1. Preliminary. These terms and conditions apply to the website design and development services (&Services&) to be provided by FreeRun Technologies, Inc. ("FreeRun") to the Client ("Client") specified in the attached proposal ("Proposal") in connection with the design and development of the Client's web site ("Web Site") specified in the Proposal. The following terms and conditions are incorporated into and made part of the Proposal and together constitute the Agreement ("Agreement") between the parties. If there is any inconsistency between the terms of the Proposal and these terms and conditions, these terms and conditions shall prevail.

2. Scope of Work. FreeRun will perform the Services described in the Proposal. Any changes in the specification set out in the Proposal shall only become effective when a written change order has been executed by both FreeRun and Client. FreeRun shall not be obliged to accept any change to the specification.

3. Estimates and Production Schedules. Any estimated cost or production schedule specified in the Proposal or subsequently proposed by FreeRun, is acknowledged by Client to be an estimate only and not a promise, undertaken or binding obligation on the part of FreeRun that the cost of the Services will not exceed the estimate or that the proposed production schedule will be achieved. Client shall not be entitled to withhold payment or claim any breach of this Agreement or any other remedy by reason of any estimate of cost being exceeded or production schedule not being met. FreeRun will keep Client periodically informed of the time being spent on the Services and will advise Client if it becomes apparent to FreeRun that the production schedule will not be met or if the estimated cost has been exceeded. Client acknowledges that, since performance of the Services is dependent upon factors outside the control of FreeRun (including, without limitation, actions to be taken by Client), Client has not entered into this Agreement in reliance upon the accuracy of any such production schedule or estimate of cost. Time shall not be of the essence in connection with the performance of the Services.

4. Deposit. Client shall pay to FreeRun at the commencement of this Agreement the deposit specified in Exhibit A. FreeRun shall not, under any circumstances, be obliged to commence Services until the deposit has been paid. Even if FreeRun does commence the Services before Client has paid the full amount of the deposit, FreeRun shall be entitled to cease performing the Services at any time until the deposit has been paid in full. The deposit, once paid, is non-refundable in the event of termination of this Agreement by Client for any reason other than a breach of this Agreement by FreeRun in which case only the difference between the amount of the deposit paid and the value of the Services rendered by FreeRun shall be refunded. Once the value of the Services rendered by FreeRun has exceeded the value of the deposit, invoicing will commence pursuant to Section 5 below.

5. Payments. Client shall pay FreeRun for the Services at the rate specified in the Proposal. Once the value of Services performed by FreeRun exceeds the value of the deposit paid by Client, FreeRun shall submit invoices on a weekly basis setting out the total amount of time spent on the Services and the amount payable by Client. The full amount of each invoice is due and payable upon receipt. In addition, Client shall reimburse FreeRun for all out of pocket expenses incurred by FreeRun in connection with the Services. Client will also be responsible for and will pay all taxes payable in connection with payments made to FreeRun under this Agreement, except for taxes on FreeRun's net income.

6. Late Payment. If any invoice remains unpaid for more than 15 days, Client will be charged a late fee of 2% of the overdue amount for each month, or part thereof, that the payment is late (or, if lower, the maximum permitted by law). If any payment whatsoever owed by Client to FreeRun on any account is overdue by more than 30 days, FreeRun shall be entitled to suspend performance of the Services until all sums due and payable by Client have been paid in full. If performance of Services is suspended, FreeRun shall be entitled to render an invoice in respect of all unbilled Services performed up to the date of suspension. If any payment is overdue by more than 60 days, FreeRun shall be entitled to terminate this Agreement.

7. Warranty. Client warrants that (a) the information provided by Client to be incorporated into the Web Site by FreeRun in the course of the Services ("Content") does not and will not infringe or violate any third parties copyright or other intellectual property rights, rights of privacy or other legal rights or any applicable government regulations or Internet guidelines or protocols; (b) Client will be responsible for obtaining all necessary third party permissions and licenses to incorporate any Content into the Web Site; and (c) all Content provided by Client to FreeRun in electronic form is and will remain free of defects or viruses. Client will defend, indemnify and hold harmless FreeRun for any breach of this warranty.

8. FreeRun Technology. FreeRun Technology incorporated into the functionality of the Web Site, and any derivative works based thereon, in whole or in part, and all intellectual property rights therein, is and will remain the sole and exclusive property of FreeRun. For the purpose of this Agreement, "FreeRun Technology" means the proprietary technology of FreeRun consisting of all data, technology, content, software and related documentation in digital or analog form developed by FreeRun or any third party (other than Client) including, without limitation, know-how, algorithms, procedures, techniques, solutions, work-arounds and bug fixes, perl, cgi scripts, interactive forms and proprietary computer software tools now existing and/or developed by or on behalf of FreeRun during or after performance of the Services, and including any copies or modifications of such FreeRun Technololgy. Performance of the Services under this Agreement grants to Client no rights whatsoever in the FreeRun Technology except to permit the functioning of the Web Site.

9. Ownership. Copyright in the design of the Web Site shall exclusively belong to Client and shall be considered as "works made for hire" (as such is defined under US copyright laws) by FreeRun for Client. However, no ownership rights in any FreeRun Technology incorporated into the Web Site shall vest in or be deemed to have vested in Client. Credit for the design of the Web Site by FreeRun shall at all times appear on the Web Site and FreeRun shall be entitled to make reference to its design work for Client in FreeRun's own advertising or promotional literature or portfolios.

