1. GOVERNING TERMS.  These terms (“Terms”) are incorporated by reference into the Agreement executed between TOPS Telecommunications Inc. (“TOPS”) and the customer identified therein (“Customer”), and form a valid and binding part thereof.  These Terms govern the sale of the Equipment identified in the Agreement.  Capitalized terms defined in the main body of the Agreement shall have corresponding meanings in these Terms.

1. TITLE. Title to the Equipment will pass from TOPS to the Customer upon receipt by TOPS of payment in full of all amounts owing in respect of the Equipment, and the Customer hereby grants a security interest in the Equipment to TOPS pending receipt of payment.  Until title to the Equipment has passed from TOPS to the Customer, the Customer shall not, and shall not allow any other party to: (a) remove the Equipment (excluding remote IP sets) from the Installation Site, or (b) encumber the Equipment in any way without TOPS’ prior written consent. TOPS reserves the right to register a security interest in any or all of the Equipment.  In addition to any other rights and remedies that TOPS may have, if the Customer fails to pay any amounts owing for the Equipment when due, and payment is not received by TOPS within ten (10) days of delivery of written notice to the Customer specifying the default, the Customer agrees that TOPS, its agents or employees, may enter upon any premises where the Equipment is located and remove same, with or without a court order or other process, without further notice.  TOPS may resell the Equipment and retain out of the proceeds all monies owing under the Agreement.  The Customer shall be liable to TOPS for any deficiency from the Contract Price after the application of the proceeds of sale.  

1. RISK; INSURANCE.  From the time of physical delivery of the Equipment by TOPS to the Installation Site until such time as title to the Equipment has passed to the Customer in accordance with Section 2, the Customer: (a) will take good care of Equipment, and take adequate security measures to protect the Equipment from theft, accident, damage or other loss (reasonable wear and tear excepted); (b) be liable to TOPS for any loss (including theft), damage or destruction of the Equipment; and (c) at its sole expense, keep the Equipment insured on an “all risks” basis for an amount not less than the actual replacement cost of the Equipment, plus applicable taxes. TOPS shall be named as an additional insured on such policy and as the first loss payee thereunder.  All insurance required pursuant to these Terms shall be with insurers, coverage, limits and deductibles which are reasonably satisfactory to TOPS.

1. SOFTWARE.  The use of the Equipment may require certain third party software (“Software”).  The Customer’s use of the Software may be subject to the terms of third party end user license agreements.  Copies of third party licenses for Software supplied by TOPS are available from TOPS or the third party licensors. 

1. ADDITIONS TO EQUIPMENT. The Customer may procure additional Equipment from time to time, and Service fees will be adjusted accordingly. The Customer agrees to pay all such additional charges and fees in accordance with the terms of the Agreement.

1. PRICES.  The price for the Equipment, and the fees for the Services and associated Software (if any) are as set out in the Agreement (“Contract Price”).  The Customer shall pay the Contract Price as specified in the Agreement.  A deposit in the amount specified in the Agreement is payable upon order acceptance, and is non-refundable.  All applicable sales taxes, duties and levies shall be the responsibility of the Customer. 

1. PAYMENT.  The Contract Price is payable as specified in the Agreement.  Payment is due net thirty (30) days from the date of invoice.  Except as specifically provided herein, payment obligations are non-cancellable.  If requested by TOPS for the purposes of credit review, the Customer will submit its most current financial information to TOPS.  All amounts, including applicable taxes, are payable in Canadian currency unless otherwise agreed.  Interest may be charged on overdue amounts at the rate of 2% for each month that the payment is overdue (26.8% per annum, effective rate), or the highest rate permitted by applicable law, whichever is lower.  All amounts payable to TOPS shall be paid in full without any deduction or withholding.  If at any time the financial condition of the Customer so warrants, or if the Customer fails to make any payment(s) when due, or if the Customer defaults on any obligation to TOPS, in addition to any other remedies that it may have at law or in equity, TOPS may at its discretion alter the terms of payment, and/or suspend or delay delivery of any Service or Equipment pending receipt of advance payment. 

1. LIMITED WARRANTY. Initial system programming and set-up services are warranted for a period of thirty (30) days. Where permitted, TOPS will pass through to the Customer any warranties provided by the third party Equipment manufacturer. The Customer agrees to promptly examine and test all Equipment following installation, and to notify TOPS of any damage or defects within three (3) business days.  The Customer’s sole and exclusive remedy for a breach of the foregoing representation is the repair or replacement of the damaged or defective Equipment.  THE WARRANTY SET OUT IN THIS SECTION 8 IS THE ONLY WARRANTY PROVIDED BY TOPS.  TOPS EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY RELATING TO THE EQUIPMENT AND THE CUSTOMER’S USE THEREOF.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TOPS EXPRESSLY EXCLUDES ANY WARRANTY OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, QUALITY, DESIGN, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, OR ANY WARRANTY OTHERWISE ARISING OUT OF ANY PROPOSAL, SPECIFICATION, OR SAMPLE, OR FROM 

A COURSE OF DEALING, USAGE OR TRADE.  THIS DISCLAIMER AND EXCLUSION SHALL APPLY EVEN IF THE EXPRESS WARRANTY SET FORTH ABOVE FAILS OF ITS ESSENTIAL PURPOSE.

