Confidential Treatment Requested
Exhibit 10.34
CONFIDENTIAL
BRAND, TECHNOLOGY AND CO-MARKETING AGREEMENT
THIS AGREEMENT dated as of June 30, 2000 ("Effective Date") between TELUS
Corporation ("TELUS"), Genuity Solutions Inc. ("Genuity") and Genuity Inc. (the
"Covenantor") witnesses that:
A. WHEREAS TELUS is a full-service telecommunications provider, and has and will
have substantial expertise in providing Telecommunications Services in Canada;
B. WHEREAS Genuity is a global e-business network provider, and has and will
have substantial expertise in providing data Telecommunications Services in the
United States and elsewhere in the world;
C. WHEREAS TELUS seeks access to the Marks, Technology and services of Genuity
developed or acquired on or after the Effective Date with a view to TELUS using
the Marks, Technology and services of Genuity to provide Telecommunications
Services in Canada;
D. WHEREAS TELUS and Genuity have agreed to exploit the substantial benefits of
having TELUS and Genuity cooperate to provide coordinated and integrated
Telecommunications Services to their respective customers to the maximum extent
permitted by law and existing obligations;
E. WHEREAS the parties intend that TELUS shall be the vehicle for Genuity's
strategy for the provision of Telecommunications Services in Canada, and Genuity
shall be the vehicle for TELUS' strategy for the provision of data
Telecommunications Services in the United States;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the covenants
and agreements herein contained and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
hereby covenant and agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
following meanings, respectively:
"Affiliate" shall mean, with respect to any person or entity, any other
person or entity Controlling, Controlled by or under common Control with such
person at the time in question.
"Xxxx Atlantic" shall mean Xxxx Atlantic Corporation and its Affiliates and
their successors and permitted assigns.
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"Competitor" means a person or entity competing to provide
telecommunications services to customers of either TELUS or Genuity, as the case
may be, but in no event shall Verizon be considered to be a Competitor of
Genuity.
"Control" shall mean:
(a) in the case of a body corporate, where a person or entity
holds securities or have such securities held for its benefit
(other than by way of security only), to which are attached
more than 50% of the votes that may be cast to elect directors
of the body corporate, and the votes attached to those
securities are sufficient, if exercised, to elect a majority
of directors of the body corporate; or
(b) in the case of an entity other than a body corporate, where a
person or entity holds an interest or have such interest held
for its benefit (other than by way of security only), that is
sufficient, if exercised, to elect a majority of the persons
who provide direction and control over the business and
affairs of the entity.
"Covenantor" shall mean Genuity Inc., its successors and permitted assigns.
"Effective Date" shall mean the date set forth at the beginning of this
Agreement.
"Functional Services" shall mean the services provided by Genuity's
operational support systems, such as order processing, network management,
trouble ticket monitoring, customer support services and customer billing,
provided by Genuity to TELUS in support of the provision of Telecommunications
Services in Canada based on or using any Technology.
"Genuity" shall mean Genuity Solutions Inc. and its Affiliates, and their
successors and permitted assigns.
"GTE" shall mean GTE Corporation and its Affiliates, and their successors
and permitted assigns.
"GTE Agreement" shall mean the Heads of Agreement (Brand, Technology and
Co-Marketing) entered into on October 19, 1998 between BC TELECOM Inc. (now
TELUS) and GTE, as amended and replaced from time to time.
"Internet" shall mean a global collaboration of autonomous, interconnected
computer networks using the Internet protocols and their successors.
"Internet Services" shall mean services provided by telecommunications
providers to Internet users. They include dial access, dedicated access, web
hosting, content provision, content aggregation, private networks (intranets),
virtual private networks, network security, electronic commerce, consulting and
other value-added services.
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"Marks" shall mean any and all trademarks and service marks now or
hereafter owned by Genuity (whether through use or registration or some other
manner) or licensed to Genuity with the authorization to sub-license such
trademarks and service marks to TELUS.
