Document:

exhibit41

    CORD
      BLOOD AMERICA, INC.

    

    2005
      STOCK OPTION PLAN

    

    ARTICLE
      I

    Purpose
      and Effectiveness

    

    1.1  Purpose.
      The
      purpose of the Cord Blood America , Inc. 2005 Stock Option Plan (the “Plan”) is
      to promote the success of Cord Blood America, Inc., a Florida corporation (the
      “Company”), by providing a method whereby directors, officers and employees of,
      and consultants, advisors, independent contractors and other persons providing
      services to, the Company and its Subsidiaries (as hereinafter defined) may
      be
      awarded remuneration for services rendered and encouraged to invest in capital
      stock of the Company, thereby increasing their proprietary interest in the
      Company’s businesses, encouraging them to remain in the service of, or employed
      and encouraged by, the Company or its Subsidiaries, and increasing their
      personal interest in the continued success and progress of the Company. The
      Plan
      is also intended to aid in attracting persons of exceptional ability to become
      directors, officers, employees and independent contractors o f the Company
      and
      its Subsidiaries.

     

    1.2  Effective
      Date.
      The
      Plan shall take effect upon the date of its adoption by the Board (as
      hereinafter defined).

     

    1.3  Shareholder
      Approval.
      The
      Plan shall be subject to the approval of the holders of a majority of the
      outstanding voting securities of the Company.

    

    ARTICLE
      II

    Definitions

    

    2.1  Certain
      Defined Terms.
      Capitalized terms not defined elsewhere in the Plan shall have the following
      meanings (whether used in the singular or plural):

    

    “Affiliate”
      of the Company means any corporation, partnership, or other business association
      that, directly or indirectly, through one or more intermediaries, controls,
      is
      controlled by, or is under common control with the Company.

    

    “Agreement”
      means the stock option agreement specified in section 7.5, both individually
      and
      collectively, as the context may require. 

    

    “Approved
      Board” means a Board that, as of a given date, is comprised of individuals at
      least a majority of whom have continuously served as directors of the Company
      during the period of two years ending on such date, unless the election of
      each
      director who was not a director at the beginning of such two year period was
      approved in advance by the directors representing at least two-thirds of the
      directors then in office who were directors at the beginning of such two year
      period.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    “Approved
      Change in Control of the Company” means any transaction or series of
      transactions which:

     

    (i)  results,
      or is reasonably anticipated to result, in a Change of Control of the
      Company;

     

    (ii)  is
      approved by the requisite vote of an Approved Board pursuant to, and in
      accordance with, applicable law and the Articles of Incorporation and Bylaws
      of
      the Company; and

     

    (iii)  if
      required by applicable law or the Articles of Incorporation or Bylaws of the
      Company, is approved by the requisite vote of the shareholders of the Company
      pursuant to, and in accordance with, applicable law and the Articles of
      Incorporation and Bylaws of the Company.

    

    “Award”
      means a grant of Options under this Plan.

    

    “Board”
      means the Board of Directors of the Company.

    

    “Change
      in Control of the Company” means any change in control of the Company of a
      nature which would be required to be reported (a) in response to Item 6(e)
      of
      Schedule 14A of Regulation 14A, as in effect on the Effective Date of this
      Plan,
      promulgated under the Exchange Act, (b) in response to item 5.01 of the Current
      Report on Form 8-K, as in effect on the Effective Date of this Plan, promulgated
      under the Exchange Act, or (c) in any filing by the Company with the United
      States Securities and Exchange Commission; provided, however, that, without
      limitation, a Change in Control of the Company shall be deemed to have occurred
      if:

    

    (i)  any
      “person” (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the
      Exchange Act), other than the Company, any Subsidiary of the Company or any
      compensation, retirement, pension or other employee benefit plan or trust of
      the
      Company or any Subsidiary of the Company, becomes the “beneficial owner”(as such
      term is defined in Rule 13d-3 promulgated under the Exchange Act), directly
      or
      indirectly, of securities of the Company or any successor to the Company
      (whether by merger, consolidation or otherwise) representing fifteen percent
      (15%) or more of the combined voting power of the Company’s then outstanding
      securities;

     

    (ii)  during
      any period of two consecutive years, the individuals who at the beginning of
      such period constitute the Board of the Company cease for any reason to
      constitute at least a majority of such Board, unless election of each director
      who was not a director at the beginning of such period has been approved in
      advance by the directors representing at least two-thirds of the directors
      then
      in office who were directors at the beginning of such period;

    

    

    
      
        
        

      

      
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      (iii)  the
        Company shall merge or consolidate with or into another corporation or other
        entity, or enter into a binding agreement to merge or consolidate with or
        into
        another corporation or other entity, other than a merger or consolidation
        which
        would result in the voting securities of the Company outstanding immediately
        prior thereto continuing to represent (either by remaining outstanding or
        by
        being converted into voting securities of the surviving corporation or entity)
        not less than eight-five percent (85%) of the combined voting power of the
        voting securities of the Company or such surviving corporation or entity
        outstanding immediately after such merger or consolidation;

    

    
       

      (iv)  the
        Company shall sell, lease, exchange, transfer, convey or otherwise dispose
        of
        all or substantially all of its assets, or enter into a binding agreement
        for
        the sale, lease, exchange, transfer, conveyance or other disposition of all
        or
        substantially all of its assets, in one transaction or in a series of related
        transactions; or

       

    

    
      (v)  the
        Company shall liquidate or dissolve, or any plan or proposal shall be adopted
        for the liquidation or dissolution of the Company; or

    

    

    provided,
      however, that any of the foregoing transactions between or among (A) any or
      all
      of the Company and any Subsidiary or Subsidiaries of the Company, or (B) any
      Subsidiaries of the Company, shall not be deemed to constitute a “Change in
      Control of the Company hereunder.

    

    “Code”
      means the Internal Revenue Code of 1986, as amended from time to time, or any
      successor statute or statutes thereto. Reference to any specific Code section
      shall include any successor section.

    

    “Committee”
      means the committee of the Board, if any , appointed pursuant to Section 3.1
      to
      administer the Plan.

    

    “Common
      Stock” means the common stock, no par value per share, of the
      Company.

    

    “Company”
      means Cord Blood America, Inc., a Florida corporation.

    

    “Disability”
      means any mental or physical illness, condition, disability or incapacity which
      prevents the Holder from reasonably discharging his duties and responsibilities
      as an officer or employee of the Company or any Subsidiary or Affiliate of
      the
      Company. If any disagreement or dispute shall arise between the Company or
      any
      Subsidiary or Affiliate of the Company and the Holder as to whether the Holder
      suffers from any Disability, then the Holder shall submit to the physical or
      mental examination of a physician licensed under the laws of the State of
      residence of the Holder, who shall be mutually selected by the Company & the
      Holder, and such physician shall make the determination of whether the Holder
      suffers from any Disability. In the absence of fraud or bad faith, the
      determination of such physician shall be final and binding upon the Company
      and
      the Holder. The entire cost of any such examination shall be borne by the
      Company.

     

    
 

    
      
        
        

      

      
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    “Effective
      Date” means the date on which the Plan becomes effective pursuant to Section
      1.2.

    

    “equity
      securities” shall have the meaning ascribed to such term in Rule 16a-1
      promulgated under the Exchange Act, or any successor Rule.

    

    “Exchange
      Act” means the Securities Exchange Act of 1934, as amended from time to time, or
      any successor statute or statutes thereto. Reference to any specific Exchange
      Act section shall include any successor section.

    

    “Fair
      Market Value” of a share of Common Stock on any day means the last sale price
      (or, if no last sale price is reported, the average of the high bid and low
      asked prices) for a share of Common Stock on such day (or, if such day is not
      a
      trading day, on the next preceding trading day) as reported on NASDAQ or, if
      not
      reported on NASDAQ, as quoted by the National Quotation Bureau Incorporated
      or
      Pink Sheets.com, Inc. or if the Common Stock is listed on an exchange, on the
      principal exchange on which the Common Stock is listed. If for any day the
      Fair
      Market Value of a share of Common Stock is not determinable by any of the
      foregoing means, then the Fair Market Value for such day shall be determined
      in
      good faith by the Board or the Committee on the basis of such quotations and
      other considerations as the Board or the Committee deems
      appropriate.

    

    “Holder”
      means a director, officer or employee of the Company or a Subsidiary, or any
      consultant, advisor or independent contractor to the Company or a Subsidiary,
      who has received an Award under this Plan.

    

    “Incentive
      Stock Option” means a stock option granted under Article VI which is intended to
      be an incentive stock option within the meaning of Section 422 of the
      Code.

    

    “NASDAQ”
      means the National Association of Securities Dealers, Inc. Automated Quotation
      System.

    

    “Nonqualified
      Stock Option” means a stock option granted under Article VI that is designated
      as a nonqualified stock option.

    

    “Option”
      means any Incentive Stock Option or Nonqualified Stock Option.

    

    “Plan”
      has the meaning ascribed thereto in Section 1.1.

    

    “qualified
      domestic relations order” means a qualified domestic relations order as defined
      by the Code or Title I of the Employee Retirement Income Security Act, or the
      rules thereunder.

    

    “Rule
      16b-3” means Rule 16b-3 promulgated under the Exchange Act, or any successor
      Rule. References to paragraphs of Rule 16b-3 shall include the comparable
      provisions of any successor Rule.

     

    
 

    
      
        
        

      

      
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    “Subsidiary”
      of the Company means any present or future subsidiary (as defined in Section
      424(f) of the Code) of the Company. An entity shall be deemed a subsidiary
      of
      the Company for purposes of this definition only for such periods as the
      requisite ownership or control relationship is maintained.

    

    “10%
      shareholder” means a grantee of an Incentive Stock Option under the Plan who, at
      the time such Option is granted, owns (or is considered as owning within the
      meaning of Section 424 of the Code) stock possessing more than ten percent
      (10%)
      of the total combined voting power of all classes of capital stock of the
      Company or any Subsidiary.

