Effective: December 6, 2004
Issued: December 6, 2004

1. General
(a) Services offered under this Agreement include Services offered by U.S. TelePacific Corp. and/or its affiliated companies (collectively referred to as “TelePacific“), pursuant to Tariffs filed with state regulatory agencies having jurisdiction over the Services, and the Federal Communications Commission (FCC) (“Tariffed Services”), as well as Services offered on a non-Tariffed basis. Tariffed Services shall be provided in accordance with the provisions of TelePacific’s Tariffs, which are incorporated herein by reference. Tariffed Services, and all other services provided under this Agreement, as they may be ordered by Customer from time to time, are collectively referred to as the “Services.” In the event that the rates, terms and conditions set forth in this Agreement, as amended by new orders and change orders authorized by Customer and accepted by TelePacific, conflict at any time with those set forth in TelePacific’s federal and/or state Tariffs applicable to the Services, rates, terms and conditions of the Tariffs shall control. The rates, terms and conditions of tariffed Services may change, subject to the approval of the applicable regulatory agency. If the Tariffs for any Services are cancelled as a result of regulatory action during the term of this Agreement, TelePacific will publish a Price List on its Web site (www.telepacific.com) setting forth the rates previously contained in such Tariffs along with any terms and conditions applicable thereto, which shall become part of this Agreement.

(b) TelePacific may increase the rates set forth in this Agreement for non-Tariffed Services to pass through any price increases imposed on it by the providers of the underlying facilities used to provide the Services or, in the case of long distance services, by its wholesale providers of such services. TelePacific may also change the terms and conditions (but not the rates) applicable to non-Tariffed Services by giving the Customer at least 30 days prior written notice of the changes. If TelePacific materially changes the terms and conditions applicable to any of its non-Tariffed Services, Customer may cancel the affected Services provided the Customer notifies TelePacific in writing prior to the effective date of the changes. If Customer exercises its right to cancel any of the Services, it will only be liable for the charges for those cancelled Service(s) incurred up to and including the cancellation date. If Customer does not cancel the affected Service(s) prior to the effective date of the changes, Customer will be deemed to have consented to the changes and to a continuation of the Services.

2. Term, Billing, and Payment
(a) Effective Date. This Agreement shall become binding upon Customer when it has been signed by both parties and upon TelePacific’s approval of Customer’s credit application and the suitability of Customer’s premises for the Services. If these conditions are met to TelePacific’s satisfaction, TelePacific will commence as soon as practicable the installation, connection and testing of the lines and/or equipment necessary to provide the Services. Additional Services and Services to additional locations (“Service Locations”) may be ordered by Customer, subject to TelePacific's acceptance, from time to time.

(b) Term. The initial term of this Agreement ("Initial Term") will commence upon the date agreed to by the parties as set forth on page 2 of this Agreement, or the date TelePacific provides notice to Customer that the Services are available for use by Customer, whichever occurs later. The Agreement, including any additional Services ordered under it from time to time for existing locations, shall continue in effect for the entire Term as set forth on page 2 of this Agreement and shall automatically renew for successive periods of one (1) year each thereafter ("Renewal Term"), unless terminated as provided in Section 4. Additional Services ordered for additional Service Locations from time to time will commence as set forth immediately above, shall continue in effect for the entire Term set forth on the applicable Service Agreement and shall automatically renew for successive periods on one (1) year each thereafter ("Renewal Term"), unless terminated as provided in Section 4. The Terms and Conditions of the Agreement shall extend automatically, following termination, to cover the remaining Term of any additional Services at additional Service Locations that may have been ordered under it.

(c) Billing. TelePacific will begin invoicing Customer for the Services after giving notice to Customer that the Services are available for Customer’s use, and shall continue invoicing Customer on a monthly basis until the Agreement is terminated. TelePacific will bill usage charges in arrears, and monthly recurring charges in advance. Customer shall be responsible for all sales, gross receipts, use, excise, and other federal, state and local taxes, charges and assessments based on Customer’s use of the Services, which will be separately listed on each invoice along with any fees or surcharges applicable to the Services. TelePacific may require, in its sole discretion, that Customer provide a deposit or other assurance of payment before the Services are provided. Any required deposit shall not bear interest unless required by law. If Customer unilaterally delays acceptance of the Services after receiving notice from TelePacific that they are available, TelePacific, may, in its sole discretion, begin charging Customer for the ordered Services. If Customer’s actions or lack of action prevent TelePacific from providing the ordered Services for more than 60 days after the date the Services are available, Customer will have materially breached the Agreement, and TelePacific will be entitled to terminate the Agreement without further notice and to pursue the remedies set forth in paragraph 4 hereof.