"Other Party's Home Territory" means, in respect of TELUS, Canada, and in
respect of Genuity, the United States.
"Technology" shall mean all present and future patents, copyrights, trade
secrets and know-how in systems, processes, hardware and software, including
source code to the extent provided for in Section 3.2 (and all supporting
documentation) owned by Genuity, and all third party patents, copyrights, trade
secrets and know-how licensed or made available to Genuity which Genuity is
authorized pursuant to its license to sub-license or otherwise make available to
TELUS, used in providing Telecommunications Services, including operating
support systems, customer care, billing, network management and intelligent
network capabilities, together with all upgrades, enhancements, additions and
modifications to any Technology developed from time to time during the Term by
Genuity or which it has the right to sub-license or otherwise make available to
TELUS for the provision of Telecommunications Services.
"TELUS" shall mean TELUS Corporation and its Affiliates, and its successors
and permitted assigns.
"Telecommunications Services" shall mean voice, data, Internet Services,
wireless (mobile and fixed), broadcasting, video, cable, services which are
value-added and provided in relation to any of the foregoing, services
introduced after the date hereof which evolve to provide, replace or substitute
for the foregoing services, any combination of the foregoing and services
incidental to the foregoing. Telecommunications Services shall not include the
provision of content for broadcasting, video, cable or Internet Services, or the
sale, publication or provision of directories in any form.
"Verizon" shall mean any one or more of GTE, Xxxx Atlantic, the entity
formed upon their merger, and their respective Affiliates, successors and
permitted assigns.
2. BRAND
2.1 Subject to the terms and conditions of this Agreement and to the rights and
licenses previously granted to third parties by Genuity of the type described in
connection with the Genuity Permitted Activities described in Exhibit A, from
and after the Effective Date, TELUS and its Affiliates shall and thereby have
the exclusive right and licence during the Term to use the Marks in connection
with the provision of Telecommunications Services in Canada, provided that such
Telecommunications Services are based on or use the Technology or are in lines
of business in which Genuity is or has been engaged at the time of use by TELUS.
Genuity agrees not to renew or extend such rights or licences after the
Effective Date unless permitted under Section 16.2.
2.2 Genuity warrants and represents that such rights and licenses to the Marks
previously granted to third parties will not prevent TELUS from (i) exclusively
using the Marks to represent
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itself as the exclusive provider of Telecommunications Services in Canada using
the Technology, or (ii) exclusively using the Marks in connection with services
which provide a substantial competitive advantage to TELUS or materially
differentiate TELUS from its competitors in providing Telecommunications
Services. In view of the exclusive license granted to TELUS hereunder, Genuity
shall not renew or extend such rights or licenses after the Effective Date
unless permitted under Section 16.2.
2.3 Irrespective of the license granted to TELUS with respect to the Marks
in Section 2.1, Genuity acknowledges that TELUS has the exclusive right and
license to certain of the Marks pursuant to the GTE Agreement.
2.4 Genuity shall have the right to control the quality of any
Telecommunications Services described in section 2.1 and that TELUS
advertises and renders using the Marks, as more specifically described in
Exhibit B hereto.
2.5 Subject to the restrictions in section 2.1 as to the right to use the
Marks, TELUS will have access to Genuity's existing creative, marketing,
advertising and other promotional materials for use in promoting
Telecommunications Services in Canada. TELUS will not pay for the development
of such promotional materials, but will be responsible for any costs for
Canadian rights for talent, music, usage of third party intellectual property
rights, etc. TELUS may not significantly alter such materials without
Genuity's approval, such approval not to be unreasonably delayed or withheld,
and will not alter such materials without any required third party approvals.
