, and remain in effect for, all active Work Orders issued hereunder, regardless of the expiration or termination of this Agreement, as well as for any timeline extensions to an active Work Order, provided that in the case of a timeline extension, the parties may mutually agree to apply an inflation rate for the extension period. In the event a Work Order shall be amended in any respect (including with respect to the scope of the Preferred Services, the timing for the delivery thereof, or otherwise), the VS Preferred Pricing [***] applicable to any Preferred Services included in such amendment and the Discount shall be the VS Preferred Pricing [***] and the Discount in effect on the date of the original Work Order. The parties further acknowledge and agree that VS Preferred Pricing [***] shall be applicable to any agreed upon expansion of the Preferred Services. With respect to any Services provided to PPD hereunder, PPD shall charge each Sponsor the actual invoiced amounts charged by VS to PPD for such Services without any mark-up or administrative or other fee, unless VS has agreed otherwise in writing in the applicable Work Order. d. Additionally, PPD shall reimburse VS for all reasonable expenses incurred in the course of performing the Services which are set forth in the Work Order. VS shall maintain a complete accounting of all expenses incurred and shall include such accounting with VS's invoice submitted to PPD. Expenses incurred must be invoiced separately and must include an expense report along with original receipts for such expenses. e. VS shall submit monthly invoices to PPD detailing its activities and fees in accordance with Section 5 of this Agreement. Notwithstanding the foregoing, invoices must be submitted to PPD within thirty (30) days of performing the Service or incurring the expense. PPD shall have no obligation to issue payment to VS for Services performed or expenses incurred which were not invoiced to PPD in accordance with this Agreement. f. VS acknowledges and agrees that where VS's Services relate to a specific Sponsor's clinical research study, all payments under a Work Order are pass through payments from Sponsor and PPD shall not have any payment obligations until such payments are received from Sponsor. PPD shall use all reasonable diligence to obtain timely payment from Sponsor in order to make payment to VS within 45 days following the date of invoice receipt. In furtherance thereof, PPD shall ensure that Sponsor is invoiced no later than ten (10) days following PPD's receipt of VS's invoice, assuming such invoice was provided to PPD by VS in accordance herewith and provided that Sponsor's invoice requirements do not preclude the same. PPD shall ensure that VS is aware of any such Sponsor restrictions as soon as possible. Further, PPD shall ensure that payment is made to VS either by wire transfer or PPD check in accordance with PPD's applicable payment processes no later than ten (10) days following PPD's receipt of applicable funds from Sponsor; provided, however, that in the event such payment occurs more than 45 days following the date of PPD's receipt of VS' invoice, such payment shall be made by wire transfer. Notwithstanding the foregoing, where a Sponsor fails to issue payment to PPD, affecting PPD's ability to pay VS, the parties shall communicate with the other to jointly pursue communication with the Sponsor to address the nonpayment.

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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g. Where PPD and Sponsor have agreed upon and captured in a fully executed contract any bonus/penalty or other similar, milestone based incentive provisions, and PPD's ability to meet the terms of such provisions will be impacted by VS's Services, PPD and VS may mutually agree, case by case, to flow through to the applicable Work Order all or agreed upon portions of such bonuses, penalties or incentives. 5. Invoices and Billing Account Number. PPD shall assign a billing account number (Purchase Order Number) to VS for the Services in each Work Order. All VS invoices must reference the Purchase Order Number, Service fees, any PPD pre-approved expenses incurred by VS, the remittance address, and the total amount of compensation owed to VS. These invoices must be sent to the following address: PPD, 929 North Front Street, Wilmington, NC 28401, Attention: Accounts Payable. 6. Independent Contractor. VS shall perform all Services under this Agreement as an independent contractor and not as an employee, partner or agent of PPD. As such, VS shall be solely responsible for the payment of all taxes, payroll deductions and similar items associated with compensation for its services under this Agreement as may be required by applicable law. VS acknowledges that as an independent contractor it will not be entitled to insurance or other benefits made available to employees of PPD. 7. Additional Personnel. VS shall have the authority to utilize a third party vendor as may be required to perform the Services (Subcontractors); provided, however, that: a. Subcontractors must be approved in advance by PPD, such approval not to be unreasonably withheld, conditioned or delayed. b . VS shall be responsible for all taxes, payroll deductions and similar items which may result from the retention of such Subcontractors to assist in the performance of VS's obligations under this Agreement. c. Compensation for the services of said Subcontractor shall be paid to VS by PPD on a pass-through basis and at no profit to VS. d. Any such Subcontractor and its employees or other personnel shall be bound by the terms and conditions of this Agreement with respect to representations and warranties, privacy, confidential information, intellectual property, indemnification, debarment, record keeping and audit (see Sections 8, 9, 10, 12, 14 and 15), which provisions shall be incorporated into a written agreement between VS and such Subcontractor. e. Notwithstanding the foregoing, VS shall remain responsible for the actions of all of the Subcontractors retained by VS.

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8. Representation and Warranties. VS represents and warrants that it shall utilize independent discretion and judgment in discharging its responsibilities in a timely, professional and workmanlike manner in accordance with internationally accepted standards, and shall, at all times: (i) use individuals of suitable training and skill to perform its duties and responsibilities under this Agreement, if applicable; (ii) be in possession of all the necessary facilities, resources and personnel required to perform its duties and responsibilities under this Agreement; and (iii) comply with all applicable laws, rules, regulations and guidelines. Further, VS represents and warrants that it has all of the necessary licenses, permits and/or registrations to perform the Services in accordance with the terms and conditions of this Agreement and that during the Term of this Agreement, all such licenses, permits and/or registrations are and shall remain current and in good standing. [*** 1 paragraph omitted] 9. Confidential Information. It is understood and agreed that any and all information which may be made available to, learned by or generated by either party during the Term of this Agreement, including without limitation, information relating to the other party's businesses, its affiliates or the Sponsor, Sponsor's protocol, and this Agreement (collectively, Confidential Information), is to be treated as strictly confidential (the party disclosing such Confidential Information, the Disclosing Party and the party receiving such Confidential Information, the Receiving Party, with the understanding that either term may include, as applicable, an affiliate of either party). Confidential Information shall be used solely in connection with performance hereunder or as otherwise may be necessary for a party to fulfill its obligations to a customer or client and shall not to be published or disclosed to any third parties other than the Receiving Party's employees on a strict needtoknow basis and provided that such employee is under a similar written and enforceable obligation to keep such information strictly confidential. Further, nothing contained herein shall prevent PPD from disclosing VS Confidential Information to PPD's customers and clients solely to the extent directly related to the provision of Services to such customer or client. The nondisclosure obligations set forth in this Section 9 shall not apply to any portion of Confidential Information (i) which is, or subsequently may, become within the knowledge of the general public other than as a result of a breach of this Agreement by the Receiving Party; (ii) which is known to the Receiving Party on a non-confidential basis at the time of receipt thereof from the Disclosing Party; (iii) which may subsequently be rightfully obtained from a third party not bound by an obligation of confidentiality to the Disclosing Party, or (iv) which is required by any law, rule, regulation, order, decision, decree, subpoena or other judicial, administrative or legal process to be disclosed, provided that the Disclosing Party receives prior written notice of such disclosure and that the Receiving Party takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of such disclosure. Receiving Party shall take reasonable care of all Confidential Information entrusted to it by or on behalf of the Disclosing Party or Sponsor, and shall return such materials to the Disclosing Party or Sponsor (as the case may be) immediately upon expiration or termination of this Agreement. Both parties agree to handle all information containing personal data in accordance with all applicable privacy laws, rules, and regulations.