    

    ARTICLE
      III

    Administration

    

    
      	3.1  	
                     
                Committee.
                

            

    

    

    
      (a)  The
        Plan
        shall be administered by the Board of Directors of the Company, the Stock
        Option
        Committee of the Board or another committee of the Board, all as shall be
        determined by the Board.

       

    

    
      (b)  The
        Committee shall be comprised of not less than two persons. Each member of
        the
        Committee shall be a member of the Board who during the one year period prior
        to
        service on the Committee was, and during such service is, an “outside director,”
        as such term is utilized in Section 162(m) of the Code, and a “non-employee
        director,” as such term is defined and utilized in Rule 16b-3. Subject to the
        foregoing, the Board may from time to time appoint members of the Committee
        in
        substitution for or in addition to members previously appointed, may fill
        vacancies in the Committee and may remove members of the Committee.

       

    

    
      (c)  The
        Committee shall select one of its members as its chairman and shall hold
        its
        meetings at such times and places as it shall deem advisable. A majority
        of its
        members shall constitute a quorum and all determinations shall be made by
        a
        majority of such quorum. Any determination reduced to writing and signed
        by all
        of the members of the Committee shall be fully as effective as if it had
        been
        made by a majority vote at a meeting duly called and held.

    

    

    
      	3.2  	
                     
                Powers.

            

    

    

    
      (a)  The
        Board
        or the Committee, if so determined by the Board, shall have full power and
        authority, subject to such orders or resolutions not inconsistent with the
        provisions of the Plan as may from time to time be issued or adopted by the
        Board, to grant eligible persons Options under Article VI of the Plan, to
        determine the restrictions, terms and conditions (which need not be identical)
        of all Awards so granted, to interpret the provisions of the Plan and any
        Agreements relating to Awards granted under the Plan, and to supervise the
        administration of the Plan.

       

       

      
        
          
          

        

        
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      (b)  The
        Board
        or the Committee, if the Board shall so determine, shall have sole authority
        in
        the selection of directors, officers and employees of the Company or a
        Subsidiary, and any consultant, advisor or independent contractor to the
        Company
        or a Subsidiary, to whom Awards may be granted under the Plan and in the
        determination of the timing, pricing, terms, conditions, restrictions and
        amount
        of any such Award, subject only to the express provisions of the
        Plan.

       

    

    
      (c)  Without
        limiting the generality of Sections 3.2(a) and 3.2(b), the Board or the
        Committee shall have the authority to condition any Award, in whole or in
        part,
        on performance or other criteria established by the Board or the Committee
        at
        the time of grant. In making determinations hereunder, the Board or the
        Committee may take into account the nature of the services rendered by the
        respective directors, officers, employees, consultants, advisors or independent
        contractors, their present and potential contributions to the success of
        the
        Company and its Subsidiaries and such other factors as the Board or the
        Committee in its discretion deems relevant, and may consult with, and give
        such
        consideration to the recommendations of, management of the Company as the
        Board
        or Committee deems desirable.

    

    

    
      3.3  Interpretation.
        The
        Board or the Committee is authorized, subject to the provisions of the Plan,
        to
        establish, amend and rescind such rules and regulations as it deems necessary
        or
        advisable for the proper administration of the Plan and to take such other
        action in connection with or in relation to the Plan as it deems necessary
        or
        advisable. Each action and determination made or taken pursuant to the Plan
        by
        the Board or the Committee, including any interpretation or construction
        of the
        Plan, shall be final and conclusive for all purposes and upon all persons.
        No
        member of the Board or the Committee shall be liable for any action or
        determination made or taken by him or the Board or the Committee in good
        faith
        with respect to the Plan. 

    

    

    ARTICLE
      IV

    Shares
      Subject to the Plan

    

    
      4.1  Number
        of Shares.
        Subject
        to the provisions of this Article IV, the maximum number of shares of Common
        Stock reserved for Awards under this Plan shall be 8,000,000 shares. Shares
        of
        Common Stock will be made available from the authorized but unissued shares
        of
        the Company or from shares reacquired by the Company, including shares purchased
        in the open market. The shares of Common Stock subject to any Award granted
        under the Plan that shall expire, terminate or be annulled for any reason
        without having been exercised shall again be available for purposes of the
        Plan.

       

    

    
      4.2  Adjustments.
        If the
        Company subdivides its outstanding shares of Common Stock into
        a
        greater number of shares of Common Stock (by stock dividend, stock split,
        reclassification or otherwise) or combines its outstanding shares of Common
        Stock into a smaller number of shares of Common Stock (by reverse stock split,
        reclassification or otherwise), or if the Board or the Committee determines
        that
        any stock dividend, extraordinary cash dividend, reclassification,
        recapitalization, reorganization, split-up, spin-off, combination, exchange
        of
        shares, warrants or rights offering to purchase Common Stock, or other similar
        corporate event (including mergers or 

       

       

      
        
          
          

        

        
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      consolidations)
        affects the Common Stock such that an adjustment is required in order to
        preserve the benefits or potential benefits intended to be made available
        under
        this Plan, then the Board or the Committee shall, in its sole discretion
        and in
        such manner as the Board or the Committee may deem equitable and appropriate,
        make such adjustments to any or all of (i) the number and kind of shares
        which
        thereafter may be awarded, optioned, or otherwise made subject to the benefits
        contemplated by the Plan, (ii) the number and kind of shares subject to
        outstanding Awards, and (iii) the purchase or exercise price with respect
        to any
        of the foregoing; provided, however, that the number of shares subject to
        any
        Award shall always be a whole number. The Board or the Committee may, if
        deemed
        appropriate, provide for a cash payment to any Holder of an Award in connection
        with any adjustment made pursuant to this Section 4.2.

    

    

    ARTICLE
      V

    Eligibility

    

    
      5.1  General.
        The
        persons who shall be eligible to participate in the Plan and to receive Awards
        under the Plan shall be such employees (including officers and, subject to
        Section 5.2, directors who are also employees) of the Company and its
        Subsidiaries, such persons who provide consulting, advisory or other services
        as
        independent contractors to the Company or its Subsidiaries, and directors
        who
        are not also employees of the Company or its Subsidiaries, all as the Board
        or
        the Committee shall select. Awards may be made to employees who hold or have
        held Awards under this Plan or any similar or other awards under any other
        plan
        of the Company or any of its Affiliates.
         

      

    

    
      5.2  Ineligibilty.
        No
        member of the Committee, while serving as such, shall be eligible to receive
        an
        Award under the Plan.

    

    

    ARTICLE
      VI

    Stock
      Options

     

    6.1  Grant
      of Options.
      Subject
      to the limitations of the Plan, the Board or the Committee shall designate
      from
      time to time those eligible persons to be granted Options, the time when each
      Option shall be granted to such eligible persons, the number of shares subject
      to such Option, whether such Option is an Incentive Stock Option or a
      Nonqualified Stock Option, the restrictions, terms and conditions of such Option
      and, subject to Section 6.2, the purchase price of the shares of Common Stock
      subject to such Option. Subject to the other provisions of the Plan, the same
      person may receive Incentive Stock Options and Nonqualified Stock Options at
      the
      same time and pursuant to the same Agreement, provided that Incentive Stock
      Options and Nonqualified Stock Options are clearly designated as
      such.

     

    
 

    
      
        
        

      

      
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      6.2  Option
        Price.
        The
        price at which shares may be purchased upon exercise of an Option shall be
        fixed
        by the Board or the Committee and may be more than, less than or equal to
        the
        Fair Market Value of the Common Stock as of the date the Option is granted;
        provided, however, that the exercise price of an Incentive Stock Option at
        the
        time of grant thereof shall:

    

    

    
      (a)  if
        such
        Incentive Stock Option is being granted to a 10% shareholder, be at least
        One
        Hundred Ten percent (110%) of the Fair Market Value of the Common Stock subject
        thereto as of the date of grant; and

       

    

    
      (b)  if
        such
        Incentive Stock Option is being granted to any other person, be at least
        One
        Hundred percent (100%) of the Fair Market Value of the Common Stock subject
        thereto as of the date of grant.

    

    

    
      6.3  Limitation
        on Grants.
        No
        Options may be granted to any person as Incentive Stock Options for which
        the
        Fair Market Value (determined as of the time an Incentive Stock Option is
        granted to such person) of the Common Stock with respect to which Incentive
        Stock Options are exercisable for the first time by such person during any
        calendar year under all plans of the Company and its Subsidiaries shall exceed
        One Hundred Thousand Dollars ($100,000). If an Option which would otherwise
        qualify as an Incentive Stock Option becomes exercisable for the first time
        in
        any calendar year for shares of Common Stock having a Fair Market Value
        (determined as of the time such Option is granted) in excess of One Hundred
        Thousand Dollars ($100,000), then the portion of such Option in respect of
        such
        excess shares shall be deemed to be a Nonqualified Stock Option.

       

    

    
      6.4  Term
        of Options.
        Subject
        to the provisions of the Plan with respect to death, retirement and termination
        of employment, the term of each Option shall be for such a period as the
        Board
        or the Committee shall determine as set forth in the applicable Agreement,
        but
        not more than (i) five years from the date of grant in the case of Incentive
        Stock Options held by 10% shareholders and (ii) ten years from the date of
        grant
        in the case of all other Incentive Stock Options.

       

    

    
      6.5  Exercise
        of Options.
        An
        Option granted under the Plan shall become (and remain) exercisable during
        the
        term of the Option to the extent provided in the applicable Agreement and
        this
        Plan and, unless the Agreement otherwise provides, may be exercised to the
        extent exercisable, in whole or in part, at any time and from time to time
        during such term; provided, however, that subsequent to the grant of an Option,
        the Board or the Committee, at any time before complete termination of such
        Option, may accelerate the time or times at which such Option may be exercised
        in whole or in part (without reducing the term of such Option).