2.6 Genuity shall use, and shall cause its Affiliates to use, commercially
reasonable efforts when obtaining from third parties licenses of trademarks,
service marks or promotional materials ("Third Party Property Rights") for
the purpose of providing Telecommunication Services, to obtain the right to
sub-license such Third Party Property Rights to TELUS. Where Genuity obtains
the right to sub-license Third Party Property Rights to its Affiliates,
Genuity shall use commercially reasonable efforts to obtain the same for
TELUS. If additional compensation is payable by Genuity to obtain such Third
Party Property Rights for TELUS, TELUS, should it decide to deploy such Third
Party Property Rights, will be responsible for such additional compensation
and Genuity will use commercially reasonable efforts to assist TELUS to
obtain favourable pricing or Genuity Affiliate pricing, whichever is lower.
2.7 TELUS will be obligated to use the Marks where TELUS reasonably
concludes that such use will enhance TELUS shareholder value.
3. TECHNOLOGY
3.1 LICENSE OF TECHNOLOGY
Subject to the terms and conditions of this Agreement and to the rights and
licenses previously granted to third parties by Genuity of the type contemplated
by the Genuity Permitted Activities described in Exhibit A, from and after the
Effective Date, TELUS and its Affiliates
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shall have the exclusive right during the Term to use, copy and modify the
Technology to provide Telecommunications Services in Canada.
Genuity warrants and represents that such rights and licenses to the
Technology previously granted to third parties will not prevent TELUS from:
(i) being the exclusive provider of Telecommunications Services in Canada
using the Technology, or (ii) exclusively providing services which provide a
substantial competitive advantage to TELUS or materially differentiate TELUS
from its competitors in providing Telecommunications Services. In view of the
exclusive license granted to TELUS hereunder, Genuity shall not renew or
extend such rights or licenses after the Effective Date unless permitted
under Section 16.2.
Irrespective of the license granted to TELUS with respect to the
Technology in this Section 3.1, Genuity acknowledges that TELUS has the
exclusive right and license to use certain of the Technology (including
associated source code, Third Party Technology and Third Party Property
Rights) pursuant to the GTE Agreement.
3.2 SOURCE CODE
Subject to the terms and conditions hereof, from and after the Effective
Date, Genuity shall make available and license to TELUS the right to use and
modify the source code for software which forms a part of the Technology.
Genuity shall not be required to sub-license or make available third party
source code for software which forms a part of the Technology to TELUS,
except to the extent that Genuity is authorized to sublicense or make
available such third party source code without payment of any additional
compensation to any third parties. Genuity shall inform TELUS that such third
party source code is used in the Technology, shall consult with TELUS
respecting its need for access to and the right to use and modify such source
code, and if TELUS determines that it requires such source code or a
contingent right to such source code, then Genuity shall use commercially
reasonable efforts to obtain access to and the right to use and modify such
source code or a contingent right to such source code, as the case may be,
for TELUS, without additional compensation, and failing that with the
compensation to be paid to any third party for such right to be paid by TELUS.
3.3 THIRD PARTY TECHNOLOGY
(a) Notwithstanding any other provision of this Agreement, Genuity shall
not be required to sub-license rights from third parties to patents,
copyrights, trade secrets, know-how and supporting documentation or
the right to use the foregoing ("Third Party Technology") to TELUS if
any additional compensation is required to be paid to any third party
for such right, provided that Genuity shall use and shall cause its
Affiliates to use commercially reasonable efforts to obtain the right
to sub-license such Third Party Technology to TELUS without the
payment of any additional compensation to any such third parties, and
failing that, to obtain the right to sub-license such Third Party
Technology to TELUS or assist TELUS in obtaining the right directly,
with any additional compensation to be paid by TELUS.
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If there are Third Party Property Rights generally included with the
license of any Third Party Technology, Genuity shall be required, subject to the
terms and conditions set out above in Section 3.3(a), to obtain the right to
sub-license such Third Party Property Rights to TELUS.
If Genuity obtains Third Party Technology on an exclusive basis, Genuity
shall use reasonable commercial efforts to obtain a sublicense for TELUS on an
exclusive basis, subject to the terms and conditions set out above in Section
3.3(a). If Genuity obtains Third Party Technology on a non-exclusive basis,
Genuity shall use reasonable commercial efforts to obtain a sublicense for TELUS
on a non-exclusive basis, subject to the terms and conditions set out above in
Section 3.3(a).