1. FORCE MAJEURE.  TOPS will not be liable for any failure to perform its obligations to the Customer due to circumstances or causes beyond TOPS’ reasonable control, including, but not limited to, acts of God, war, terrorism, riot, embargoes, acts of civil or military authorities, delay in delivery by TOPS’ vendors, delay by the Customer, fire, flood, accident, epidemic, strikes, or inability to secure transportation, facilities, fuel, energy, labor, or materials.  In the event of force majeure, TOPS’s time for delivery or other performance will be extended for a period equal to the duration of the delay caused thereby.

1. LIMITATION OF LIABILITY.  TOPS’, ITS SUPPLIERS’, AND THEIR RESPECTIVE OFFICERS’, DIRECTORS’, EMPLOYEES’ AND AGENTS’ TOTAL COLLECTIVE LIABILITY UNDER THE AGREEMENT OR ARISING OUT OF OR IN CONNECTION WITH THE EQUIPMENT AND SERVICES SOLD OR DELIVERED TO THE CUSTOMER, AND THE PERFORMANCE OR NON-PERFORMANCE OF TOPS’ OBLIGATIONS TO THE CUSTOMER UNDER THE AGREEMENT, SHALL BE LIMITED TO THE ACTUAL DIRECT DAMAGES CAUSED THEREBY, NOT TO EXCEED THE AMOUNTS ACTUALLY RECEIVED BY TOPS FROM THE CUSTOMER FOR THE EQUIPMENT OR SERVICES GIVING RISE TO THE DAMAGES DURING THE IMMEDIATELY PRECEDING TWELVE (12) MONTH PERIOD.  IN NO EVENT SHALL TOPS HAVE ANY LIABILITY TO THE CUSTOMER OR TO ANY OTHER PARTY FOR INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY NATURE (INCLUDING, WITHOUT LIMITATION, LOST REVENUES, LOST PROFITS, DELAY, OR LOSS OF USE) ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OR NON-PERFORMANCE OF THE AGREEMENT, EVEN IF TOPS HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  THESE LIMITATIONS WILL APPLY FOR ALL CLAIMS, INCLUDING WITHOUT LIMITATION, CONTRACT, WARRANTY, INDEMNITY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, AND WILL APPLY EVEN IF THE CUSTOMER’S REMEDIES FAIL OF THEIR ESSENTIAL PURPOSE.

1. HIGH RISK APPLICATIONS. If the Customer elects to use any Equipment in applications or environments requiring fail-safe performance in which the failure or malfunction of any of the Equipment could lead to death, personal injury, or severe physical or environmental damage, the Customer hereby acknowledges and agrees that: (a) the Customer shall assume all risk and liabilities associated with such uses; (b) the Customer shall indemnify, defend and hold TOPS and its suppliers harmless from and against any and all losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, liabilities, costs and expenses (including attorneys’ fees) arising as a result of such uses; and (c) the Customer shall be solely responsible to ensure its compliance with any and all applicable federal, provincial, and local statutes, laws, regulations, and guidelines, including, without limitation, any CRTC restrictions or warnings, in connection with such uses.

1. EXPORT CONTROL.  The Customer shall comply with all Canadian and other applicable export laws, restrictions and regulations.  Without limitation, the Customer shall not export, re-export or otherwise transmit, download or use, directly or indirectly, any Equipment, software, information, data, or other materials received pursuant to the Agreement in violation of any such restrictions, laws or regulations.  The Customer shall indemnify, defend and hold harmless TOPS and its third party suppliers from any loss, liability, cost or expense (including reasonable legal fees) related to any action arising from the Customer’s failure to comply with this section.

1. GOVERNING LAWS.  The Agreement, including all schedules and amendments, will be construed, interpreted and governed by the laws of the Province of British Columbia, Canada, without regard to its conflicts of laws principles. The courts of the Province of British Columbia will have exclusive jurisdiction to resolve any dispute that arises out of or in connection with the Agreement that cannot be resolved amicably through discussions between the parties’ senior management.

1. MISCELLANEOUS. No alternations or modifications of the Agreement will be binding upon either party unless made in writing and signed by an authorized representative of each party.  The failure by either party to insist upon the performance of any obligation or to exercise any rights under the Agreement will not be construed as a waiver of the right or obligation, or of any other right or obligation under the Agreement. The Agreement may not be assigned by the Customer without TOPS’ prior written consent.  The Agreement will be binding upon, enure to the benefit of, and is enforceable by, the parties and their respective successors and permitted assigns.