       

    

    
      6.6  Manner
        of Exercise.
        

    

    

    
      (a)  Form
        of Payment.
        An
        Option shall be exercised by written notice to the Company upon such terms
        and
        conditions as the Agreement may provide and in accordance with such other
        procedures of the exercise of Options as the Board or the Committee may
        establish from time to time. The method or methods of payment of the purchase
        price for the shares to be purchased upon exercise of an Option and of any
        amounts required by Section 7.10 shall be 

       

       

       

      
        
          
          

        

        
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      determined
        by the Board or the Committee and may consist of (i) cash, (ii) check, (iii)
        if
        and to the extent the Company will not be required to recognize for financial
        accounting purposes a charge for compensation expense, whole shares of Common
        Stock already owned by the Holder, (iv) the withholding of shares of Common
        Stock issuable upon such exercise of the Option, (v) the delivery, together
        with
        a properly executed exercise notice, of irrevocable instructions to a broker
        to
        deliver promptly to the Company the amount of sale or loan proceeds required
        to
        pay the purchase price, (vi) any combination of the foregoing methods of
        payment, or such other consideration and method of payment of payment as
        may be
        permitted for the issuance of shares under the Florida Business Corporation
        Act.
        The permitted methods of payment of the amounts payable upon exercise of
        an
        Option, if other than in cash, shall be set forth in the applicable Agreement
        and may be subject to such conditions as the Board or the Committee deems
        appropriate. Without limiting the generality of the foregoing, if a Holder
        is
        permitted to elect to have shares of Common Stock issuable upon exercise
        of an
        Option withheld to pay all or any part of the amounts payable in connection
        with
        such exercise, then the Committee shall have the sole discretion to approve
        or
        disapprove such election, which approval or disapproval shall be given after
        such election is made, and the making of such election (including the related
        exercise of the Option) shall (to the extent necessary) comply with the
        requirements for exemptive relief under Rule 16b-3, including, to the extent
        necessary and without limitation, paragraphs (e) and (f) thereof.

       

    

    
      (b)  Value
        of Shares.
        Shares
        of Common Stock delivered in payment of all or any part of the amounts payable
        in connection with the exercise of an Option, and shares of Common Stock
        withheld for such payment, shall be valued for such purpose at their Fair
        Market
        Value as of the exercise date.

       

    

    
      (c)  Issuance
        of Shares.
        The
        Company shall effect the transfer of the shares of Common Stock purchased
        under
        the Option as soon as practicable after the exercise thereof and payment
        in full
        of the purchase price therefore and of any amounts required by Section 7.10,
        and
        within a reasonable time thereafter such transfer shall be evidenced on the
        books of the Company. No Holder or other person exercising an Option shall
        have
        any of the rights of a shareholder of the Company with respect to shares
        of
        Common Stock subject to an Option granted under the Plan until due exercise
        and
        full payment has been made. No adjustments shall be made for cash dividends
        or
        other rights for which the record date is prior to the date of such due exercise
        and full payment.

    

    

    
      6.7  Nontransferability.
        Options
        shall not be transferable other than by will or the laws of descent and
        distribution or pursuant to a qualified domestic relations order and, except
        as
        otherwise required pursuant to a qualified domestic relations order, Options
        may
        be exercised during the lifetime of the Holder thereof only by such Holder
        (or
        his or her court appointed legal representative).

    

     

    
 

    
      
        
        

      

      
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    ARTICLE
      VII

    General
      Provisions

    

    
      7.1  Acceleration
        of Options.
        

    

    

    
      (a)  Death
        or Disability.
        If a
        Holder’s employment shall terminate by reason of death or Disability,
        notwithstanding any contrary waiting period, installment period or vesting
        schedule in any Agreement or in the Plan, unless the applicable Agreement
        provides otherwise, each outstanding Option granted under the Plan shall
        immediately become exercisable in full in respect of the aggregate number
        of
        shares covered thereby.

       

    

    
      (b)  Change
        in Control of the Company.
        Upon
        the occurrence of any Change in Control of the Company, notwithstanding any
        contrary waiting period, installment period or vesting schedule in any Agreement
        or in the Plan, unless the applicable Agreement provides otherwise, each
        outstanding Option granted under the Plan shall immediately become exercisable
        in full in respect of the aggregate number of shares covered
        thereby.

       

    

    
      (c)  Approved
        Change in Control of the Company.
        Notwithstanding the provisions of Section 7.1(b) above, unless otherwise
        provided in the applicable Agreement, the Board or the Committee may, in
        its
        discretion, determine that any or all outstanding Awards of any or all types
        granted pursuant to the Plan will not vest or become exercisable on an
        accelerated basis in connection with an Approved Change in Control of the
        Company if the Board or the surviving or acquiring person, corporation or
        other
        entity, as the case may be, shall have taken, or made effective provision
        for
        the taking of, such action as in the opinion of the Board or the Committee
        is
        equitable and appropriate to substitute a new Award for such Award or to
        assume
        such Award and in order to make such new or assumed Award, as nearly as may
        be
        practicable, equivalent to the old Award (before giving effect to any
        acceleration of the vesting or exercisability thereof), taking into account,
        to
        the extent applicable, the kind and amount of securities, cash or other assets
        into or for which the Common Stock may be changed, converted or exchanged
        in
        connection with the Approved Change in Control of the
        Company.

    

    

    
      7.2  Termination
        of Employment.

    

    

    
      (a)  General.
        If a
        Holder’s employment shall terminate prior to the complete exercise of an Option,
        then such Option shall thereafter be exercisable, solely to the extent provided
        in the applicable Agreement; provided, however, that (i) no Option may be
        exercised after the scheduled expiration date thereof; (ii) if the Holder’s
        employment terminates by reason of death or Disability, the Option shall
        remain
        exercisable for a period of at least one year following such termination
        (but
        not later than the scheduled expiration of such Option); and (iii) any
        termination by the Company for cause will be treated in accordance with the
        provisions of Section 7.2(b).

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

    

    
      (b)  Termination
        for Cause.
        If a
        Holder’s employment with the Company or a Subsidiary shall be terminated by the
        Company or such Subsidiary prior to the exercise of any Option for cause
        (for
        these purposes, cause shall have the meaning ascribed thereto in any employment
        agreement to which said Holder is a party or, in the absence thereof, shall
        include but not be limited to, insubordination, dishonesty, incompetence,
        moral
        turpitude, other misconduct of any kind or the refusal to perform his duties
        and
        responsibilities for any reason other than death or Disability; provided,
        however, that if such termination occurs within one year after the date of
        any
        Change in Control of the Company, other than an Approved Change in Control
        of
        the Company, termination for cause shall mean only a felony conviction for
        fraud, misappropriation or embezzlement), then all Options held by such Holder
        shall immediately terminate.

       

    

    
      (c)  Leave
        of Absence.
        The
        Board or the Committee may determine whether any given leave of absence
        constitutes a termination of employment; provided, however, that for purposes
        of
        the Plan (i) leave of absence, duly authorized in writing by the Company
        for
        military service or sickness, or for any other purpose approved by the Company
        if the period of such leave does not exceed six months, and (ii) a leave
        of
        absence in excess of six months, duly authorized in writing by the Company,
        provided the employee’s right to reemployment is guaranteed either by statute or
        contract, shall not be deemed a termination of employment.

       

    

    
      (d)  Change
        in Employment.
        Awards
        made under the Plan shall not be affected by any change of position or
        employment so long as the Holder continues to be an employee of the Company
        or
        any Subsidiary.

    

    

    
      7.3  Right
        of Company to Terminate Employment or Engagement.
        Nothing
        contained in the Plan or in any Award, and no action of the Company, the
        Board
        or the Committee with respect thereto, shall confer or be construed to confer
        on
        any Holder any right to continue to be employed or engaged by the Company
        or any
        of its Subsidiaries or interfere in any way with the right of the Company
        or a
        Subsidiary to terminate the employment or engagement of the Holder at any
        time,
        with or without cause; subject, however, to the provisions of any written
        employment or other agreement between the Holder and The Company or any
        Subsidiary.

       

    

    
      7.4  Nonalienation
        of Benefits.
        No
        right or benefit under the Plan shall be subject to anticipation, alienation,
        sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance
        or
        charge, and any attempt to anticipate, alienate, sell, assign, hypothecate,
        pledge, exchange, transfer, encumber or charge the same shall be void. No
        right
        or benefit hereunder shall in any manner be liable for or subject to the
        debts,
        contracts, liabilities or torts of the person entitled to such
        benefits.

       

    

    
      7.5  Written
        Agreement.

    

    

    (a)   
      Each
      award of an Option under the Plan shall be evidenced by a stock option agreement
      which shall designate the Options granted thereunder as Incentive Stock Options
      or Nonqualified Stock Options. 

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (b)   
      Each
      grantee of an Option shall be notified promptly of such grant and a written
      agreement shall be promptly executed and delivered by the Company and the
      grantee, provided that, in the discretion of the Board or the Committee, such
      grant of Options shall terminate if such written agreement is not signed by
      such
      grantee (or his attorney) and delivered to the Company within ninety days after
      the date the Board or the Committee approved the grant.

     

    (c)   
      Any
      such
      written agreement may contain (but shall not be required to contain) such
      provisions as the Board or the Committee deems appropriate to insure that the
      penalty provisions of Section 4999 of the Code will not apply to any stock
      or
      cash received by the Holder from the Company. Any such agreement may be
      supplemented or amended from time to time as approved by the Board or the
      Committee as contemplated by Section 7.8(b) hereof.

    

    7.6 Designation
      of Beneficiaries.
      Each
      person who shall be granted an Award under the Plan may designate a beneficiary
      or beneficiaries and may change such designation from time to time by filing
      a
      written designation of beneficiary or beneficiaries with the Board or the
      Committee on a form to be prescribed by it, provided that no such designation
      shall be effective unless so filed prior to the death of such
      person.