10. Confidentiality. Save as otherwise required by law, FreeRun will not disclose any Client Confidential Information to any third party or otherwise use any Client Confidential Information for any purpose other than for the proper performance of the Services as contemplated by this Agreement without the prior written consent of Client.

"Client Confidential Information" shall mean any information or (including, without limitation, trade secrets, know-how, marketing plans or other sensitive business information) which is designated by Client as confidential but shall not include any such information which is already known to FreeRun (otherwise than from a source known by FreeRun to be under an obligation of confidentiality to Client) or is otherwise publicly known or no longer secret or confidential (otherwise then by virtue of a breach of this obligation of confidentiality by FreeRun).

11. Limitation of Liability. Client hereby confirms that it is not entering into this Agreement in reliance upon any express or implied promise, representation, warranty, undertaking or obligation of FreeRun not otherwise specified herein. In no event shall FreeRun be liable to Client for any special incidental or consequential damages, whether based on breach of contract, torts (including negligence), product liability or otherwise and whether or not FreeRun has been advised of the possibility of such damage. FreeRun's total liability to Client in respect of any breach of this Agreement will be limited to the payments received from Client under this Agreement. Nothing in this Agreement shall create or is intended to create a contractual relationship for the benefit of any third party.

12. Force Majeure. FreeRun will not be liable for and will not be considered to be in breach of or in default under this Agreement on account of any delay, failure or inability to perform as required by this Agreement as a result of any causes or conditions which are beyond its reasonable control, including, without limitation, acts of God, acts of war, earthquake, floor, embargo, riot, sabotage, labor shortage or dispute, government act, failure of the Internet or loss of power for any period. If such an event occurs, FreeRun will give notice thereof to Client and will use commercially reasonable efforts to minimize the impact of such event.

13. Indemnity. Client shall indemnify defend and hold FreeRun harmless from and against any and all claims, liabilities, suites, demands, losses, costs and expenses including, but not limited to, attorney's fees incurred by FreeRun or any third party, and all interest thereon accruing or resulting to any and all persons on account of or arising out of or in any way connected with the provision or non-provision of the Services except to the extent caused by the negligence of FreeRun.

14. Termination. Client may, at its option, terminate any or all of the Services at any time upon written notice. Upon receipt of such notice of termination, FreeRun shall inform Client of the value of the Services performed up to the date of of such receipt and, upon payment of all sums due from Client pursuant to this Agreement, FreeRun will deliver to Client whatever work product exists at that time, in such manner as is reasonably prescribed by Client. FreeRun shall be entitled to terminate this Agreement in the event of non-payment of any sums payable to FreeRun pursuant to this Agreement as specified in Section 6 above or, upon giving seven days notice in writing to Client, if FreeRun believes, in good faith, that FreeRun will not be able to perform the Services by reason of a breakdown of mutual trust and confidence between FreeRun and Client. In the event of such termination by FreeRun, and subject to payment of all sums due and payable to FreeRun under this Agreement, FreeRun will deliver to Client whatever work product then exists in such manner as is reasonably prescribed by Client. Either party may terminate this Agreement immediately, in the event of the bankruptcy, insolvency or liquidation of the other party, or upon ten days written notice to the other party in the event of a breach of a material provision of this Agreement by the other party provided that, during the ten day period, the breaching party fails to cure such breach.

15. Assignment. Neither this Agreement nor the benefit of it may be assigned by either party without the prior written consent of the other party. Client acknowledges that performance of some or all of the Services may be undertaken by independent contractors engaged by FreeRun from time to time.

16. Waiver. The failure by either party to insist on strict performance of the terms of this Agreement will not be deemed as a waiver of any rights or remedies that such party may have for any subsequent breach, defaults or non performance or either parties right to insist on strict performance of this Agreement. No waiver is valid unless in writing specifying the nature of the waiver and signed by the waiving party.

17. Notice. Any notice to be given hereunder shall be given in writing and may be delivered in person or by prepaid first class mail or fax or e-mail and addressed to FreeRun or Client at the address, fax or e-mail address specified in the proposal (or to such other address, fax or e-mail address as may be notified in writing by either party to the other).

18. Attorney's Fees. If either party brings legal action against the other, the prevailing party will be entitled to recover its reasonable legal costs and expenses for bringing and maintaining such action.

19. Severability. Each term or provision of this Agreement is separate and divisible if any such term or provision is found to be void, invalid or unenforceable for any reason, the remaining terms and provisions of this Agreement shall survive and continue to be in full force and effect.

20. Entire Agreement. This Agreement constitutes the entire and integrated Agreement between the parties with regard to the provision of the Services and supersedes all prior and contemporaneous communications, representations or Agreements whether oral or in writing. This Agreement may only be amended in writing signed by both parties.

21. Mediation and Arbitration. Unless otherwise agreed by the parties any unresolved claim, dispute or other matter or question between the parties relating to this Agreement shall be first submitted to non-binding mediation. Should no mutually satisfactory settlement be achieved through such mediation such claim or dispute or matter in question shall be submitted to arbitration in Santa Rosa, California in accordance with the rules of commercial arbitration of the American Arbitration Association. Judgment upon the award of the arbitrator may be entered into any court of law having jurisdiction with respect thereto. The arbitrator shall have authority to award reasonable attorney's fees and other costs incurred in such arbitration proceedings.

22. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California.