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

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10. Intellectual Property. Nothing contained herein, nor the delivery of any information to either party hereunder, shall be deemed to grant the other party a right or license under any patent or patent application or to any know-how, technology, invention or other intellectual property of the other party or of the Sponsor. All inventions, patents, know-how, trademarks, copyrights, information, data, software, methodologies, writings and other property in any form whatsoever, which are provided to either party and which were owned or controlled by the providing party (Originator) shall remain the sole property of the Originator. The parties' ownership rights in any inventions, patents, trademarks, copyrights, software, methodologies, writings and other property in any form whatsoever that results out of the development of a Joint Solution shall be addressed by the parties by separate written agreement which may include, an applicable Work Order and/or an amendment to this Agreement (Intellectual Property Amendment) . Unless otherwise addressed in an Intellectual Property Amendment, VS hereby assigns to PPD (or Sponsor as the case may be) all rights that VS may have in any invention, technology, know-how or other intellectual property which is developed with use of Confidential Information provided to VS by PPD. Additionally, VS shall assist PPD (or Sponsor), at PPD's (or Sponsor's) sole cost and expense, in obtaining or extending protection therefor. Unless otherwise addressed in an Intellectual Property Amendment, PPD hereby assigns to VS all rights that PPD may have in any invention, technology, know-how or other intellectual property which is developed with use of Confidential Information provided to PPD by VS. Additionally, PPD shall assist VS, at the sole cost and expense of VS, in obtaining or extending protection therefor. 11. Termination. Either party may terminate this Agreement, without cause, upon ninety (90) days prior written notice to the other party, provided, however, that all outstanding Work Orders shall continue to be governed by the terms and conditions hereof. Either party may terminate this Agreement, or a relevant Work Order, immediately, upon the occurrence of any of the following for cause events: (a) either party's material breach of the commitments set forth in Section 3; (b) either party commences a voluntary proceeding under any bankruptcy, insolvency or other similar law or an involuntary case or proceeding is commenced against a party under any bankruptcy, insolvency or other similar law; (c) significant audit findings are identified by the other party, a Sponsor, or an applicable regulatory authority; or (d) significant operational deficiencies that are not resolved in accordance with the Steering Committee determinations following escalation. PPD shall further be permitted to terminate this Agreement or a relevant Work Order, immediately, for cause, upon the occurrence of any of the following: (a) VS's failure to meet the agreed upon timelines, provided that such failure is due to circumstances within VS's reasonable control; (b) VS's failure to provide pricing which is reasonably competitive; (c) a change of ownership equal to fifty percent (50%) or more in the outstanding voting securities of VS; (d) the acquisition of a number of VS's outstanding voting securities by a PPD Competitor that would require disclosure by such PPD Competitor pursuant to Rule 13d-1 of the Securities Exchange Act of 1934 (a Significant Ownership Position); (e) a change in any VS Key Leadership Position. In the event Sponsor, with or without cause, terminates, or requests that PPD terminate, VS's involvement in a project, PPD shall have the right to immediately terminate the Work Order to which such project relates. Additionally, in the event the services requested of PPD by Sponsor are cancelled or put on hold or the services agreement between PPD and Sponsor is terminated, PPD may terminate any relevant Work Order immediately upon notice to VS. In the event any Work Order is terminated, PPD shall pay VS for all Services performed in accordance with the Work Order through the date of termination plus any agreed upon costs necessary to close-out the Work Order (which costs shall be documented in a Work Order amendment if not included in the Work Order) and any non-cancelable expenses incurred prior to the termination of such Work Order, provided VS makes all reasonable attempts to mitigate such non-cancelable expenses.

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12. Indemnification. VS shall indemnify, defend and hold harmless PPD, its affiliates, directors, officers and employees thereof for any and all damages, costs, expenses and other liabilities, including reasonable attorney's fees and court costs, incurred by any such party as a result of any claim, action or proceeding by a third party (a Third Party Claim) arising from VS's negligence, intentional misconduct, or breach of this Agreement. PPD shall indemnify, defend and hold harmless VS, its directors, officers and employees thereof for any and all damages, costs, expenses and other liabilities, including reasonable attorney's fees and court costs, incurred by any such party as a result of any Third Party Claim arising from PPD's negligence, intentional misconduct, or breach of this Agreement. Either indemnified party shall give the indemnifying party prompt notice of any Third Party Claim for which indemnification is sought hereunder. The indemnifying party shall have the right to control the defense and settlement of such Third Party Claim, provided the indemnifying party shall act reasonably and in good faith with respect to all matters relating to the settlement or disposition of the claim, and the indemnified party shall reasonably cooperate in the investigation, defense and settlement of such claim. The indemnified party shall have the right to participate in, but not control, the defense and settlement of a claim and to employ separate legal counsel of its own choice; provided, however, that such employment shall be at the indemnified party's own expense, unless (i) the employment thereof has been specifically authorized by the indemnifying party, or (ii) the indemnifying party has failed to assume the defense and employ counsel (in which case the indemnified party shall control the defense and settlement of such claim). 13. Limitation of Liability. EXCEPT WITH REGARD TO A PARTY'S BREACH OF SECTION 9, GROSS NEGLIGENCE, WILLFUL MISCONDUCT AND INDEMNIFICATION OBLIGATIONS RELATED TO THIRD PARTY CLAIMS PURSUANT TO SECTION 12, EACH PARTY'S ENTIRE LIABILITY UNDER THIS AGREEMENT WILL IN NO EVENT EXCEED THREE TIMES (3X) THE TOTAL VALUE OF THE WORK ORDER UNDER WHICH THE CLAIM AROSE. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES OR FOR ANY DAMAGES ARISING OUT OF OR IN CONNECTION WITH ANY LOSS OF PROFIT, INTERRUPTION OF SERVICE OR LOSS OF BUSINESS OR ANTICIPATORY PROFITS, EVEN IF A PARTY OR ITS AFFILIATES HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING, IN EACH CASE ARISING IN CONNECTION WITH ANY DEFAULT OR BREACH OF OBLIGATIONS UNDER THIS AGREEMENT OR ANY ATTACHMENTS HERETO. IN THE EVENT OF A BREACH OR DEFAULT BY VS UNDER THIS AGREEMENT OR ANY WORK ORDER, VS AGREES, AT PPD'S OPTION, TO EITHER REPEAT THE SERVICES AT ISSUE OR REFUND THE PORTION OF THE CONSIDERATION ATTRIBUTABLE THERETO.

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THE WARRANTIES PROVIDED IN SECTION 8 AND ANY WORK ORDER ARE IN LIEU OF ALL OTHER CONDITIONS OR WARRANTIES, EXPRESS OR IMPLIED, WHETHER ARISING BY STATUTE, COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR PROFESSION OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, AND ARE IN LIEU OF ALL OTHER OBLIGATIONS RELATING TO THE QUALITY OR ADEQUACY OF THE SERVICES IMPOSED BY LAW, ALL OF WHICH ARE EXPRESSLY DISCLAIMED TO THE EXTENT PERMITTED BY APPLICABLE LAW.