    

    7.7 Right
      of First Offer.
      The
      Agreements may contain such provisions as the Board or the Committee shall
      determine to the effect that if a Holder elects to sell all or any shares of
      Common Stock that such Holder acquired upon the exercise of an Option, then
      such
      Holder shall not sell such shares unless such Holder shall have first offered
      in
      writing to sell such shares to the Company at Fair Market Value on a date
      specified in such offer (which date shall be at least three business days and
      not more than ten business days following the date of such offer). In any such
      event, certificates representing shares issued upon exercise of Options shall
      bear a restrictive legend to the effect that transferability of such shares
      are
      subject to the restrictions contained in the Plan and the applicable Agreement
      and the Company may cause the transfer agent for the Common Stock to place
      a
      stop transfer order with respect to such shares.

    

    
      7.8  Termination
        and Amendment.
        

    

    

    (a) General.
      Unless
      the Plan shall theretofore have been terminated as hereinafter provided, no
      Awards may be made under the Plan on or after the tenth anniversary of the
      Effective Date. The Board or the Committee may at any time prior to the tenth
      anniversary of the Effective Date terminate the Plan, and may, from time to
      time, suspend or discontinue the Plan or modify or amend the Plan in such
      respects as it shall deem advisable; provided, however, that any such
      modification or amendment shall comply with all applicable laws, applicable
      stock exchange listing requirements, and applicable requirements for exemption
      (to the extent necessary) under Rule 16b-3. Notwithstanding the foregoing,
      without further shareholder approval no modification or amendment to this Plan
      shall increase the number of shares of Common Stock subject to the Plan (except
      as authorized by Article IV), change the class of persons eligible to receive
      Awards under the Plan, or otherwise materially increase the benefits accruing
      to
      participants under the Plan.

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

 

    (b) Modification.
      No
      termination, modification or amendment of the Plan may, without the consent
      of
      the person to whom any Award shall theretofore have been granted, adversely
      affect the rights of such person with respect to such Award. No modification,
      extension, renewal, or other change in any Award granted under the Plan shall
      be
      made after the grant of such Award, unless the same is consistent with the
      provisions of the Plan.. With the consent of the Holder and subject to the
      terms
      and conditions of the Plan (including Section 7.8(a)), the Board or the
      Committee may amend outstanding Agreements with any Holder, including, without
      limitation, any amendment which would (i) accelerate the time or times at which
      the Award may be exercised and/or (ii) extend the scheduled expiration date
      of
      the Award. Without limiting the generality of the foregoing, the Board or the
      Committee may, but solely with the Holder’s consent unless otherwise provided in
      the Agreement, agree to cancel any Award under the Plan and issue a new Award
      in
      substitution therefore, provided that the Award so substituted shall satisfy
      all
      of the requirements of the Plan as of the date such new Award is made. Nothing
      contained in the foregoing provisions of this Section 7.8(b) shall be construed
      to prevent the Board or the Committee from providing in any Agreement that
      the
      rights of the Holder with respect to the Award evidenced thereby shall be
      subject to such rules and regulations as the Board or the Committee may, subject
      to the express provisions of the Plan, adopt from time to time, or impair the
      enforceability of any such provision.

    

    7.9 Government
      and Other Regulations.
      The
      obligation of the Company with respect to Awards shall be subject to all
      applicable laws, rules and regulations and such approvals by any governmental
      agencies as may be required, including, without limitation, the effectiveness
      of
      any registration statement required under the Securities Act of 1933, and the
      rules and regulations of any securities exchange or association on which the
      Common Stock may be listed or quoted. For so long as the Common Stock is
      registered under the Exchange Act, the Company shall use its reasonable
      commercial efforts to comply with any legal requirements (i) to maintain a
      registration statement in effect under the Securities Act of 1933 with respect
      to all shares of Common Stock that may be issued to Holders under the Plan,
      and
      (ii) to file in a timely manner all reports required to be filed by it under
      the
      Exchange Act.

    

    7.10 Withholding.
      The
      Company’s obligation to deliver shares of Common Stock or pay cash in respect to
      any Award under the Plan shall be subject to applicable federal, state and
      local
      tax withholding requirements. Federal, state and local withholding tax due
      at
      the time of an Award or upon the exercise of any Option, as appropriate, may,
      in
      the discretion of the Board or the Committee, be paid in shares of Common Stock
      already owned by the Holder or through the withholding of shares otherwise
      issuable to such Holder, upon such terms and conditions (including without
      limitation, the conditions referenced in Section 6.6 above) as the Board or
      the
      Committee shall determine. If the Holder shall fail to pay, or make arrangements
      satisfactory to the Board or the Committee for the payment, to the Company
      of
      all such federal, state and local taxes required to deduct from payment of
      any
      kind otherwise due to such Holder an amount equal to any federal, state or
      local
      taxes of any kind required to be withheld by the Company with respect to such
      Award.

    

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    

    

    7.11 Separability. If
      any of
      the terms or provisions of this Plan conflict with the requirements of Rule
      16b-3 under the Exchange Act and/or Section 422 of the Code, then such terms
      or
      provisions shall be deemed inoperative to the extent they so conflict with
      the
      requirements of Rule 16b-3 and/or, with respect to Incentive Stock Options,
      Section 422 of the Code. With respect to Incentive Stock Options, if this Plan
      does not contain any provisions required to be included herein under Section
      422
      of the Code, such provision shall be deemed to be incorporated herein with
      the
      same force and effect as if such provision had been set out at length herein;
      provided, further, that to the extent any Option which is intended to qualify
      as
      an Incentive Stock Option cannot so qualify, such Option, to that extent, shall
      be deemed to be a Nonqualified Stock Option for all purposes of the
      Plan.

    

    7.12 Non-Exclusivity
      of the Plan.
      Neither
      the adoption of the Plan by the Board nor the submission of the Plan to the
      shareholders of the Company for approval shall be construed as creating any
      limitations on the power of the Board to adopt such other incentive arrangements
      as it may deem desirable, including, without limitation, the granting of stock
      options and the awarding of stock and cash otherwise than under the Plan, and
      such arrangements may be either generally applicable or applicable only in
      specific cases.

    

    7.13 Exclusion
      from Pension and Profit-Sharing Computation.
      By
      acceptance of an Award, unless otherwise provided in the applicable Agreement,
      each Holder shall be deemed to have agreed that such Award is special incentive
      compensation that will not be taken into account, in any manner, as salary,
      compensation or bonus in determining the amount of any payment under any
      pension, retirement or other employee benefit plan, program or policy of the
      Company or any Subsidiary. In addition, each beneficiary of a deceased Holder
      shall be deemed to have agreed that such Award will not affect the amount of
      any
      life insurance coverage, if any, provided by the Company on the life of the
      Holder which is payable to such beneficiary under any life insurance plan
      covering employees of the Company or any Subsidiary.

    

    
      7.14  Un-funded
        Plan.
        Neither
        the Company nor any Subsidiary shall be required to segregate any cash or
        any
        shares of Common Stock which may at any time be represented by Awards and
        the
        Plan shall constitute an “un-funded” plan of the Company. No person shall have
        voting or other rights with respect to shares of Common Stock prior to the
        delivery of such shares. Neither the Company nor any Subsidiary shall, by
        any
        provisions of the Plan, be deemed to be a trustee of any Common Stock or
        any
        other property, and the liabilities of the Company and any Subsidiary to
        any
        person pursuant to the Plan shall be those of a debtor pursuant to such contract
        obligations as are created by or pursuant to the Plan, and the rights of
        any
        person under the Plan shall be limited to those of a general creditor of
        the
        Company or the applicable Subsidiary, as the case may be. In its sole
        discretion, the Board may authorize the creation of trusts or other arrangements
        to meet the obligations of the Company under the Plan, provided, however,
        that
        the existence of such trusts or other arrangements is consistent with the
        un-funded status of the Plan.

    

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    

    
      7.15  Governing
        Law.
        The
        Plan shall be governed by, and shall be construed and interpreted in accordance
        with, the laws of the State of Florida.

    

    

    
      7.16  Accounts.
        The
        delivery of any shares of Common Stock and the payment of any amount in respect
        of an Award shall be for the account of the Company or the applicable
        Subsidiary, as the case may be, and any such delivery or payment shall not
        be
        made until the recipient shall have paid or made satisfactory arrangements
        for
        the payment or any applicable withholding taxes as provided in Section
        7.10.

    

    

    
      7.17  Legends.
        In
        addition to any legend contemplated by Section 7.7, each certificate evidencing
        Common Stock subject to an Award shall bear such legends as the Board or
        the
        Committee deems necessary or appropriate to reflect or refer to any terms,
        conditions or restrictions of the Award applicable to such shares, including,
        without limitation, any to the effect that the shares represented thereby
        may
        not be disposed of unless the Company has received an opinion of counsel,
        acceptable to the Company, that such disposition will not violate any federal
        or
        state securities laws.

    

    

    
      7.18  Company’s
        Rights.
        The
        grant of Awards pursuant to the Plan shall not affect in any way the right
        or
        power of the Company to make reclassifications, reorganizations or other
        changes
        of or to its capital or business structure or to merge, consolidate, liquidate,
        sell or otherwise dispose of all or any part of its business or
        assets.

    

    

    
      7.19  Headings.
        The
        headings contained in this Plan are for reference purposes only and shall
        not
        affect in any way the meaning or interpretation of any or all of the provisions
        hereof.

    

    

    
      7.20  Gender.
        In this
        Plan, any word or phrase denoting one gender shall also include the other
        gender.