(d) Payment. Invoices are due and payable upon presentation, and become past due after the Pay By date printed on the invoice. If Customer has a bonafide dispute with any of the amounts on the invoice (“Disputed Amount”), Customer shall pay all amounts not in dispute by the Pay By date and provide TelePacific with a written request for a billing adjustment, together with all supporting documentation, within 45 days from the Pay By date or Customer’s right to any billing adjustment shall be waived. If TelePacific agrees to adjust all or a portion of the disputed charges on the invoice, Customer shall not be obligated to pay interest or TelePacific’s late payment charge on the adjusted amount. If Customer fails to pay all non-Disputed charges on TelePacific’s invoice by the Pay By date, TelePacific may impose a late payment charge of 1.5% per month or the maximum rate allowed by law, whichever is less, on the unpaid balance until the amount is paid. TelePacific may also suspend Customer’s services until all delinquent amounts, including late payment charges, are paid in full. An additional charge of $25.00 will apply to all returned checks.

3. Customer Obligations
(a) TelePacific’s Property. Any equipment installed by TelePacific at Customer’s premises remains the personal property of TelePacific, and nothing contained in this Agreement shall give or convey to Customer any right, title or interest whatsoever in such equipment. Customer agrees not to interfere with or damage the equipment, and further agrees to reimburse TelePacific for any loss or damage thereto that is caused by the intentional or negligent acts of Customer, its agents, employees, authorized users or representatives. Customer will allow TelePacific to promptly remove the equipment from Customer’s premises upon termination of the Services for which the equipment was installed.

(b) Responsibility for Message Content. Customer shall be solely responsible for all content that Customer makes available on or through any Services provided by TelePacific. Customer warrants that all such content will not infringe on, or contain any content that infringes on, or otherwise violates any copyright, patent or any other right held by a third-party, and shall not violate any applicable law, rule, regulation or industry standard.

(c) Network Security. Customer hereby acknowledges that it is the Customer's responsibility to take whatever actions it deems necessary to adequately make its computer and voice network and circuits adequately secure from unauthorized access. Customer further acknowledges that TelePacific is only the provider of the telecommunications services and equipment to Customer and that it is not responsible for the security of Customer's own network and circuits from third parties, or for any damages that may result from any unauthorized access to Customer's network. TelePacific urges Customer to seek independent advice with respect to products, equipment (including configurations thereof), and services available to make Customer's computer network and circuits more secure from third parties.

CUSTOMER FURTHER ACKNOWLEDGES THAT NO TELEPACIFIC EMPLOYEE, AGENT, REPRESENTATIVE OR SUBCONTRACTOR HAS MADE, AND THEY DO NOT HAVE THE AUTHORITY TO MAKE, ANY REPRESENTATIONS CONCERNING THE SECURITY OF CUSTOMER'S NETWORK OR THE SERVICES PROVIDED BY TELEPACIFIC HEREIN THAT ARE INCONSISTENT WITH THE STATEMENTS CONTAINED IN THE PRECEDING PARAGRAPH.

4. Termination
(a) This Agreement and any orders for Services submitted under it, shall remain in effect until terminated as set forth in this Section. After the Initial Term, this Agreement will automatically renew for successive periods of one year each at TelePacific’s rates then in effect for the Services to the Customer unless either party notifies the other in writing within the last sixty (60) days of the then-current Term of the intent not to allow the Agreement to renew for a successive Term, thereafter. Even after termination, the Terms and Conditions of the Agreement shall automatically extend to cover any remaining Terms of any additional Services to additional Service Locations ordered by the Customer which have not expired. The Term of any such additional Services shall be subject to the same automatic renewal and termination notice provisions as the Agreement. If either party notifies the other party in writing during that sixty (60) day period of a decision not to allow the Agreement or the Term of any additional Services to additional Service Locations to renew at the expiration of a Term, actual termination of Services will not occur until the later of the end of the then-current Term or thirty (30) days after receipt of that notification. If Customer elects to terminate the Agreement or any orders for Services prior to the installation of the Services, Customer shall pay to TelePacific as a termination charge and not as a penalty, an amount equal to: (1) the tariffed non-recurring charges applicable to the Services, even if initially waived, unless those charges have already been paid, and (2), if the Agreement is for a Term of one year, an amount equal to three times the one month recurring charges, or in the case of an Agreement with a Term of more than one year, an amount equal to six times the one month recurring charges.