14. Debarment. VS hereby certifies that it has not been debarred, and has not been convicted of a crime which could lead to debarment, under the Generic Drug Enforcement Act of 1992. If VS or any of its employees or agents who perform Services hereunder is debarred or receives notice of an action or threat of action of debarment, VS shall immediately notify PPD. 15. Record Keeping and Audit. During the Term of this Agreement, VS shall maintain all materials and all other data obtained or generated by VS in the course of providing the Services hereunder, including all computerized records and files. VS shall cooperate with any internal reviews or audits by PPD or Sponsor (or its and their representatives) and shall make available for examination and duplication, during normal business hours and at mutually agreeable times, all documentation, data and information relating to this Agreement or any Work Order. Further, VS shall inform PPD within one (1) business day of being notified of an audit by any regulatory authority or by any Sponsor to the extent such audit relates to the Preferred Services, the Joint Solution or a Work Order hereunder. PPD or its representatives shall be permitted to be present at and directly communicate with such regulatory authority or Sponsor representatives (as the case may be) concerning any matters related to the Preferred Services, the Joint Solution or a Work Order hereunder arising in connection with such audit. To the extent permitted by the auditing entity, VS shall ensure that PPD is provided with copies of any written communications, reports and findings resulting from any inspection of VS by that regulatory authority or Sponsor to the extent related to the Preferred Services, the Joint Solution or a Work Order. To the extent any such communications, reports or findings require action by VS, VS shall include with such copies its remedial plan of action, including timelines for completion of the same. To the extent such remedial plan of action impacts the Preferred Services or Joint Solution, and, where applicable, to the extent permitted by the relevant regulatory authority, VS shall collaborate with PPD prior to developing or implementing any changes to the Preferred Services or Joint Solution as a result of the audit findings. 16. Insurance. VS represents and warrants that it has and will maintain during the Term of this Agreement and, additionally, where applicable, during the term of any active Work Order, and for a period of two (2) years following expiration or termination of either, insurance in the types and limits generally accepted in the industry. Upon request, VS shall provide PPD with a copy of its certificate of insurance. 17. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Delaware without regard to its conflict of laws provisions. 18. Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. Neither party shall have the right to assign this Agreement or any Work Order or to assign any rights thereunder without the prior written consent of the other party. Notwithstanding the foregoing, PPD may assign a Work Order to an affiliate or to Sponsor upon written notice to VS. In the event PPD assigns a Work Order to a Sponsor, VS agrees to release and forever discharge PPD from any and all claims that may arise out of the relevant Work Order after the effective date of such assignment. Unless otherwise agreed in writing by VS, PPD shall not be released from any liability or obligation under this Agreement upon assignment of any Work Order to an affiliate of PPD. VS may subcontract all or a portion of the Services to be provided hereunder in accordance with Section 7 above. Any unauthorized attempt to assign or delegate any portion of this Agreement or any Work Order shall be void.

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19. Publicity. Except as otherwise specifically set forth herein, neither party shall use the name, insignia, symbol, trademark, trade name, logo, logotype, or any abbreviation or adaptation thereof, of the other party or any affiliate of the other party, in any publication, press release, promotional material or other form of publicity, nor will either party use the same as verbal endorsement of its services, without the prior written approval of the other party in each instance. Further, VS shall be similarly restricted as it pertains to Sponsor and any Sponsor affiliate. The restrictions imposed by this Section shall not prohibit the parties from making any disclosure identifying the other party that is required by any applicable law, rule or regulation. Additionally, following final execution of this Agreement, the parties acknowledge and agree that a joint press release statement regarding the parties' preferred relationship and its impact on the parties' ability to provide Services hereunder shall be prepared and mutually agreed upon prior to its release or use by either party. 20. Force Majeure. The parties shall be excused from performing their obligations under this Agreement if its performance is delayed or prevented by any event beyond such party's reasonable control, including, but not limited to, acts of God, fire, explosion, weather, disease, war, insurrection, civil strife, riots, government action, or power failure, provided that such performance shall be excused only to the extent of and during such disability. 21. Covenant Not to Interfere. Neither party will solicit for employment any employee of the other party during the active term of this Agreement and further, where applicable, the term of any active Work Order. As used in this section solicit means the initiation by a party or its agent or representative of a contact with any of the other party's then current employees who are performing services under this Agreement for the purpose of offering employment to such employees, but shall not include the circumstance where any such employee initiates a contact with the other party for the purpose of obtaining employment whether in response to a general advertisement of employment or where such contact is initiated by a third party who was not instructed to contact such employee by the hiring party. 22. Miscellaneous. a. By agreeing to the terms and conditions of this Agreement and performing the Services for PPD, VS is representing that it is not in violation of any terms and conditions of any agreement with any other individual or entity. b. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements, whether written or oral. This Agreement shall be construed according to its fair meaning and not strictly for or against any party. c. This Agreement may be modified only by a writing signed by the parties hereto. d. If any provision of this Agreement conflicts with the law under which this Agreement is to be construed or if any such provision is held invalid by a court, such provision shall be deemed to be restated to reflect as nearly as possible the original intentions of the parties in accordance with applicable law and the remainder of this Agreement shall remain in full force and effect.

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e. Waiver or forbearance by either party with respect to a breach of any provision of this Agreement or any applicable law shall not be deemed to constitute a waiver with respect to any subsequent breach of any provision hereof. f. Any notice required or permitted to be given hereunder by either party hereto shall be in writing and shall be deemed given on the date received if delivered personally, by recognized overnight courier, by facsimile or by electronic delivery, or five (5) days after the date postmarked if sent by registered or certified U.S. mail, return receipt requested postage prepaid, to the following address: If to PPD: PPD Development, LP 929 North Front Street Wilmington, NC 28401 Telephone: (910) 251-0081 Facsimile: (910) 343-5920 Attn.: Chief Executive Officer With a Copy to: General Counsel

If to VS: VirtualScopics, Inc. 500 Linden Oaks, Second Floor Rochester, New York 14625 Telephone: (585) 249-6231 Facsimile: (585) 218-7350 Attn: Molly Henderson

Either party may change its notice address and contact person by giving notice of same in the manner herein provided. g. This Agreement may be executed in one or more counterparts, each of which for all purposes shall be deemed to be an original, and all of which when taken together shall constitute but one and the same instrument. This Agreement and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or by electronic mail, shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. 23. Survival. The obligations of the parties contained in Sections 4 (provided that any payments due upon termination shall be governed in accordance with Section 11), 5, 9, 10, 12, 13, 15, 19 and 23 hereof and herein shall survive termination of this Agreement or any Work Order. 24. Conflict. Any and all Services provided during the Term of this Agreement, including all Services provided pursuant to a Work Order, shall be subject to the terms and conditions contained herein. To the extent any terms contained in this Agreement conflict with a Work Order, the terms of this Agreement shall govern and control unless the Work Order specifically states otherwise. To the extent any terms contained in this Agreement or a Work Order conflict with a Purchase Order, the terms of this Agreement shall govern and control first, followed by the terms of the applicable Work Order.

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[signatures appear on following page]

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IN WITNESS WHEREOF, the parties have caused their duly authorized representatives to execute this Agreement as of the Effective Date.

VirtualScopics, Inc. By: Name: Molly J. Henderson Title: Chief Business and Financial Officer, Sr. Vice President PPD Development, LP By: PPD GP, LLC Its General Partner By: Name: Title:

[Signature Page to Strategic Alliance Agreement]

Exhibit A

Integration Services

[*** 2 pages omitted]

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit B

[***] Pricing

[*** 3 pages omitted]

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit C

Discounts and Bookings Thresholds

The percentage Discount applicable to Bookings in any given Measurement Period shall be determined in accordance with the discount structure set forth in the table below:

[*** .5 pages omitted]

[***] Represents material which has been redacted and filed separately with the Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
[EX A]: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?

[EX Q]: 1 Exhibit 10.2

CO-HOSTING AGREEMENT

This Co-Hosting Agreement (the Agreement) is made by and between NETWORKS ASSOCIATES, INC., a Delaware corporation, doing business as Network Associates, Inc., with its principal place of business at 3965 Freedom Circle, Santa Clara, California 95054 (NAI), and SOFTWARE.NET CORPORATION, a Delaware corporation, a.k.a. Beyond.com, with its principal place of business at 1195 West Fremont Avenue, Sunnyvale, California 94087 (Co-Host). The Effective Date of this Agreement (herein called the Effective Date) is September 21, 1998.

RECITALS

WHEREAS, Co-Host owns various Internet locations, including the location set forth in Part 1 of Exhibit A hereto (the Co-Host Site) and markets software and computer hardware products from the Co-Host Site (herein referred to as the Goods).

WHEREAS, Co-Host, as successor of Cybersource Corporation, and NAI are parties to an Electronic Software Distribution Agreement, dated as of September 1, 1997 regarding the electronic distribution of NAI's Goods (the ESD Agreement).