    

     

     

     

    
 

    
      
        
        

      

      
        15Reseller Agreement

Exhibit 10.5

Reseller Agreement

This Agreement is made and entered into by and between 695014 B.C. Ltd. dba Galaxy Telecom, having a principal office at 200 – 375 Water Street, Vancouver, British Columbia V6B 5C6 Canada (“Galaxy”) and Galaxy Telnet SRL, having a principal office at Aleea Malinului, Nr. 11, Bl. D, Scara C, Apt. 43, Constanta, Judetul Constanta, Romania (“Telnet”) as of the 1st day of June, 2004. 

WHEREAS:

1. 

Galaxy is a wholesale provider of Voice over Internet Protocol (“VoIP”) telephony and related services and products.  

2.

Telnet is a provider of VoIP telephony and related services and products to Subscribers, as defined hereafter.

3.

Galaxy wishes to provide to Telnet and Telnet wishes to acquire from Galaxy VOIP related services and products from time to time for the purpose of providing them to Telnet’s existing and future clients. 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties covenant and agree with each other as follows:

1.

DEFINITIONS AND INTERPRETATION

1.1

Definitions

In this agreement unless the context otherwise requires:

“Agreement” means this agreement;

“Confidential Information” means all information which one of the Parties will have access to or come into possession of which is confidential and proprietary to the other Party and which is either declared to be confidential or which the receiving Party should know, acting reasonably, is confidential or proprietary in nature and includes, but is not limited to, the terms and pricing for the Products and Services, all information contained on or accessible through the Partner Portal, as defined hereafter, any information disclosed by any third party which the third party is obligated to treat as confidential or proprietary to one of the Parties hereto, trade secrets, know-how, processes, standards, product specifications, marketing plans and techniques, cost and financial pricing figures, all client or customer information (including without limitation their names, financial information, address or telephone number), all systems software applications, all software/systems source and object code, data, documentation, program files, flow charts, and all operational procedures.

“Effective Date” means the date first written above;

“Force Majeure” shall include but not be limited to an Act of God, strike, lockout, labour dispute, act of a public enemy, war whether declared or undeclared, blockade, revolution, riot, insurrection, civil commotion, lightning, fire storms, flood, or other natural calamities, explosion, governmental restraint or restrictions, laws, regulations, orders, proclamations of any governmental entities, judgement or orders of any court of law, embargoes, unavailability of equipment and any other cause (other than a shortage or unavailability of funds) which is not reasonably within the control of the Party whose performance under this Agreement is affected by the cause;

“Partner Portal” means Galaxy’s web-based VoIP subscriber, management and business administration system;

“Party” means either Galaxy or Telnet as is appropriate in context and “Parties” means both or either of Galaxy and Telnet as is appropriate in context; 

“Product” means one of and “Products” means some or all of the VoIP related devices offered for sale by Galaxy;

“Service” means one of and “Services” means some or all of the VoIP services as listed in Schedule “A” attached hereto;

“Subscriber” means a client of Telnet who is a consumer of the Products or Services as provided by Galaxy and sold by Telnet.

1.2

Currency

All references to currency, unless otherwise specified, are to lawful money of the United States.  

1.3

Headings

The division of this Agreement into articles, sections, and/or subsections and the provision of headings for all or any of them are for convenience of reference only and shall not affect the interpretation of this Agreement.

1.4

Schedules

(a)

The following schedules are attached to and form part of this Agreement:

Schedule “A”

Services and Products and Pricing

Schedule “B”

Tier 1 Subscriber Support 

Schedule “C”

Subscriber Contract Clauses

(b)

Whenever any provision of any schedule to this Agreement conflicts with any provision in the body of this Agreement, the provision in the body of this Agreement shall prevail.  References herein to a schedule shall mean a schedule of this Agreement.  Reference in any schedule of this Agreement to an agreement shall mean this Agreement. 

1.5

Usage

In this Agreement, unless there is something in the subject matter or context inconsistent therewith:

(a)

words importing the singular shall include the plural and vice versa; and

(b)

words importing gender shall include masculine, feminine and neuter genders.

1.6

Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein, excluding its conflict-of-laws rules.  The parties expressly disclaim the application of the United Nations’ Uniform Convention for the Sale of Goods convention, to this Agreement.

2.

RELATIONSHIP OF THE PARTIES

2.1

Non-Exclusive Reseller

Subject to the terms and conditions of this Agreement, Galaxy hereby appoints Telnet as a non-exclusive authorized reseller of the Products and Services and Telnet hereby accepts the appointment.

2.2

Not a Partnership

(a)

This Agreement does not and shall not be construed to create a partnership, joint venture, agency or any other business relationship which would authorize either Party to act on behalf of the other or to have any authority to create any liability or obligations on behalf of or in the name of the other.  Each of the Parties is and will remain completely independent of the other.  

(b)

Telnet may indicate to the public that it is an authorized seller of Galaxy Services and it may advertise Products and Services under Galaxy trademarks, logos, and symbols as provided for in this Agreement, but under no circumstances shall it represent itself to be an associate, franchisee, representative, servant or agent of Galaxy.

3.

TELNET OBLIGATIONS

3.1

Marketing and Sales

(a)

Telnet shall be responsible for promoting, marketing and selling those Products and Services it offers for sale or distribution and it shall use its reasonable best efforts to do so;

(b)

Telnet may market and sell the Services as being Telnet services or as Galaxy services being provided by Telnet.

3.2

Business Expenses

Telnet shall be responsible for all expenses it incurs from its business activities associated with the marketing, promotion, sale and support of the Products and Services, including, but not limited to, those expenses related to the installation and activation of Products and Services.  

3.3

Pricing Structure & Levels

Telnet shall, in its sole discretion, set the prices it charges for the Products and Services it sells or distributes and the manner, if any, in which it bundles or combines them.  

3.4

Qualified Sales and Marketing Representatives

Telnet covenants that all of its employees, agents and representatives who promote, market and sell the Products and Services will be fully qualified in and knowledgeable of the Products and Services. 

3.5

Terms of Service

Telnet shall include those terms set out in Schedule “C” as a term in each Subscriber agreement for Services.

3.6

Subscriber Support

Telnet shall maintain a first line of response, known within the telephony industry as a “Tier 1 Subscriber help-desk and support function”, as further defined in Schedule “B”, as is required to maintain Subscriber satisfaction at or above industry standards.  

3.7

Government Authorizations

(a)

Telnet shall obtain and maintain in good standing all licenses, permits and other governmental approvals and authorizations required in connection with implementation of this Agreement and the sale of Products and Services, including without limitation, business licenses, import licenses and foreign exchange permits.  

(b)

Telnet shall keep Galaxy apprised of any change in the status of the licenses, permits and approvals and authorizations as are referred to in subsection 3.7(a) which may materially affect the implementation of this Agreement.  

3.8

Notification of Infringement

Telnet shall notify Galaxy immediately of any actual, suspected or alleged infringement of Galaxy trademarks, or copyrights that it becomes aware of.

4.

TELNET RECORDS

4.1

Maintain Records

Telnet shall maintain complete and, to the best of its ability, accurate records on the Partner Portal (the “Records”) of all Subscribers, including:

(a)

Name, location, contact information and date of activation;

(b)

Products purchased, including model and serial number and date of activation;

(c)

Services subscribed; including date of activation; and

(d)

All service calls relating to Products or Services, showing Subscriber information, date and nature of call, Telnet response, service work performed and such other information as Galaxy may reasonably request.  

4.2

Ownership and Privacy of Records

Galaxy shall own the Records, but it shall use the information contained therein only as allowed by the terms and conditions and intent of this Agreement.  Galaxy shall treat the Records as Confidential Information and it shall not provide to or allow access by any third party except as required or allowed by this Agreement.  

4.3

911 Call Response Service

Galaxy shall have the right to disclose Records to any third party providing emergency call response service to Subscribers as are required by such third party in order to provide the service.

5.

GALAXY RESPONSIBILITIES

5.1

Services and Products

Subject to the terms and conditions of this Agreement, Galaxy shall provide the Products and Services to Telnet.

5.2

Network 

Galaxy shall establish a Telnet account within the Partner Portal and, subject to the terms and conditions of this Agreement, it shall provide Telnet with access thereto.

5.3

Materials

Galaxy shall provide Telnet with access to electronic copies of sales and technical materials, user manuals, installation manuals and brochures and catalogues relating to the Products and Services which Galaxy has electronic versions of and which it, in its absolute discretion, is of the opinion are relevant.

5.4

Supporting Information

Galaxy shall make available to Telnet such technical and commercial information which Galaxy has or which comes into Galaxy’s possession and which, in Galaxy’s opinion, may be of assistance to Telnet in selling and supporting the Products and Services.

5.5

Tier 2 Support 

Galaxy shall provide “Tier 2” technical support to Telnet which would include assistance with any technical issues related to the Services and Products that could not be resolved by Telnet’s Tier 1 Subscriber support personnel. 

6.

PRODUCTS

6.1

Approved Products

(a)

Galaxy shall, at its sole discretion, determine the technical specifications and the brand and model of those devices which it will support in providing the Services and chooses to offer as Products;

(b)

Telnet shall purchase from Galaxy all devices or Products used or to be used by it to enable the provisioning of the Services pursuant to this Agreement and Galaxy shall be required to support only those devices actually purchased from Galaxy by Telnet;  

(c)

Notwithstanding section 6.1(b), Telnet may request from Galaxy that it enable and support devices other than Products acquired by Telnet from Galaxy, and Galaxy shall not unreasonably refuse such request; and

(d)

Galaxy shall have the right, at its sole discretion, to change the Products by discontinuing or adding new devices to the Products offered and by changing manufacturers, brands, models or technical or software specifications of any of them.

6.2

Pricing

(a)

Prices for Products shall be as quoted at the time of order by Telnet and are subject to change at any time;

(b)

Prices quoted shall be for the Products only and shall not include applicable taxes and shipping, insurance, expedition, import/export, brokerage and other fees, which shall be in addition to the quoted Product prices.