(b) Either party may terminate this Agreement upon 30 days notice if the other party materially breaches the terms and conditions of this Agreement, including, but not limited to, Customer’s failure to pay TelePacific’s invoices for the Services by the Due Date, and the other party fails to cure the default within the 30 day period. If Customer terminates this Agreement after TelePacific’s material breach, then Customer will be responsible only for charges accrued prior to the date of termination. If, however, subject to paragraph 4(c), below, after the Service has been installed and is available for Customer’s use, TelePacific terminates this Agreement as a result of Customer’s material breach, or Customer terminates the Agreement or any Services thereunder for any reason other than TelePacific’s material breach, Customer shall pay to TelePacific as a termination charge, and not as a penalty, during the Initial Term an amount equal to: (i) the tariffed non-recurring charges for the terminated Services, even if initially waived unless those charges have already been paid, and (ii) the difference between the monthly recurring charges paid for the terminated Services for the period used and the monthly recurring charges for that same period which the Customer would have paid if the Customer's original term commitment had been for the greater of the one-year or two-year period which the Customer has fully completed ("Default MRC"), and (iii) 100% of the Default MRC for the terminated Services multiplied by the number of months, if any, remaining in the revised alternative term, or during a Renewal Term, an amount equal to 100% of the monthly recurring charges for the terminated Services multiplied by the number of months remaining in the then-current Renewal Term. In addition, TelePacific shall be entitled to recover from Customer all of the costs it incurs (including reasonable attorneys’ fees and court costs) to collect any delinquent charges owed by Customer along with all other damages it incurs as a result of Customer’s breach of this Agreement. Paragraphs 4 and 5 of this Agreement, inclusive of subparagraphs, shall survive any termination or expiration of this Agreement.

(c) California Small Business Clause. Notwithstanding anything in the Agreement to the contrary, California Small Business Customers may elect to cancel without termination fees or penalties any new tariffed Service or any new contract for Service within the first thirty (30) days after the new Service is initiated by providing written notice of such election to TelePacific within that period. Customer shall indicate a desired date of termination not more than sixty (60) days after the date of notification. Customer is responsible for the normal recurring charges and usage charges applicable to the Service incurred before canceling and while still connected to and using the Service (including charges that may be billed subsequently) and for the reasonable cost of work done on Customer's premises before Customer canceled. "Small Business" is defined for the purposes of this Agreement for California Customers as any Customer who subscribes to Services using not more than one T-1 at the account level.

5. Warranty, Disclaimer, Limitation of Liability and Indemnity
(a) WARRANTY DISCLAIMER. WITHOUT LIMITING ANY EXPRESS FINANCIAL OR LIABILITY PROVISIONS PROVIDED FOR IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES (INCLUDING WITHOUT LIMITATION, LOST BUSINESS, REVENUE, PROFITS, OR GOODWILL) ARISING IN CONNECTION WITH THIS AGREEMENT OR THE PROVISION OF SERVICES HEREUNDER (INCLUDING ANY SERVICE IMPLEMENTATION DELAYS/FAILURES), UNDER ANY THEORY OF TORT, CONTRACT, WARRANTY, STRICT LIABILITY OR NEGLIGENCE, EVEN IF THE PARTY HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. TELEPACIFIC MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY SERVICE PROVISIONED HEREUNDER. TELEPACIFIC SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR TITLE OR INFRINGEMENT OF THIRD PARTY RIGHTS.

(b) TelePacific shall not be liable for any act, omission of any other entity furnishing Customer with facilities or equipment used with the Services, nor shall TelePacific be liable for any damages or losses due in whole or in part to the fault or negligence of Customer or due in whole or in part to the failure of Customer-provided equipment or facilities.

(c) LIMITATION OF LIABILITY. NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (A), TELEPACIFIC’S TOTAL LIABILITY HEREUNDER SHALL IN NO EVENT EXCEED THE LESSER OF (1) CUSTOMER’S PROVEN DIRECT DAMAGES; (2) THE AMOUNTS PAID BY CUSTOMER TO TELEPACIFIC FOR THE SERVICES DURING THE PERIOD IN WHICH ANY SERVICE-RELATED PROBLEMS WERE EXPERIENCED, OR (3) IN THE CASE OF TARIFFED SERVICES, THE CREDITS AVAILABLE TO CUSTOMER UNDER TELEPACIFIC’S THEN STANDARD TARIFFED LIMITATION OF LIABILITY. THE FOREGOING LIMITATIONS APPLY TO ALL CAUSES OF ACTION AND CLAIMS, INCLUDING WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATION AND OTHER TORTS.