WHEREAS, NAI has developed various Internet locations (the NAI Internet Sites) (with separate URL designations issued to NAI by InterNIC) (said designations being herein referred to individually as an URL) comprised of one or more file servers, with an Internet access at the applicable URL. Those portions of the NAI Internet Site or any future Internet locations developed by NAI which are accessible by members of the general public are referred to herein as the Originating Locations. NAI permits the maintenance of hot links from the Originating Locations to other Internet locations, whereby the end user can transfer from the NAI Internet Sites to the Co-Host Site by clicking the pointing device on highlighted text or images. Originating Locations does not include the McAffee Mall (as defined in Part 2 of Exhibit A) or web servers within a firewall or accessable only by passwords or other similarly restricted URLs (the Restricted Sites); provided, however, that the term Restricted Sites shall not include sites accessable only through online services (such as AOL) and other portals generally accessable to the public.

WHEREAS, NAI and Co-Host desire to place a Co-Host hot link for the Goods at the Originating Locations and NAI and Co-Host desire to enter into certain additional agreements regarding such marketing opportunities through the Originating Locations.

THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements hereinafter set forth, Co-Host and NAI have entered into the agreements hereinafter set forth.

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2 IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

SOFTWARE.NET CORPORATION (a.k.a. Beyond.com)

ADDRESS FOR NOTICES 1195 West Fremont Avenue Sunnyvale, California 94087 Attention: President

By: /s/ JAMES R. LUSSIOR ------------------------------------- Name: James R. Lussior ----------------------------------- Title: Vice President Business Operations ---------------------------------- Date: 9/21/98 -----------------------------------

NETWORKS ASSOCIATES, INC.

ADDRESS FOR NOTICES 3965 Freedom Circle Santa Clara, California 95054 Attention: Vice President Legal Affairs

By: /s/ PRABHAT K. GOTAL ------------------------------------- Name: Prabhat K. Gotal ----------------------------------- Title: CFO ----------------------------------

Date: September 21, 1998

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TERMS AND CONDITIONS OF AGREEMENT

1. LOCATION. During the Term (as defined in Section 6 (a) below), NAI shall provide the following marketing considerations to Co-Host:

(a) Co-Hosting Rights. Co-Host shall be permitted to maintain on the Online Service Page (as defined in Part 2 of Exhibit A) of the Originating Locations in the manner set forth on Exhibit B hereto (and on such other positions as are set forth on Exhibit B or as the parties may mutually agree upon in writing from time to time) a hot link to Internet locations specified by the Co-Host (the Destination) from which Goods (other than Competitor's Goods (hereinafter defined)) may be sold. The web pages at the Destination shall be maintained in accordance with the requirements of this Agreement, including without limitation, Section 2 hereof. Competitor's Goods as used herein shall mean the Goods of any of the persons or entities described on Part 1 of Exhibit C attached hereto and made a part hereof. The Destination shall not contain any links to any third party sites for the purchase of Competitor's Goods; provided that the Destination will link to the Co-Host Site (which will sell Competitor's Goods).

(b) Exclusive Positioning. Co-Host shall be the exclusive reseller of software products (Software) at the Originating Locations. The preceding sentence shall not prohibit NAI from (i) reselling Software including NAI Goods (hereinafter defined) from the McAfee Mall; (ii) referencing and linking to sites of strategic partners (other than competitors of Co-Host listed on Part 2 of Exhibit C) which may also be involved in the resale of Software from such sites; provided that no Software may be purchased on the page of such site which is linked to any Originating Location and further provided that the references and links to the sites of strategic partners shall not be placed on the Online Service Page; and (iii) advertising Software with banners, buttons and other forms of online advertising; provided that any link from such advertising takes the end user to the publisher of the Software and not a reseller of Goods (other than Co-Host). For example, an advertising banner or button for the Windows 98 software program may link back to the website of Microsoft Corporation but not the website of Dell Computer Corporation which is reselling the program. Without limitation on the foregoing, NAI may co-host a comparative shopping service on the Originating Locations. NAI will obtain a written covenant that the comparative shopping co-host will present sellers of Software in a neutral manner and upon request of Co-Host will require removal or alteration of presentations by such co-host on such co-hosted facility which Co-Host reasonably deems to be non-neutral; provided, however, that, notwithstanding the foregoing, Co-Host may be the featured or most prominent Software reseller on any such service.

(c) Short Term Product Exclusives. For a period of fourteen (14) days following release of any new NAI Goods or major version releases (i.e., version 3.0 to 4.0) of existing NAI Goods, Co-Host shall be the exclusive online seller of any such

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release released during the Term. NAI Goods as used herein shall mean retail desktop software products offered by NAI under the McAfee brand or other NAI owned brand, which NAI makes available for resale through distributors and resellers via the Internet.

(d) Reference Site. Co-Host may refer to the Originating Locations as a Co-Host customer location and to NAI as a Co-Host customer hereunder provided all such references shall be subject to the prior review and approval of NAI, which approval will not be unreasonably withheld.

(e) Links to Online Service Page. Any end user accessing the principal URLs of NAI (e.g., mcafee.com, cybermedia.com, pgp.com, tis.com) shall be taken to the Online Service Page. Any end user accessing a buy button on any of the Originating Locations shall be taken to the Online Service Page. NAI shall not sell retail desktop consumer products, including without limitation, NAI Goods from the NAI Internet Sites (other than the McAfee Mall).

NAI reserves the right to change the URL of the Originating Locations from time to time and agrees to give Co-Host as much notice of any such change as is practicable.

2. MARKETING AND SALES.

(a) Placement of Order. In consideration of the Co-Hosting Fee set forth in Part 3 of Exhibit A, NAI shall provide the marketing consideration identified in Section 1 during the Term of this

Agreement.

(b) Advertising Materials; Destination Operation. Co-Host shall provide to NAI artwork and text materials with respect to the advertisement of the Destination at the Originating Locations. Such artwork and materials must be non-infringing, inoffensive, accurate, truthful and otherwise comply with all applicable laws. Co-Host shall comply with all applicable laws in connection with the operation of the Destination, including without limitation, requirements regarding the confidentiality of information concerning end users. NAI retains the right, but not the obligation, to disapprove or remove any advertisements or advertising materials it reasonably deems illegal, inappropriate or otherwise inconsistent with the purposes of the Originating Sites, without the consent of Co-Host.

(c) Use of Trademarks. Co-Host hereby grants to NAI a non-exclusive, non-transferable, royalty-free license during the term of this Agreement to use the trademarks, service marks and trade names of Co-Host in connection with the advertising and promotion of the Goods from the Originating Locations, provided that NAI complies with the terms of Section 9(b) of the Web Site Services Agreement (as defined below). Co-Host reserves the right to terminate the foregoing right, after giving NAI notice and opportunity to cure the allegedly harmful use, if in Co-Host's reasonable judgment, NAI's use of such trademarks, service marks and trade names harms the business, image or goodwill of Co-Host.

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(d) Limited Duty of Promotion. NAI shall have no duty or obligation to advertise or promote the Goods, other than as set forth in this Section 2. Except as expressly set forth herein (including, without limitation, as set forth in this Section 2(d)), NAI does not, expressly or impliedly, guaranty or warrant any results or level of sales or customer leads to Co-Host. NAI reserves the right to cease publication of the Originating Locations for brief periods from time to time for maintenance or other purposes; provided that the Originating Locations will comply with the same Uptime Requirements specified with respect to the Managed Site in the Web Site Services Agreement.

(e) Marketing Promotions. During the Term, Co-Host and NAI will regularly discuss and implement mutually agreed upon jointly funded marketing promotions. NAI and Co-Host hereby agree that the marketing promotions set forth on Exhibit D hereto will be implemented as set forth on Exhibit D.

(f) Distribution of Physical Products. NAI grants to Co-Host the right to distribute physical copies of NAI's Goods to end users ordering from the Managed Site, the Destination or Beyond.com upon the terms set forth in Exhibit E attached hereto and made a part hereof.

3. PAYMENT AND RECORDS.

(a) Fees. Subject to the provisions of Section 6 hereof, Co-Host shall pay to NAI the amount designated in Part 3 of Exhibit A as the Co-Hosting Fee upon the schedule set forth in such Part.