6.3

Ordering

(a)

All Telnet orders of Products are subject to acceptance by Galaxy (upon acceptance, the “Order”).  Galaxy shall have the right to not accept an order of Products from Telnet, in whole or in part, if Telnet is in breach of any term or condition of this Agreement;

(b)

Unless specifically agreed otherwise and stated in writing, the terms of this Agreement shall supersede the terms of any Order;

6.4

Payment

(a)

Telnet shall pay (the “Product Payment” ) for an Order, using a payment method acceptable to Galaxy, prior to shipment of the Order by Galaxy;

(b)

If Telnet falls into arrears on its account for Services, Galaxy shall have the right to apply any Product Payment, in whole or in part, to Telnet’s account for Services and any Product Payment so transferred shall be deemed to be a payment for Services, not Products, and Galaxy shall have no further obligation to deliver the Products which such funds were originally payment for.  

6.5

Delivery

(a)

Galaxy shall, subject to availability, use all reasonable effort to deliver the Order within a reasonable time from the date of the Order;

(b)

Galaxy shall have the right to suspend or stop delivery of an Order, in whole or in part, if Telnet is in breach of any of the terms and conditions of this Agreement, and, if Galaxy elects to stop delivery pursuant to this section, it shall deem such Order to be an inventory return subject to section 6.7.

6.6

Order Substitution

Subject to obtaining Telnet’s approval for any price changes, Galaxy shall have the right to deliver a different Product of equal or greater technical capability in place of the Order.

6.7

Inventory Returns

Galaxy may, at its sole discretion, accept the return, in whole or in part, of an Order and, if it elects to do so, Telnet shall pay a restocking fee of 25% of the original purchase price of the returned Product or Products. 

6.8

Warranty

Unless specifically stated otherwise, Galaxy makes no warranty or guarantee, express or implied, including any implied warranty of merchantability or fitness for a particular purpose, with regard to the Products.  All warranties with regard to the Products shall be those of the original equipment manufacturer only.

7.

SERVICES

7.1

Available Services

Listed in Schedule “A” is a list of the Services which are available to Telnet as of the Effective Date. 

7.2

Change to Services

Galaxy reserves the right to, at its sole discretion, to add, delete or change any of the Services from time to time.

7.3

Provision of Service

(a)

Upon Telnet’s activation of a Subscriber account, Galaxy shall, subject to the terms and conditions of this Agreement, provide the requested Services to Subscriber on behalf of Telnet;

(b)

Subject to section 13.2, if Telnet is in breach of any of the terms and conditions of this Agreement, Galaxy shall have the right to suspend or terminate delivery of the Services, in whole or in part, to Telnet and the Subscribers.

7.4

Communication of Termination

Galaxy may, at its sole and absolute discretion, provide long distance termination through one or more termination partners.  Galaxy shall have the right, at its sole discretion, to reroute the communication traffic originating from Telnet or Subscribers between Galaxy’s different termination partners.  

7.5

411 and 911 Service

Galaxy shall arrange with third parties for the provision of:

(a)

411 directory assistance service; and

(b)

911 emergency call response service,

which services will be provided through Galaxy as part of the Services.  

7.6

Prices

(a)

The prices charged by Galaxy to Telnet for each of the Services (the “Service Prices”) shall be as listed in Schedule “A”;

(b)

Galaxy shall have the right, but not the obligation, to:

(i)

during the term of this Agreement, adjust any of the Service Prices by an amount that is proportionate with any changes to Galaxy’s direct third party costs in providing the related Services;

(ii)

at the time of any renewal of this Agreement, adjust the Service Prices as it, in its absolute discretion, determines provided it has given written notice to Telnet of such price changes a minimum of 60 days in advance of the renewal.

(c)

Prices for long distance termination shall be as posted on the Partner Portal and Telnet understands and agrees that, other than for those destinations noted in Schedule A as being fixed in price for the term of this Agreement, such prices are variable and subject to change without notice.

7.7

Billing For Services

(a)

Galaxy shall invoice Telnet once per month for the Services delivered, termination fees, 411 directory assistance and 911 emergency call service fees and any other fees or billings chargeable to Telnet;  

(b)

Galaxy shall deliver each invoice to Telnet’s account in the Partner Portal; and

(c)

Telnet shall give notice to Galaxy of all errors and inaccuracies in an invoice within 15 days of receipt by Telnet of the invoice at issue.  Thereafter, Telnet will be deemed to have agreed with the accuracy of the invoice.

7.8

Payment of Services Invoice

(a)

Telnet hereby covenants to pay all invoices rendered to its account by Galaxy within 15 days of the date of invoice;  

(b)

Interest shall accrue on overdue accounts at the rate of 1.5% per month calculated and payable from the date of invoice until the date of payment in full of the overdue amount.

7.9

Warranty

Galaxy does not guarantee the integrity of data transmitted using the Products and Services or that the Products and Services will operate uninterrupted or error-free, including, without limitation, the degradation of voice transmission quality and the failure of an incoming or outgoing call, including emergency calls (911 or equivalent), to be connected or completed. 

8.

LIMITATION OF REMEDIES AND LIABILITY

8.1

Telnet’s Exclusive Remedies 

Telnet’s sole and exclusive remedies concerning Galaxy’s performance or non-performance in any matter related to this Agreement or the provisioning of the Services or Products are limited to those expressly stated in this Agreement.

8.2

Limitation of Galaxy Liability

(a)

Galaxy shall have no liability to Telnet, whether in contract, tort (including negligence), strict liability or otherwise, for any special, indirect or consequential damages or for lost profits, in any matter related to this Agreement, including but not limited to any delay or failure by Galaxy to furnish, deliver or provide Products or Services;  

(b)

Galaxy’s liability in any matter related to Product shall be limited to the purchase price paid by Telnet for the Product with respect to which such liability relates;

(c)

Galaxy’s liability in any matter related to Services shall be limited to the fee paid by Telnet for the Service with respect to which the liability relates in the month or months in which the event giving rise to the liability occurred.  

8.3

Liability Upon Termination of Agreement

Neither Party shall be liable to the other for any damages or compensation in connection with termination of this Agreement including, without limitation, for loss of profits, loss of investment or expenditures made in reliance on this Agreement or loss of goodwill.

8.4

Force Majeure 

Neither party will be liable to the other for any delay or failure to perform if that delay or failure results from a cause beyond its reasonable control.

8.5

Telnet’s Indemnity 

Telnet agrees to indemnify Galaxy (and any business entity controlled by it, controlling it or under common control with it) and save them harmless from any claim made against any of them, directly or indirectly, by a Subscriber or resulting from: (i) any promise or commitment that Telnet may have made purportedly on Galaxy’s behalf in violation of this Agreement; or (ii) from any breach by Telnet or Telnet’s employees with respect to Telnet’s obligations under this Agreement.

8.6

Limitation of Privacy 

The Products and Services utilize, in whole or in part, the public Internet and third party networks to transmit voice and other communications.  Galaxy shall not be liable to Telnet for any loss or damages caused by or related to a lack of privacy which may be experienced as a result of use of the Products and Services.

9.

USE OF NAME, LOGOS, TRADEMARKS AND LICENSED MATERIALS

9.1

News Releases

Neither Party will use the name of the other in any news release, public announcement, advertisement or other form of publicity, without the prior written consent of the other Party.

9.2

Ownership and Use of Galaxy Trade Marks 

(a)

Telnet acknowledges Galaxy’s exclusive ownership of the Galaxy name and logo as well as certain other trademarks and trade names which Galaxy uses in connection with the Products and Services (the “Trademarked Material”) and agrees that Telnet will not acquire any interest in any of the Trademarked Material by virtue of this Agreement or anything done pursuant to it; 

(b)

While this Agreement is in effect, Telnet may indicate to the public its status of being an authorized seller of the Galaxy Products and Services;  

(c)

Except with the prior written consent of Galaxy, Telnet will not adopt or use any of the Trademarked Material, in whole or in part, or any confusingly similar word or symbol, as part of Telnet’s name or, to the extent Telnet has knowledge of such use and the power to prevent such use, allow others to use the Trademarked Material;  

(d)

Nothing in this Agreement contains any transfer or license to Telnet of any Trademarked Material or other proprietary rights.

9.3

Review and Approval of Uses 

(a)

Galaxy shall have the right to review any use by Telnet of the Trademarked Material and to approve or disapprove, in its absolute discretion, Telnet’s use of it and if Galaxy disapproves of Telnet’s use of Trademarked Material, Telnet shall not use the Trademarked Material for such use.

(b)

Telnet shall, at Galaxy’s request, provide to Galaxy a copy of anything which Telnet is using or may use and which contains the Trademarked Material;

(c)

Telnet must adhere to Galaxy’s standards of use in respect to any of the Trademarked Material. Among other things, Telnet will be required to indicate explicitly Galaxy’s ownership of the name or mark. 

9.4

No Removal of Logos, Trademarks & Notices

Unless Telnet first obtains express written consent from Galaxy, Telnet will not remove or alter any patent numbers, trade names, trademarks, copyright or other proprietary notices, serial numbers, labels, tags or other identifying marks, symbols or legends affixed to or included with any Product or portion thereof, whether on packaging, media, presentations or otherwise, or any related materials provided to Telnet by Galaxy.

10.

TERM AND TERMINATION

10.1

Term of the Agreement

The initial term of this Agreement will be for two (2) year(s) commencing on the Effective Date. Thereafter, this agreement will renew automatically from year to year unless cancelled in writing by either Party giving the other written notice of such cancellation a minimum of 60 days before the end of the then current term.  

10.2

Termination for Default

Subject to section 13.2, either Party may terminate this Agreement, effective immediately, if the other commits a material breach of it, commits any material fraudulent act in performing any of its obligations or makes any material misrepresentation to the other or commits an act of malfeasance or misfeasance in the performance of its or his duties or is unable or unwilling to perform its obligations and duties under this Agreement which circumstances will include, but not be limited to: 

(a)

If a receiver, trustee in bankruptcy or similar officer is appointed to take charge of any of its assets; or

(b)

If it files for relief under any applicable bankruptcy laws.

