1. GOVERNING TERMS.  These terms (“Terms”) are incorporated by reference into the Rental and Service Agreement (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 rental 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. OWNERSHIP.  The Equipment is and shall at all times remain the exclusive property of TOPS, even if installed in or attached to real property by the Customer, and Customer grants TOPS a security interest in the Equipment.  The Equipment is provided to the Customer solely for the Customer’s own internal use at the Installation Site identified in the Agreement, and for no other purpose.  The Customer shall not rent, lease or lend the Equipment to any third party, nor shall it create, nor permit to exist, any encumbrance upon, or security interest in, the Equipment or any component thereof.  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.  

1. ADDITIONS TO EQUIPMENT. Customer may add Equipment from time to time during the Term, and Schedule A to the Agreement will be amended to reflect the additions.  Rental charges and service fees will be adjusted accordingly, and the Customer agrees to pay all such additional charges and fees in accordance with the terms of the Agreement.

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 any software supplied by TOPS are available from TOPS or the third party licensors. 

1. SERVICES.  TOPS agrees to provide installation, support and maintenance services (“Services”) for the Equipment during the Term.  The provision of the Services will be subject to TOPS Standard Support and Maintenance Terms and Conditions available here.

1. PRICES.  Rental fees for the Equipment, and fees for the Services and any associated Software are as set out in the Agreement (“Contract Price”).  The Customer shall pay the Contract Price and shall reimburse TOPS for any reasonable expenses incurred by TOPS and TOPS’ employees and contractors in connection with the performance of the Services.  Such expenses may include, but shall not be limited to, any required permits and reasonable travel costs incurred by TOPS employees in connection with the Services; provided, however, that all expenses shall be evidenced by supporting documentation.  All applicable sales taxes, duties and levies shall be the responsibility of the Customer. 

1. PAYMENT.  Unless otherwise agreed by TOPS, the Contract Price is payable monthly in advance.   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, 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, and/or pursue any other remedies available under the Agreement, at law or in equity. 

1. CARE, RISK OF LOSS, INDEMNITY AND INSURANCE

1. For the purposes of this Agreement, the Equipment shall be deemed to be in the “possession and control” of the Customer from the time of physical delivery of the Equipment by TOPS to the Installation Site, until the Equipment is returned to TOPS.

(b) While the equipment is in the Customer’s possession and control, the Customer shall, at the Customer’s sole expense, use, maintain, operate and store the Equipment in accordance with: (i) any oral and written instructions provided by TOPS; (ii) the conditions of coverage in any applicable policies of insurance; and (iii) all applicable laws, rules, codes and regulations.  The Customer will take good care of the Equipment, maintain the Equipment in good working order, and take adequate security measures to protect the Equipment from theft, accident, damage or other loss (reasonable wear and tear excepted).  Repairs and maintenance shall be performed only by TOPS or technicians approved by TOPS.  The Customer shall not transport, store, or use the Equipment under conditions likely to damage the Equipment or to cause damage to property or injury or death to persons.  The Customer shall not remove the Equipment (excluding remote IP sets) from the Installation Site without TOPS’s prior written consent.

(c) The Customer acknowledges that its use of the Equipment is at its own risk, and agrees to defend, indemnify and hold TOPS harmless from all losses, costs, damages, expenses, suits, judgments and other liabilities arising from or in connection with injury to or death of any persons, or from damage to property resulting from the use, operation, storage or transportation of the Equipment, or from a breach by the Customer of its obligations under the Agreement.  The Customer shall also be liable to TOPS 

for any loss (including theft), damage or destruction of the Equipment, or any part thereof, including loss or damage resulting from: (i) misuse, accident, negligence or failure to maintain the Equipment as required by TOPS; or (ii) unauthorized modifications, alterations or repairs, or use in connection with third party hardware or software not supplied or approved by TOPS.

(d) If the Equipment is lost, stolen or damaged while in the possession and control of the Customer, the Customer shall pay to TOPS: (i) the cost of repairing the Equipment to render it in good condition and working order; or (ii) if, in TOPS’s reasonable opinion, the Equipment cannot be repaired, the actual replacement value of the Equipment and applicable taxes.  For greater certainty, nothing contained in this provision is intended to limit damages recoverable by TOPS under any other provision of this Agreement, or by operation of law.

(e) While the Equipment is in the possession and control of the Customer, the Customer shall 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.  The Customer shall also carry public or general liability insurance, as well as insurance to cover its obligation under subsection 9(c) for lost rental income in the event of damage to or destruction of the Equipment.  TOPS shall be named as an additional insured on such policy(ies) and as the first loss payee thereunder.  All insurance required pursuant to these Terms shall be with insurers, coverage, limits and deductibles which are satisfactory to TOPS.

1. TERMINATION 

(a) Unless earlier terminated in accordance with this Section 9, the Agreement and the Equipment rental will terminate upon the expiry of the Term set out in the Agreement, including any agreed extension(s). 

(b) TOPS may terminate the Agreement or all or part of the Equipment rental: (i) if the Customer fails to pay any rents or other amounts due, and payment is not received by TOPS within ten (10) days of delivery of written notice to the Customer specifying the default; (ii) if the Customer breaches any other material obligation under the Agreement, and fails to rectify the breach to TOPS’s reasonable satisfaction within thirty (30) days of delivery of notice to the Customer; or (iii) immediately, if the Customer enters (or TOPS reasonably believes that the Customer may enter) into any arrangement with its creditors, or if a proceeding in bankruptcy, receivership or insolvency is instituted against the Customer or its property, or if the Customer generally becomes unable to pay its debts as they become due.

(c) Upon the expiry or earlier termination of the Equipment rental, the Customer shall promptly return the Equipment to TOPS at the Customer’s risk and expense, by prepaid, insured shipment to TOPS at TOPS’s designated location.  The Customer shall return the Equipment to TOPS in good operating condition, normal wear and tear excepted.  The Equipment shall be properly packed for shipment, using the original shipping containers if appropriate.  If the Customer fails to return the Equipment as required, 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, but with notice to the Customer.  Further, if the Equipment rental is terminated by TOPS pursuant to subsection (b) prior to the expiry of the Term, the entire unpaid amount of the rental fees for the Term shall, at TOPS’s option, be immediately due and owing. 

(d) Any provision of these Terms that by its nature should survive the termination or expiry of this Agreement shall survive including Sections 7, 9(c), 9(d), 11, 12 and 13.   Termination of the Agreement will not affect the right of either party to pursue any other remedies available at law or in equity, including injunctive relief.

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’s 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’s 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 RENTED, LEASED, 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, RESULTING FROM THE PERFORMANCE OR NON-PERFORMANCE OF THE AGREEMENT, EVEN IF TOPS HAS 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. 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 alterations 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’s 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.