(b) Payment Terms. Except as set forth in such Part 3 of Exhibit A, payments from Co-Host to NAI shall be due thirty (30) days from the date of invoice. All payments will be made in United States dollars, free of any taxes then currently applicable, at the address designated above by NAI. Late payments shall bear interest at the lesser of: (i) the maximum rate permitted by law, and (ii) the rate of 1.5% per month from the due date until paid.

4. EQUITABLE RELIEF. Each party acknowledges that any breach of its obligations under this Agreement with respect to the proprietary rights or confidential information of the other party will cause the other party irreparable injury for which there are inadequate remedies at law, and therefore such other party will be entitled to equitable relief in addition to all other remedies provided by this Agreement or available at law.

5. PROPRIETARY RIGHTS. NAI retains ownership of the NAI Internet Site, the Originating Locations, the trademarks and all intellectual property rights in connection with the NAI Internet Site, including without limitation, its URL designations and all rights from InterNIC in connection therewith. Co-Host and its licensors retain ownership of all intellectual property rights in the advertising materials provided, the trademarks and all intellectual property rights in connection with the Destination and the Co-Host Site, including, without limitation, its URL designations and all rights from InterNIC in connection therewith, and all of its other intellectual property rights.

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6. TERM AND TERMINATION.

(a) Term. This Agreement will commence on the Effective Date, and will terminate on the third anniversary of the Effective Date (the Term), unless earlier terminated as provided in this Agreement.

(b) Termination. A party may terminate this Agreement immediately: (i) if the other party engages in any material unlawful business practice and such practice continues uncured thirty (30) days following written notice thereof, (ii) if the other party fails to perform any material obligation, (which shall include, without limitation, the payment obligations hereunder and compliance with the Uptime Requirements in respect of the Originating Locations) or violates any material restriction contained in this Agreement and such failure continues uncured thirty (30) days following written notice thereof, (iii) by such party if that certain Web Site Services Agreement between NAI and Co-Host dated of even date herewith (the Web Site Services Agreement) or the ESD Agreement is terminated by the other party, (iv) if a receiver is appointed for the other party or its property, (v) if the other party makes an assignment for the benefit of creditors, (vi) if the other party becomes the subject of any proceeding under any bankruptcy, insolvency or debtor's relief law, (vii) upon ninety (90) days prior notice in writing by Co-Host at any time after June 30, 2000, if the term of the Web Site Services Agreement has not been renewed for an additional term of one (1) year or more pursuant to its terms or (viii) if the party terminates the Web Site Services Agreement by reason of the other party's material default thereunder.

(c) Effect of Termination. Upon the effective date of the termination, all outstanding invoices and other invoicable amounts will become due and payable. Co-Host's contractual right to the marketing consideration shall cease immediately upon the effective date of the termination. Termination or expiration of this Agreement if by reason of material breach by Co-Host shall not affect any of Co-Host's payment obligations, all of which survive termination of this Agreement; provided that, in (i) the event of termination of this Agreement by Co-Host due to a material default by NAI, NAI shall pay to the Co-Host the Liquidated Damages Amount (as defined in Part 2 of Exhibit A).

7. CONFIDENTIALITY. Confidential Information disclosed by either party in writing and marked as confidential, proprietary or the like (or disclosed verbally if a written summary is provided within thirty days), including any information relating to such party's research, development, proprietary technology, product and marketing plans, finances, personnel and business opportunities will be considered confidential information. Each party will not use the other party's confidential information except as required to achieve the objectives of this Agreement and will not disclose such confidential information except to employees, agents and contractors who have a need to know in the discharge of their duties under this Agreement. Such restrictions will not apply to information that becomes public knowledge other than through the disclosing party, is independently developed by the non-disclosing party, or is lawfully required to be disclosed by any governmental agency or otherwise required to be disclosed by law.

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Neither party will make any disclosure of, or statement covering, the terms of this Agreement, including the financial terms, to any third parties (other than its attorneys, accountants and professional consultants), without obtaining the other's prior written consent, except as required by court order or applicable regulatory authorities, including without limitation, the rules and regulations of the Securities and Exchange Commission, any stock exchange and the NASDAQ. The parties agree that under their current understanding, disclosure of the financial terms of this Agreement is not required under the foregoing rules and regulations. The obligations of this Section 7 shall survive the termination of this Agreement, under any circumstances. The parties shall make a joint press release announcing the relationship, the timing and content of which shall be subject to the mutual agreement of the parties.

8. RELATIONSHIP OF THE PARTIES. The parties are independent contractors and not partners, joint venturers or agents, and neither party may obligate the other to any warranty or other obligation. Neither NAI nor Co-Host is by virtue of this Agreement authorized as an agent or other representative of the other party.

9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.

(a) Co-Host represents and warrants to NAI that Co-Host has all right, title, ownership interest and/or marketing rights necessary to provide the advertising materials to NAI, to perform its obligations hereunder and to operate the Destination. Each party further represents and warrants to the other that it has not entered into any agreements or commitments which are inconsistent with or in conflict with the rights granted or obligations incurred by the representing party in this Agreement. Co-Host further represents and warrants that the advertising materials supplied hereunder do not infringe any Covered Country (hereinafter defined) copyright, trademark, or trade secret right. Covered Country shall mean the United States of America and any member state of the European Economic Union. Co-Host agrees that, if notified promptly in writing and given sole control of the defense and all related settlement negotiations, it will defend NAI, its employees, officers and agents, against any claim based on an allegation that (i) advertising materials supplied hereunder infringes a Covered Country patent, copyright, trademark or state trade secret right, or (ii) Co-Host violated any law, statute or ordinance or any governmental or administrative order, rule or regulation with regard

to the advertising materials, the operation of the Destination or the manufacture, possession, distribution, use or sale of the Goods. Co-Host will pay any resulting costs, damages and attorneys' fees finally awarded by a court, or agreed to in settlement by Co-Host, with respect to any such claims. NAI agrees that, if the advertising materials become, or in Co-Host's opinion are likely to become, the subject of an infringement claim, NAI will permit Co-Host, at Co-Host's option and expense, to, among other things, procure the right for NAI to continue marketing and using the advertising materials, or to replace or modify them so that they become non-infringing.

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(b) NAI represents and warrants that NAI has all right, title, ownership interest and/or marketing rights necessary to operate the Originating Locations, provide the Products to Co-Host, and the Products shall be free and clear of all liens and encumbrances. NAI further represents and warrants that it has not entered into any agreements or commitments which are inconsistent with or in conflict with the rights granted to Co-Host in this Agreement. NAI further represents and warrants that the Products supplied hereunder do not infringe any Covered Country patent, copyright, trademark, or trade secret right. NAI agrees that, if notified promptly in writing and given sole control of the defense and all related settlement negotiations, it will defend Co-Host, its employees, officers and agents against any claim based on an allegation that (i) a Product supplied hereunder infringes a Covered Country patent, copyright, trademark or trade secret right, or (ii) NAI violated any law, statute or ordinance or any governmental or administrative order, rule or regulation with regard to a Product or its manufacturer, possession, use or sale. NAI will pay any resulting costs, damages and attorneys' fees finally awarded by a court, or agreed to in settlement by NAI, with respect to any such claims to the extent of the compensation received under this Agreement. Co-Host agrees that, if the Products in the inventory of Co-Host, or the operation thereof, become, or in NAI's opinion are likely to become, the subject of an infringement claim, Co-Host will permit NAI, at NAI's option and expense, to, among other things, procure the right for Co-Host to continue marketing and using such Products, or to replace or modify them so that they become non-infringing. If neither of the foregoing alternatives is available on terms that NAI deems reasonable, Co-Host will return such Products on written request from NAI. NAI will grant Co-Host a credit equal to the price paid by Co-Host for such returned Products, as adjusted for discounts, returns and credits actually given, provided that such returned Products are in an undamaged condition. NAI will have no obligation to Co-Host with respect to infringement of patents, copyrights, trademarks or trade secrets or other proprietary rights beyond that stated in this Section 9(b).

(c) No Combination Claims. Notwithstanding Section 9(b), NAI will not be liable to Co-Host for any claims to the extent they arise solely based upon the combination, operation or use of any Product with equipment, data or programming not supplied by NAI, or to the extent they arise solely based upon the alteration or modification of the Products by the Co-Host or the purchaser of such Products.