10.3

Obligations Upon Termination 

Upon expiration or termination of this Agreement:

(a)

Telnet shall immediately: 

(i)

stop representing itself as a seller of the Products and Services and marketing and selling the Products and Services; 

(ii)

discontinue using the Trademarked Materials; and

(iii)

return to Galaxy all Galaxy sales and technical materials and other Galaxy literature; 

(b)

Galaxy shall deliver pending Orders per the terms of such Orders; and

(c)

all amounts due from each party to the other shall become immediately due and payable.

10.4

Inventory Returns

Upon termination of this Agreement, Galaxy may, at its sole discretion accept inventory returns of Products.  If Galaxy accepts inventory returns, Telnet shall pay a restocking fee of twenty-five percent (25%) of the original billing amount for the returned inventory.  

10.5

Subscribers 

If this Agreement is terminated pursuant to section 10.2, Galaxy shall have the right to contact Subscribers directly and solicit such Subscribers to become subscribers of Galaxy, an affiliate thereof or of another client of Galaxy’s.

11.

CONFIDENTIALITY

11.1

Confidential Information

Each of the Parties acknowledges that in the course of their relationship pursuant to this Agreement, each (the “Receiving Party”) will have access to or come into possession of Confidential Information of the other Party (the “Disclosing Party”) and that the disclosure of such Confidential Information to third parties or to the general public would be detrimental to the best interests and business of the Disclosing Party.

11.2

Exceptions to Confidential Information

Notwithstanding the definition of Confidential Information and the provisions of section 11.1, “Confidential Information” does not include information or data, which the Receiving Party can prove, on a balance of probabilities, is or was:

(a)

publicly known at the time of disclosure; 

(b)

already known by the Receiving Party at the time it receives the information; 

(c)

provided to the Receiving Party by a third party that is not under obligation to keep such information confidential; or 

(d)

independently developed by the Receiving Party without use of any Confidential Information of the Disclosing Party.  

11.3

Limitations on Use

The Receiving Party will not, during the term of this Agreement or at any time thereafter:

(a)

disclose any Confidential Information to any person;

(b)

use or exploit, directly or indirectly, the Confidential Information for any purpose other than the proper purposes of the Disclosing Party; or

(c)

disclose for any purpose, other than those of the Disclosing Party, the private affairs of the Disclosing Party or any other information which the Receiving Party may acquire during the term of the Agreement with respect to the business and affairs of the Disclosing Party,

whether acquired in the course of carrying out the Agreement or incidentally.

11.4

Required Disclosure

Notwithstanding the foregoing, the Receiving Party will be entitled to disclose Confidential Information if required by law provided that the Receiving Party will promptly notify the Disclosing Party, consult with the Disclosing Party and cooperate with the Disclosing Party in any attempt to enjoin, to resist or narrow such disclosure or to obtain an order or other assurance that such information will be accorded confidential treatment.

11.5

Survival of Confidentiality

All covenants of confidentiality herein shall survive the term of this agreement by three (3) additional years counting from the date of termination of this Agreement. 

12.

EXCLUSION FROM TERRITORIES

12.1

Right to Exclude

Subject to section 12.2 Galaxy reserves the right to grant to any other person an exclusive territory (the “Territory”) for the marketing, sales and distribution of the Services and, from that date which is 30 days after the date upon which Galaxy delivers notice in writing to Telnet of such grant of exclusivity over a Territory (the “Exclusion Date”), Telnet shall not sell, distribute or market the Services within the Territory.  However, Telnet shall be entitled to continue to sell the Services to any Subscriber resident within the Territory who became a Subscriber prior to the Exclusion Date.

12.2

Territories From Which Telnet May Not Be Excluded

During the term of this Agreement, Telnet may not be excluded pursuant to section 12.1, from the following areas:

(a) Romania.

13.

MISCELLANEOUS

13.1

No Waiver

The failure by either Party to enforce or take advantage of any of the provisions of this Agreement shall not constitute nor be construed as a waiver of such provisions or of the right subsequently to enforce or take advantage of each and every such provision.

13.2

Default

If either of the Parties should be in default (the “Defaulting Party”) of any obligation or requirement under this Agreement, the Party affected may give written notice to the Defaulting Party specifying the default and will give the Defaulting Party a grace period of 30 days (the “Grace Period”) to cure such default or to take such reasonable steps to cure without undue delay such default prior to seeking any remedy it may have on account of such default.  The Defaulting Party shall lose no rights under this Agreement if it cures the stated default within the Grace Period.

13.3

Disputes 

Galaxy and Telnet will attempt to settle any claim or controversy relating to this Agreement through consultation and negotiation in good faith and a spirit of mutual cooperation. If those attempts fail, then a mutually acceptable mediator, chosen by Galaxy and Telnet within forty-five (45) days after written notice from one of the parties to the other, demanding mediation, will mediate the dispute. Neither party may unreasonably withhold consent to the selection of a mediator.  Galaxy and Telnet will share the costs of the mediation equally and each shall bear its own costs. Any dispute which the parties cannot resolve between themselves through negotiation or mediation within ninety (90) days after the date of the initial demand for mediation may then be submitted to the courts for final resolution. Nothing in this paragraph will prevent either party from resorting to judicial proceedings if: 

(a)

good faith efforts to resolve the dispute under these procedures have been unsuccessful; or 

(b)

interim relief from a court is necessary to prevent serious and irreparable injury to one party or to others.

13.4

Notices

Any formal notice between the Parties hereto will be in writing and will be either personally delivered or sent by facsimile or by registered mail to the appropriate party or parties at the address noted for that party on the first page of this Agreement, or such other address as may be designated by a party in a written notice sent to the other parties in accordance with this paragraph.  Any notice or other communication will be effective seven calendar days from the day that it was sent, or if given by personal delivery or facsimile, the day following its receipt.

13.5

Assignment

Neither party may assign this Agreement without the prior written consent of the other. However, Telnet agrees that Galaxy may assign this entire Agreement to an affiliate or sell, transfer or assign any account receivable under it to a financing institution to enforce the Galaxy’s rights to receive payment from Telnet. This Agreement will be binding upon any authorized assignee or successor of Telnet or Galaxy.

13.6

Compliance with Law

Each of the Parties agrees to comply with all applicable laws, rules and regulations of the jurisdictions in which it operates and to do nothing to cause the other to violate the law, rules and regulations of those jurisdictions. If this Agreement or the performance hereof, is determined to be contrary of the laws, rules or regulations of the Territory or of Canada, this Agreement will automatically terminate subject the terms of Termination outlined in this Agreement.  

14.

GENERAL

14.1

Entire Agreement 

This Agreement and all documents contemplated by or delivered under or in connection with this Agreement constitute the entire agreement between the Parties with respect to the subject matter of this Agreement, and supersede all prior agreements, negotiations, discussions, undertakings, representations, warranties and understandings, whether written or oral, express or implied, statutory or otherwise. 

14.2

Amendment

No amendment, supplement, restatement or termination of any provision of this Agreement is binding upon the Parties hereto unless it is in writing and signed by an authorized representative of each Party to this Agreement at the time of the amendment, supplement, restatement or termination. 

14.3

Severability

If any provision or any portion of any provision of this Agreement shall be held unlawful or unenforceable, the balance of such provision and all other provisions hereof shall nonetheless in all respects remain binding and effective and shall be construed in full force and effect to the extent lawfully permissible.

14.4

Time of Essence

Time is of the essence in the performance of the terms and conditions of this Agreement.

14.5

Enurement

This Agreement enures to the benefit of and binds the Parties and their respective heirs, executors, administrators, successors and permitted assigns.

14.6

Counterpart Signature and Facsimile Delivery

This Agreement may be executed in two or more counterparts and may be delivered by facsimile, each of which will be deemed to be an original and all of which will constitute one agreement, effective as of the reference date given above.  

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above:

	695014 B.C. LTD.

	 	GALAXY TELNET SRL

	Per:

	“Peter Wiggans”

	 	Per:

	“Michael Stunden”

	 	Authorized Signatory

	 	 	Authorized Signatory

	 	Peter Wiggans

	 	 	Michael Stunden

	 	(Print name)

	 	 	(Print name)

	Title:

	Chief Operating Officer

	 	Title:

	Chief Financial Officer

 

SCHEDULE “A”

PARTNER PRICING

Galaxy Telnet 

Table 1

	 	Business Partner Pricing

	VoIP Services

	One-Time Fee

	Monthly Service Fee

	VoIP Connectivity (per port charge)

Includes: Unlimited VoIP calls, VoIP Caller ID, Call waiting, Basic voicemail

	$9.95

	$5.95

	VoIP Connectivity – Commpanion Galaxy Telecom Brand

With i-box subscription

Includes: Unlimited VoIP calls, VoIP Caller ID, Call waiting, Basic voicemail, 3-way Calling, Call forwarding, Do not disturb, Call hold, Auto answer, Call ignore, Call “go to voicemail”, Redial, Mute

	$19.95

	$1.95

	VoIP Connectivity – i-box Commpanion Galaxy Telecom Brand

Stand alone subscription

Includes: Unlimited VoIP calls, VoIP Caller ID, Call waiting, Basic voicemail, 3-way Calling, Call forwarding, Do not disturb, Call hold, Auto answer, Call ignore, Call “go to voicemail”, Redial, Mute

	$19.95

	$5.95

	VoIP to VoIP Termination

	included

	included

	VoIP to PSTN Termination (Long distance)

	included

	See Current Published Rates 

	Basic Voicemail Service

	included

	included

	i-box CommCenter - Enhanced Voicemail

Includes: Web interface, call forwarding, do not disturb, speed dial, call logs, email message notify management, time zone control, profile management, greeting management and password control

	included

	$2.00

	Services

	 	 
	Partner Portal

	included

	included

	Partner Portal Back-Office (API) 

	included

	included

	Special Accounts

	 	 
	Demonstration Accounts See note 3

	free

	free

	Employee only Accounts See note 3

	free

	$1.95

	Promotion Accounts

	 	 
	TBD

	Special

	Special

	Phone Numbers

	 	 
	Direct Inward Dial (DID) - Canada 

	$250 one time fee per order

see note 1

	$3.00

	Direct Inward Dial (DID) - USA 

	$250 one time fee per order

see note 1

	$2.50

	Toll Free Dial (1-8XX) – Canada/USA

	$2.50

	$2.50 plus usage ($.05 avg.)