(d) Indemnification. Customer will defend, indemnify and hold harmless TelePacific (including its officers, directors, employees, agents, and contractors) from any claims, liabilities, losses, damages and expenses (including reasonable attorneys’ fees and costs), arising out of or relating to Customer’s use of the Services. This indemnity will not be available if the damage or loss is due to TelePacific’s willful or reckless acts or omissions. Subject to the limitation of liability set forth in subparagraph (c) of this Section, TelePacific will defend, indemnify and hold harmless Customer (including its officers, directors, employees, agents, licensees or contractors) from any claims, liabilities, losses damages and expenses (including reasonable attorneys’ fees and court costs), arising out of or relating to TelePacific’s delivery of the Services to Customer. This indemnity will not be available if the damage or loss is due to Customer’s willful or reckless acts of omissions.

6. Miscellaneous Provisions
(a) Assignment and Succession. Customer may not assign or transfer this Agreement without TelePacific’s prior written consent, which shall not be unreasonably withheld. Any unauthorized assignment or transfer shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, successor and authorized assigns.

(b) Governing Law. This Agreement shall be deemed to have been made in, and shall be construed pursuant to the laws of the State of California without regard to the conflicts of law provisions thereof.

(c) Force Majeure. TelePacific shall not be liable for any failure of performance of the Services due to causes beyond its control, including, but not limited to, fire, flood, electric power interruptions, national emergencies, civil disorder, acts of terrorists, riots, strikes, lockouts, work stoppages, Acts of God, or any law, regulation, directive, or order of the United States government, or any other governmental agency, including state and local governments having jurisdiction over TelePacific or the Services provided hereunder.

(d) Arbitration. If the parties cannot resolve between themselves any dispute arising under this Agreement, the parties shall promptly submit the dispute to binding arbitration at the office of the American Arbitration Association (“AAA”) located in the City or County of the state where the services are provided, or if there is no AAA office at that location, then at the AAA office closest to where the services are provided (“Arbitration Site”). The arbitration will be held in accordance with the commercial arbitration rules of the AAA. Either party may initiate arbitration by providing written demand for arbitration (with a copy to the other party), a copy of this Agreement and the administrative fee required by the AAA rules to the AAA office located at the Arbitration Site. The remaining cost of the arbitration shall be shared equally by the parties unless the arbitration award provides otherwise. Each party shall bear the cost of preparing and presenting its case. The parties agree to undertake all reasonable steps to expedite the arbitration process. One arbitrator will be appointed in accordance with the AAA rules within 30 calendar days of the submission of the demand for arbitration. The arbitrator will designate the time and place for the Arbitration within 30 days of appointment. TelePacific and Customer agree that the arbitrator’s authority to grant relief shall be subject to the provisions of this Agreement, TelePacific’s applicable tariffs, if any, and any other applicable law. The arbitrator shall not be entitled to award, nor shall either party be entitled to receive, punitive, incidental, exemplary, consequential, reliance or special damages, including damages for lost profits. The arbitrator’s decision shall follow the plain meaning of this Agreement and shall be final, binding and enforceable in a court of competent jurisdiction.

(e) Entire Agreement and Modifications. This Agreement and all other documents specifically referred to herein constitute the entire and final agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to such subject matter, which are of no further force or effect. The exhibits referred to herein are integral parts of this Agreement and are hereby made a part of this Agreement. This Agreement may only be modified or supplemented by an instrument in writing executed by a duly authorized representative of each party.

(f) Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court or administrative agency with jurisdiction over the Services, such provision shall be deemed amended to the minimum extent necessary to render it enforceable.

(g) Headings. The headings used in this Agreement are for convenience only and do not in any way limit or otherwise affect the meaning of any of the terms contained herein.

(h) Waiver. Under no circumstances shall the failure of TelePacific to enforce any provision of this Agreement in any particular instance be construed as a waiver of that provision.

7. Service Guarantee
Notwithstanding anything to the contrary contained in this Agreement, Customer may terminate this Agreement without any further obligation if the Services provided by TelePacific are not substantially performing up to industry standards during the first 90 days the Services are available for Customer's use. If Customer elects to terminate the Agreement pursuant to this guarantee, TelePacific will reimburse Customer for all reasonable costs incurred by Customer to re-establish service with its previous service provider not to exceed the amount that Customer paid to TelePacific for installation of the Services. This Service Guarantee only applies if (a) the cause of the Service deficiency was within TelePacific's reasonable control; (b) Customer ordered at least the amount of Services recommended by TelePacific to meet Customer's traffic volumes; and (c) TelePacific fails to correct the Service deficiency within 15 days after receiving written notice from the Customer of the deficiency given during the 90 day period.