10. LIMITATION OF LIABILITY. EXCEPT FOR CLAIMS UNDER SECTION 9 HEREOF, THE LIABILITY OF A PARTY TO THE OTHER FOR DIRECT DAMAGES SHALL NOT EXCEED FIFTEEN MILLION DOLLARS. EXCLUSIVE OF ANY CLAIMS BY THIRD PARTIES FOR INJURY OR DAMAGES TO PERSONS OR TANGIBLE PROPERTY DIRECTLY CAUSED BY ANY PRODUCT, NEITHER PARTY'S LIABILITY WITH REGARD TO THIS AGREEMENT OR THE ADVERTISING MATERIALS, IF ANY, WILL INCLUDE CONSEQUENTIAL, INCIDENTAL, SPECIAL OR OTHER INDIRECT DAMAGES, SUCH AS LOST PROFITS, EVEN IF

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THE OTHER PARTY HAS KNOWLEDGE OF THE LIKELIHOOD OF SUCH DAMAGES.

11. FORCE MAJEURE. Neither party shall be liable for the failure to perform any of its obligations under this Agreement, except for payment obligations, if such failure is caused by the occurrence of any event beyond the reasonable control of such party, including without limitation, fire, flood, strikes and other industrial disturbances, failure of raw materials suppliers, failure of transport, accidents, transmission difficulties, phone service interruptions, riots, insurrections, acts of God or orders of governmental agencies.

12. GENERAL.

(a) This Agreement, the Web Site Services Agreement and the certain ESD Agreement between the parties set forth the entire agreement between the parties on all subject matters and supercede all prior agreements and understandings between the parties.

(b) This Agreement may not be changed, terminated or amended except in writing. Whenever the consent of any party is required hereunder, such consent may be given or withheld in such party's sole discretion and with or without reason or cause, unless this Agreement states otherwise.

(c) The parties agree that the terms and conditions of this Agreement shall prevail over any contrary or additional terms in any purchase order (unless agreed to in writing by both parties), sales acknowledgment, confirmation or any other document issued by either party affecting the purchase and/or sale of Goods. The terms of the Exhibits to this Agreement shall be equal in importance to the terms of the body of this Agreement.

(d) Either party's failure or delay in exercising any of its rights will not constitute a waiver of such rights unless expressly waived in writing. Neither party may assign this Agreement without the other's prior written approval, except by operation of law or in connection with the sale of substantially all of the assets of such party's business or the acquisition of such party by a third party.

(e) This Agreement will be governed and interpreted according to the laws of the State of California, without reference to principles of conflicts of laws. Each party hereto expressly consents to the personal jurisdiction of the state and federal courts located in Santa Clara County, California, and expressly waives any defense to any action based on inconvenient forum, choice of venue, lack of personal jurisdiction, sufficiency of service of process or the like.

(f) In the event of any litigation or arbitral proceeding between they parties regarding this Agreement, the advertising materials or the obligations of the parties hereunder, the party not prevailing therein shall pay the reasonable attorneys' fees and court costs of the party prevailing therein.

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(g) If a court of law finds any provision of this Agreement unenforceable, the parties agree to modify such provision to the extent necessary to make it legal and enforceable while preserving its intent and the economic effect of the unenforceable provision.

(h) Any notices and demands provided hereunder must be in writing and will be deemed given upon the earlier of actual receipt or two (2) days after being sent by overnight Federal Express or Express Mail, return receipt requested, to the appropriate address set forth above, as such contacts and addresses may be changed by written notice to the other party.

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EXHIBIT A

Additional Agreement Terms (with location of first reference in Agreement)

1. Destination (Recitals)

www.mol.com or any successor site, which shall be the page to which traffic is directed from the public NAI URLs.

Co-Host Site www.beyond.com

2. Certain Definitions

1. Aggregate Revenue in any year of the Term shall mean the revenue generated in such year by (i) the sale of Goods to customers entering the Co-Host Site through the Destination,and (ii) sales of Goods from the Managed Site (as defined in the Web Site Services Agreement).

2. Liquidated Damages Amount shall mean the difference between (i) the aggregate amount of the Co-Hosting Fee paid by Co-Host (the Aggregate Fee) and (ii) the Aggregate Fee multiplied by a number the numerator of which shall be the actual Aggregate Revenue through the effective date of termination of the Agreement and the denominator of which shall be the aggregate of the Minimum Revenue Targets through the effective date of the termination.

3. McAfee Mall shall mean the same thing as the Managed Site under the Web Site Services Agreement.

4. Online Service Page shall mean the general reference page for the NAI Sites established under the URL www.mol.com or any successor URL.

5. Minimum Revenue Targets shall mean: (i) in the first (1st) year of the Term, Aggregate Revenues of not less than Nine Million Dollars ($9,000,000) and (ii) in the second (2nd) year of the Term, Aggregate Revenues of not less than Twelve Million Dollars ($12,000,000).

3. Co-Hosting Fee (Section 2(a)) Co-Host shall pay to NAI a Co-Hosting Fee in the following amounts:

(a) A non-refundable initial payment of Two Million Five Hundred Thousand Dollars ($2,500,000) payable as follows: $2,000,000 on or before

September 30, 1998, and the balance within sixty (60) days of the execution of this Agreement.

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(b) Quarterly payments of $312,500 each, with the first payment being due September 15, 1999, and on each December 15, March 15, June 15, and September 15 thereafter during the Term unless (i) the Agreement is terminated in accordance with Section 6 of the Agreement prior to such date in which case no quarterly payments will be due following the effective date of such termination or (ii) if the Minimum Revenue Target (as defined in Part 2 of this Exhibit A) for the first year of the Term is not achieved by the first anniversary of the Effective Date, in which case no quarterly payments are payable until such time as the Minimum Revenue Target for the first year of the Term is achieved at which point Co-Host will resume making future quarterly payments on the schedule and in the amount set forth above for the duration of the Term or (iii) if the aggregate Minimum Revenue Targets (as defined in Part 2 of this Exhibit A) for the first and second year of the Term are not achieved by the second anniversary of the Effective Date, then, even if the Minimum Revenue Target (as defined in Part 2 of this Exhibit A) for the first year of the Term has been achieved prior to such second Anniversary, no quarterly payments are payable during the second year of the Term until such time as such aggregate Minimum Revenue Target is achieved at which point Co-Host will resume making future quarterly payments on the schedule and in the amount set forth above for the duration of the Term. The parties hereby agree to renegotiate in good faith a downward adjustment to the foregoing quarterly payments in the event that the Minimum Revenue Target for year one (1) is not achieved in the first year of this Agreement.

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EXHIBIT B

SPECIFICATIONS FOR HOT LINK FROM THE ONLINE SERVICE PAGE OF ANY ORIGINATING LOCATION

The hot link to the Co-Host site shall be no less prominent (whether is size, location or format) than any hot link to the McAfee Mall from the Online Service Page. In addition, in the event that any hot links to the McAfee Mall are located on any web page on the Originating Locations other than on the Online Service Page, then a hot link to the Co-Host Site shall all be located on such web page and shall be no less prominent (whether is size, location or format) than any hot link to the McAfee Mall. Notwithstanding the foregoing, the hot links to the Co-Host Site referred to above shall be no less prominent (whether in size, location or format) than any third party hot link on the Online Service Page or the Originating Locations.

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EXHIBIT C

COMPETITORS OF NAI

PART 1

Computer Associates International, Inc. Symantec Corporation Check Point Software Internet Security Systems, Inc. Cisco Systems (only with respect to firewall products) Security Dynamics

COMPETITORS OF CO-HOST

PART 2

Microwarehouse CompUSA Insight PC Connection

Best Buy Circuit City Cyberian Outpost Digital River Egghead.com Programmers Paradise Office Max Online Software Store Office Depot Online Software Store Staples Online Software Store WalMart Online Software Store BuyDirect.com Barnes & Noble Online Software Store Amazon.com Software Store Dell Computer Online Software Store Gateway 2000 Online Software Store Software Street Techwave and related companies CDW Online Store

THE PARTIES AGREE TO ACT IN GOOD FAITH IN MODIFYING THE ABOVE LIST OF COMPETITORS.