	Use existing phone number see note 2

	$10.00

	$3.00

	Bundles & Calling Zones

	 	 
	Monthly 250 North America minute bundle

	n/a

	$2.95

	Monthly 500 North America minute bundle

	n/a

	$5.95

	Monthly 750 North America minute bundle

	n/a

	$8.95

	Monthly 1000 North America minute bundle

	n/a

	$11.95

	Local Calling Zone  

On-net locations only

Includes: 750 minutes inbound and outbound local calls. Requires DID.  Subscriber must reside in Local Calling area.

	included

	$6.95

	Virtual Calling Zone

On-net locations only

Includes: 750 minutes inbound calls from virtual calling area.  Requires DID Applies to North America-based subscribers only.

See note 4

	included

	$6.95

	Custom Calling Zone

Off-net locations 

	Custom Quote

	Custom Quote

Note 1 Not available in all areas, see Table 3, 25 DID number block minimum 

Note 2 Not available in all areas see Table 3

Note 3 Quantity to be agreed between parties, Long distance charges apply

Note 4 Unlimited calling FROM Virtual Calling Zone only.  Long distance charges apply when calling to VCZ.  

Table 2

i-box Commpanion Telecom Branded Version

	Licenses

	i-box CommPanion

	Additional

	500 Licenses

	$7,000

	$14.00 ea

	1,350 Licenses

	$14,000

	$10.50 ea

	2,500 Licenses

	$21,000

	$8.40 ea

	3,650 Licenses

	$28,000

	$7.70 ea

	5,000 Licenses

	$35,000

	$7.00 ea

	6,700 Licenses

	$42,000

	$6.30 ea

	8,750 Licenses

	$49,000

	$5.60 ea

	11,500 Licenses

	$56,000

	$4.90 ea

	15,000 Licenses

	$63,000

	$4.20 ea

	20,000 Licenses

	$70,000

	$3.50 ea

Note 1 Co-Branding one time charge $1,350.00

Table 3

Galaxy Telecom On-net locations

	Canada

	Province

	City

	Alberta

	Calgary

Edmonton

	British Columbia

	Vancouver

Victoria

Kelowna

Whistler

Abbotsford

	Manitoba

	Winnipeg

	Nova Scotia

	Halifax

	Ontario

	Toronto

Ottawa

Hamilton

Windsor

Kitchener

London

Guelph

Kingston

Oshawa

St. Catherines

Waterloo

Hespeler

	Quebec

	Montreal

Quebec City

	Saskatchewan

	Regina

	USA

	State

	City

	Alabama

	Birmingham

	Arizona

	Phoenix

	California

	Los Angeles

San Diego

San Francisco

	Colorado

	Denver

	Florida

	Gainesville

Miami

Orlando

Tampa

	Georgia

	Atlanta

	Illinois

	Chicago

	Indiana

	Indianapolis

	Maryland

	Baltimore

	Michigan

	Detroit

	Minnesota

	Minneapolis

	Missouri

	Kansas City

St Louis

	New York

	New York City

	North Carolina

	Charlotte

Fayetteville

Greensboro

Raleigh

	Ohio

	Cincinnati

Cleveland

Dayton

	Oregon

	Portland

	Pennsylvania

	Philadelphia

	Tennessee

	Nashville

	Texas

	Dallas

Austin

Houston

San Antonio

	Utah

	Salt lake City

	Virginia

	Culpepper

	Washington

	Seattle

	Washington DC

	Washington DC

SCHEDULE “B”

TIER 1 SUBSCRIBER SUPPORT

Under this Agreement the Telnet is required to maintain Tier 1 Subscriber Support (the “Subscriber Support”) functioning as initial response for any direct Subscriber inquiries.  Galaxy will provide Tier 2 technical support for technical inquiries from qualified resellers only.

The Criteria for the Subscriber Support are as follows:

Subscriber Satisfaction

Telnet will use its best efforts to ensure that Subscribers achieve the highest levels of satisfaction with the Services delivered by Telnet. Telnet shall notify Galaxy immediately of any complaints by Subscribers, whether they involve sales, Service, Performance or other issues. Galaxy shall use Subscriber satisfaction surveys, field Service reports, and random audits, as it deems necessary to determine if the appropriate levels of Subscriber satisfaction are achieved. If Galaxy determines that an inappropriate level of Subscriber dissatisfaction exists, Galaxy and Telnet shall put in place an action plan as approved by Galaxy to continually improve and maintain Subscriber satisfaction levels.

Staff

Subscriber Support shall be staffed by fully qualified and trained personnel as per the following criteria:

1.

Training

Telnet shall maintain technically qualified Service personnel and use its best efforts to service Telnet subscribers in the Territory.

2.

Technical Team 

(a)

Language Capabilities

Telnet shall employ at least one lead Service engineer who is fluent in English who will be responsible for communicating with Galaxy’s technical staff and who can accurately translate all technical documentation from English.

(b)

Service Staff

Upon execution of this Agreement and annually thereafter, Telnet shall furnish Galaxy with a list of its Service management and other technical staff qualified to support Galaxy Services.

(c)

Help Desk

Telnet shall ensure that the personnel staffing the Subscriber help desk, as set out in section 3.6, shall have a sufficient working knowledge of:

(i)

networking in a TCP/IP WAN/LAN environment;

(ii)

configuring and maintaining network equipment;

(iii)

relevant operating systems (Macintosh, Windows, Linux); and

(iv)

both written and spoken English,.

to be able to provide effective help to Subscribers, communicate and work with Galaxy’s Tier 2 help desk to address those Subscriber issues which Telnet’s help desk are unable to resolve and to communicate and work with Galaxy with regard to technical issues. 

SCHEDULE “C”

SUBSCRIBER CONTRACT CLAUSES

Telnet shall include as a term of any agreement between itself and a Subscriber with respect to any of the Services, the relevant clauses of the following:

General

The Subscriber will not use the Service for any purpose that is unlawful, abusive, intrusive on another's privacy, harassing, libellous, defamatory, threatening or hateful, or in any other way that would violate any applicable governmental law.

Telnet offers the Service internationally. While the Service may be used to make and receive international calls, we do not represent that the use of the Service is legally appropriate in locations outside of Canada and the United States. If the Subscriber chooses to use the Service from or to a location outside of Canada and the United States, the Subscriber is responsible for compliance with any and all governing foreign and local laws.

The Subscriber may not reverse engineer, distribute, publish, display, modify or in any way exploit the configuration parameters Telnet provides as a means to access the Service.

The Subscriber acknowledges that any devices and embedded software or firmware (“Products”) furnished by Telnet are exclusively for use with Telnet’s Service.

Residential Use of Service

If you have subscribed to Residential Services, the Service is provided to you as a residential user, for your personal, residential, non-business and non-professional use.  This means that you are not using the service for any commercial or governmental activities, profit-making or non-profit, including but not limited to business, sales, telecommuting, telemarketing, autodialing, continuous or extensive call forwarding, fax broadcast, fax blasting or any other activity that would be inconsistent with normal residential usage patterns.  Telnet reserves the right to immediately terminate or modify the service, if Telnet determines, in its sole discretion, that the subscriber’s service is being used for any of the aforementioned activities.

The Service is offered on a monthly basis to the Subscriber. The monthly Service term begins on the date that Service is activated for the subscriber. Full monthly terms will renew automatically unless Telnet is otherwise notified of the intent to cancel the Service.  Upon cancellation, the Subscriber will be responsible for charges for the full term of the then current billing period and any unbilled charges. 

Small Business Use of Service

If you have subscribed to Small Business Services, the Service is provided to you as a small business user.  You agree not to use the Service for auto-dialling, continuous or extensive call forwarding, telemarketing or fax broadcasting.  Telnet reserves the right to immediately terminate or modify the service, if Telnet determines, in its sole discretion, that the subscriber’s service is being used for any of the aforementioned activities.

The Service is offered on a monthly basis to the Subscriber. The monthly Service term begins on the date that subscriber requests activation of the Service. Full monthly terms will renew automatically unless the Telnet and Galaxy is otherwise notified of the intent to cancel the Service.  Upon cancellation, the Subscriber will be responsible for charges for the then current full monthly term and any unbilled charges

Short Form Emergency Services, E911 and 911

The Service presently does not support 911, E911 or any other type of emergency Services; that calls to "9-1-1" cannot be connected; and that alternative arrangements need to be made to contact emergency Services in situations where emergency numbers would have to be dialled.

Theft

The Subscriber is responsible for cancelling the Service if Subscriber believes that the associated Products have been lost or stolen, or if the Subscriber becomes aware that the Service provided is being used or misused without Subscribers consent.  Subscriber is liable for all charges accruing to Subscribers account for the Service until Subscriber cancels the Service.

Service Termination

The Provider reserves the right to terminate the Service at any time with or without notice and for any reason. The subscriber agrees that the provider shall not be liable to the subscriber or to any third party for any modification, suspension or discontinuance of the Service.

Privacy

Personal data and certain other information submitted by the subscriber is subject to our Privacy Policy. Voice over IP communications are transmitted over public networks including the Internet. The subscriber acknowledges that the provider is not liable for any loss of privacy arising out of use of the Service.

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