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EXHIBIT D

Joint Marketing Programs

PROGRAM: FUNDING:

1. NAI will make five e-mail promotions during the fourth quarter of 1998 for NAI products which will contain links to the Online Service Page.

2. NAI will make available up to 500,000 impressions on the NAI Internet Sites and ten percent (10%) of the impressions available on NAI's Upgrade/Update site for advertising materials to promote Beyond.com.

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EXHIBIT E

DISTRIBUTION ADDENDUM

WHEREAS, NAI owns and/or markets certain computer software and hardware products set forth on Exhibit A (Products).

WHEREAS, Co-Host is an independent reseller of computer products to end users ordering products through web sites on the Internet operated by Co-Host.

WHEREAS, Co-Host distributes electronic copies of the Products pursuant to the ESD Agreement.

WHEREAS, Co-Host desires to distribute the Products and NAI desires to make the Products available to Co-Host for further distribution.

THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements hereinafter set forth, NAI and Co-Host enter into the following additional agreements regarding the Products:

1. APPOINTMENT. NAI appoints Co-Host as a non-exclusive distributor of the Products to end users ordering the Products from the Destination or the Co-Host Site, and Co-Host accepts this appointment. Co-Host shall distribute the Products, as an independent reseller, at its own risk and expense and subject to any such prices, contractual terms and conditions as Co-Host may from time to time determine. Nothing in this Agreement shall prohibit Co-Host from distributing competing products in the Territory. The Territory as that term is used herein shall mean all countries in the world except countries to which export or re-export of any Product, or the direct products of any Product is prohibited by United States law without first obtaining the permission of the United States Office of Export Administration or its successor. Co-Host shall not have the right to assign or otherwise transfer this Agreement or any rights herein granted to any other person or entity, except by operation of law or in connection with the sale of all of its assets, or the acquisition of the Co-Host by a third party. Any such attempted assignment shall be void and the Agreement shall remain in effect.

2. DISTRIBUTION. Co-Host has the right to market and distribute the Products subject to the license agreement that accompanies such Product. Co-Host may

not engage in the rental of any of the Products. Co-Host shall not in any event remove from or obscure upon any Products any labels placed thereon by NAI containing statements of restrictions upon distribution, without the prior written consent of NAI. NAI reserves the right in its sole discretion and without liability to Co-Host to add additional Products, change the prices for the Products pursuant to Section 5, modify the Products, change the level of NAI's support for the Products and discontinue the availability of any Product. Any addition or deletion from the list of Products will be indicated by NAI's revision to the NAI price list, and NAI will use reasonable efforts to provide Co-Host with thirty (30) days notice prior to the effective date of such changes indicated on the NAI price list.

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3. MARKETING.

(a) General. Co-Host will use commercially reasonable efforts to market the Products it orders to the best of its ability, and to that end will (i) conduct marketing activities authorized by NAI, (ii) support special promotions initiated by NAI, and (iii) maintain a sound financial condition. Co-Host will conduct its business in a manner that reflects favorably upon the Products and NAI.

(b) Advertising; Use of Trademarks. Co-Host may advertise and promote the Products in a commercially reasonable manner and, subject to the provisions of Section 5 of the Co-Hosting Agreement, may use trademarks, service marks and trade names provided by NAI in connection therewith, provided that all such promotions and advertising will be consistent with NAI's general quality standards and the provisions of Section 5 of the Co-Hosting Agreement. Unless otherwise agreed upon in writing by NAI, Co-Host will submit each advertisement and promotion to NAI for trademark review and approval prior to initial release, which approval will not be unreasonably delayed or withheld. All such usage which was not expressly approved by NAI must be terminated immediately upon receipt of notice from NAI to that effect.

(c) Trademarks Rights. NAI owns any and all trademarks, trade names, and service marks for the Products (as noted in Section 5 of the Co-Hosting Agreement). Such trademarks, trade names, and service marks shall include all product names, the names Network Associates, logos, designs, and other designations or brands used by NAI in connection with the Products. Co-Host acknowledges and agrees that NAI is not granting to Co-Host any rights in any Product trademark, trade name, or service mark in or outside of the Territory.

4. INSPECTIONS, RECORDS AND REPORTING.

(a) Sales Out Reports. Co-Host will provide to NAI within ten (10) days after the end of each calendar month, a computer media data file in the format established by NAI showing, for such month, Co-Host's total sales, by customer and by Product from each location. If requested by NAI, Co-Host shall provide such reports with respect to weekly periods or bi-weekly periods prior to the end of the calendar month in which such period occurs.

(b) Inventory Level Reports. Co-Host will provide to NAI on Monday of each week, a computer media data file in the format established by NAI showing Co-Host's current inventory levels of each Product (including items in transit), and weekly runrate snapshots and the other information reasonably requested by NAI.

(c) Records. For three (3) years after each calendar quarter during the term of this Agreement, Co-Host will keep, at Co-Host's office, full and accurate books of account and copies of all documents and other materials for such quarter relating to this Agreement and Co-Host's records, accounts and contracts relating to the distribution of the Products.

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(d) Audit. NAI may inspect the records described in Sections 4(c) upon demand from time to time. In addition, Co-Host agrees to allow NAI's independent auditors to audit and analyze appropriate accounting records of Co-Host from time to time (but not more than one every six (6) months) to ensure compliance with all terms of this Agreement. Any such audit shall be permitted by Co-Host within fifteen (15) days of Co-Host's receipt of NAI's written request to audit, during normal business hours. The cost of such an audit will be borne by NAI unless a material discrepancy indicating inadequate record keeping or that additional fees due to NAI are discovered, in which case the cost of the audit shall be borne by Co-Host. A discrepancy shall be deemed material if it involves payment or adjustment of more than five percent of the amount reported in favor of NAI. Audits and inspections shall not interfere unreasonably with Co-Host's business activities.]

5. ORDERING AND PAYMENT.

(a) NAI's Acceptance. Any order for delivery of physical product placed

with NAI is subject to acceptance by NAI within ten (10) days following receipt by NAI. NAI may decline any order, in whole or in part, and unless NAI accepts an order in writing, the order is considered accepted only to the extent it is fulfilled.] The terms and conditions of this Agreement and of the applicable NAI invoice or confirmation will apply to each order accepted or shipped by NAI. Electronic confirmation from an authorized NAI email address shall have the same effect as a signed written confirmation. The provisions of Co-Host's form of purchase order or other business forms will not apply to any order notwithstanding NAI's acknowledgment or acceptance of such order.

(b) Price to Co-Host. NAI will inform Co-Host as to its current suggested retail price of the Products and standard discount or pricing granted to NAI's traditional product distributors. During the term of this Agreement, Co-Host will be invoiced on the basis of the discounts set forth on Exhibit A of this Distribution Addendum. Discounts off suggested retail price (SRP) for standard NAI Products shall exclude tradeups, upgrade SKUs and special promotions, unless otherwise indicated. NAI may change its SRP from time to time upon written notice to Co-Host, which may take the form of a revised price list, and NAI may notify Co-Host of a different discount from SRP in the event NAI offers special promotional SRPs or Product prices in NAI's discretion.

(c) Price Increase. If NAI increases its suggested retail price for any Product (a product upgrade with a different part number will not be the same Product) and there is a resulting increase in the price of Products to Co-Host, NAI will give Co-Host thirty (30) days advance notice of the effective date of any such increase and:

(i) NAI will honor the old price for any shipments of such Product already in transit to Co-Host;

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(ii) All additional orders following such thirty (30) day period will be shipped at the new price;

(iii) NAI has orders for such Product from Co-Host already booked into NAI's order entry system at the time of such price increase or if Co-Host orders additional Products during such thirty (30) day period, then the price increase will not apply to that portion of such orders which call for shipments of not more than the monthly average quantity of such Products shipped to Co-Host in the three month period preceding the date of the increase; and

(iv) Orders for such Product in NAI's order entry system in excess of the quantity specified in (iii) above will be shipped at the new price unless they are canceled by Co-Host by written notice to NAI, provided that such notice is received by NAI no later than fifteen (15) days prior to the date of shipment specified in such order.

(d) Price Decrease. If NAI decreases its suggested retail price for any Product (a product upgrade with a different part number will not be the same Product), the decrease will apply to all units of such Product in Co-Host's inventory and orders in transit to Co-Host from NAI that are in an unopened, salable condition as of the effective date of the decrease, provided that such Products had been shipped to Co-Host no more than ninety (90) days prior to such effective date. To be eligible for such price protection, Co-Host must deliver to NAI written evidence, signed by Co-Host, of an inventory of such Products showing the number and location of each unit of Product for which Co-Host claims price protection eligibility hereunder within thirty (30) days of receiving notice of such price decreases. Such reduction will constitute a credit on Co-Host's account for future orders from NAI under this Agreement (unless the Agreement has terminated or expired in which case such reduction will be refunded to the extent that Co-Host does not owe NAI money) in an amount equal to the difference between the net invoice price at which each such unit in inventory was provided to Co-Host and the current price then applicable for shipments of such Product to Co-Host hereunder.

(e) TAXES.

(i) All amounts payable by Co-Host to NAI under this Agreement are exclusive of any tax, withholding tax, levy, or similar governmental charge that may be assessed by any jurisdiction in or outside the Territory except income and similar taxes levied on and payable by NAI. Such taxes, withholding taxes, levies, and governmental charges (collectively Taxes) include Taxes based on sales, use, excise, import or export values/fees, value-added, income, revenue, net worth, or may be the result of the delivery, possession, or use of the Products, the execution or performance of this Agreement or otherwise. Should any Taxes be due, Co-Host agrees to pay such Taxes and indemnify NAI for any claim for

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such Taxes demanded. Co-Host shall make no deduction from any amounts owed to NAI for any Taxes. Co-Host covenants to NAI that all Products distributed hereunder will be in the ordinary course of Co-Host's business, and Co-Host agrees to provide NAI with appropriate information and/or documentation satisfactory to the applicable taxing authorities to substantiate any claim of exemption from any Taxes.

(ii) For all Taxes paid by Co-Host, Co-Host shall provide to NAI within forty-five (45) days after the end of any quarter, a certificate of tax payment documenting the payment and amount of the Taxes paid during the preceding quarter.

6. SHIPMENT, RISK OF LOSS AND DELIVERY.

(a) Shipment. All the physical Products will be shipped by NAI, F.C.A. (Incoterms 1990) place of shipment. Co-Host is responsible for paying all freight charges, transportation expenses, insurance charges, all applicable taxes, duties, import and export fees and similar charges associated with the delivery of the Products to Co-Host. All shipments will be made using either any carrier approved by both Co-Host and NAI. Co-Host will not without NAI's prior written consent, submit any order calling for the shipment of a Product to more than a single redistribution site.

(b) Risk of Loss. All risk of loss of or damage to the Products will pass to Co-Host upon delivery by NAI to the common carrier. Co-Host will bear the risk of loss or damage in transit.

(c) Partial Delivery. Unless Co-Host clearly advises NAI to the contrary in writing NAI, may make partial shipments on account of Co-Host's orders which shall, to be separately invoiced and paid for when due.

7. RETURNS.

(a) Returned Merchandise Authorization. Notwithstanding anything to the contrary herein contained, NAI will not issue credit to nor be obligated to accept returns for any reason for any physical Products unless NAI shall have previously issued a written Return Merchandise Authorization (RMA). The preceding sentence governs whether or not NAI is obligated to issue an RMA under this Agreement or applicable law. RMAs must be in writing, signed by NAI and only authorize the return of Products in good resalable conditions unless expressly provided otherwise herein. If damaged goods are received pursuant to an RMA, no credit shall be given by NAI with respect to such damaged goods unless the RMA indicates otherwise. Co-Host shall be responsible for all freight charges for goods returned pursuant to an RMA, unless otherwise indicated herein or in the RMA.

(b) Customer Returns and Bad Box. Subject to Section 7 (a), Co-Host may, during the term of this Agreement, obtain a credit against current or future invoices from

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NAI, for Products which have been returned by end users as defective, or pursuant to the warranty stated in NAI's end user license. Such credit will be in an amount equal to the original invoice price less any discounts or other credits previously received. Co-Host shall also have the ability to return for credit Products which have boxes that are or become damaged, unless such damage was caused by Co-Host. An offsetting purchase order must be placed for all bad box returns. In the event of claims by end users of incomplete Product, NAI, at its discretion, may supply to Co-Host, at no charge, any and all missing materials which are supposed to be provided with the current release of such Products or replace the entire Products in such situation.

(c) Discontinued Products. Co-Host may, during the term of this Agreement, obtain a credit for the price paid by Co-Host to be applied against current or future invoices, for all versions of Products shipped by NAI within the previous ninety (90) days that NAI discontinues or which are removed from NAI's current retail price list. Such credit will be equal to the price paid by Co-Host for such obsolete Products, less discounts received under Section 5 of this Agreements. All such discontinued Products will be counted and inspected at the Inspection Site by NAI's employee, and upon NAI's acceptance thereof (which will be a condition of Co-Host's eligibility for a credit hereunder) such Products will be promptly and completely destroyed or, if requested by NAI, such Products or any portion thereof will be returned to NAI as it directs. No Product shall be deemed discontinued if a later version of the Product is still being offered by NAI and end users may obtain the current version of such Product from NAI electronically at no additional charge.

(d) Freight. Co-Host will pay all costs (including freight) associated with the return of the Products to NAI and back to Co-Host as provided herein, except that NAI will be responsible for all freight costs associated with (i) the return of Products under Section 7(b), (ii) the return of any discontinued or obsolete Products under Section 7(c), and (iii) the return of other Product updates agreed upon by NAI and Co-Host.

8. GENERAL.

(a) Co-Host agrees that it will not, directly or indirectly, export or transmit the Product and technical data (or any part thereof) or any process or service that is the direct product of the software and documentation, to any group S or Z country specified in Supplement No. 1 of Section 770 of the Export Administration Regulations or to any other country to which such export or transmission is restricted by such regulation or statute, without the prior written consent, if required, of the Office of Export Administration of the U.S. Department of Commerce, or such other governmental entity as may have jurisdiction over such export or transmission.

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(b) Co-Host acknowledges that some NAI Products hereto contain encryption and some are export restricted (the Restricted Software) by the U.S. Department of Commerce's Bureau of Export Administration (BXA). Co-Host further acknowledges that for this reason, the export of such items may subject the Co-Host or its executives to fines and/or other severe penalties. Unless all required permits and/or approvals have been obtained, Co-Host shall not export or re-export the Restricted Software outside of the United States, whether directly or indirectly, and will not cause, approve or otherwise facilitate others such as agents, subsequent purchasers, licensees or any other third parties in doing so. The parties agree to cooperate with each other with respect to any application for any required licenses and approvals. However, Co-Host acknowledges it is their ultimate responsibility to comply with all export laws with respect to the Restricted Software and that NAI has no further responsibility after the initial sale to the Co-Host within the United States.

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EXHIBIT A TO EXHIBIT E

1. PRODUCTS COVERED (RECITALS). Product(s) provided to Co-Host shall be all NAI Goods as that term is defined in Section 1 (c) of the Agreement and no other products.

2. PRICES AND DISCOUNTS (SECTION 5(a)).

The standard discount or pricing granted to NAI's traditional Product distributors increased by four percentage points.
[EX A]:
Highlight the parts (if any) of this contract related to Liquidated Damages that should be reviewed by a lawyer. Details: Does the contract contain a clause that would award either party liquidated damages for breach or a fee upon the termination of a contract (termination fee)?