In each of the above instances where TELUS is responsible for payment of
compensation to a third party, Genuity will use commercially reasonable efforts
to assist TELUS to obtain favourable pricing or Genuity Affiliate pricing,
whichever is lower.
3.4 NON-TANGIBLE TECHNOLOGY
To the extent that the Technology consists of know-how or other
proprietary information which is not available in tangible form, Genuity
shall share such know-how and other proprietary information with TELUS. In
furtherance of this, Genuity and TELUS shall jointly develop guidelines for
providing TELUS with access to Technology that consists of know-how and other
non-tangible proprietary information (which shall include the placement of
TELUS representatives with Genuity at TELUS' expense), provided that such
access shall be provided in a manner that minimizes the disruption to
Genuity's business, as determined by Genuity acting reasonably, and provided
further that Genuity and TELUS shall jointly determine when TELUS shall be
required to compensate Genuity for such access. In making such determination,
the parties agree to balance (a) the need of TELUS, as a payer for the
Technology, to have reasonable access to Genuity personnel to ensure a
meaningful transfer and understanding of the Technology and its capabilities
without Genuity charging for every inquiry and contact, against (b) the need
of Genuity to ensure that such assistance does not result in its subsidizing
TELUS' operations or in substantial disruption of Genuity's business.
4. FUNCTIONAL SERVICES
4.1 Genuity will make Functional Services available to TELUS during the Term
and the Extended Term, upon TELUS' reasonable request, so as to enable TELUS
to provide Telecommunications Services in Canada based on or using the
Technology or to provide Telecommunications Services in Canada in lines of
business in which Genuity has been or is engaged at the time of TELUS'
request, provided that such Functional Services can reasonably be provided by
Genuity, given the availability of Genuity's resources at the time of TELUS'
request.
4.2 Genuity will provide such Functional Services exclusively to TELUS in
Canada, provided that Genuity may also provide such Functional Services:
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(a) to third parties in Canada only to the extent that such Functional
Services are part of Genuity's Permitted Activities in Canada; and
(b) to third parties who are not providers of Telecommunications Services.
5. CONSULTING SERVICES
5.1 Subject to Section 7.1(b), Genuity will provide TELUS with consulting
services ("Consulting Services") reasonably requested by TELUS, during the
Term and the Extended Term including technical, marketing, training, support
and similar assistance to enable TELUS to provide Telecommunications Services
in Canada and to Canadian customers, based on or using the Technology or to
provide Telecommunications Services in Canada in lines of business in which
Genuity is engaged at the time of TELUS' request, including adapting the
Technology for use in Canada ("Canadianization"), provided that such
Consulting Services can reasonably be provided by Genuity, given the
availability of Genuity's resources at the time of TELUS' request.
6. PAYMENTS
6.1 The parties agree that, in consideration for the rights granted to TELUS
under this Agreement, during the Initial Term, TELUS shall make payments to
Verizon in accordance with the terms of the GTE Agreement. Genuity
acknowledges that, in addition to other good and valuable consideration
provided to it under this Agreement, it will derive benefits from TELUS'
payments to Verizon. The parties further agree that such payments shall
constitute sufficient consideration to bind the parties to their obligations
set forth in this Agreement. For greater certainty, Genuity hereby agrees
that any dispute between Verizon and Genuity shall not in any way adversely
impact TELUS under this Agreement.
6.2 [INTENTIONALLY DELETED]
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6.4 Overdue payments will be subject to interest at the prime rate posted by
TELUS' principal Canadian bank.
6.5 If the parties terminate this Agreement at the end of the Term, then
during the Extended Term, TELUS shall have no further payment obligations to
Genuity, except for any Functional Services or Consulting Services and
payments earned during the Term prior to termination.
6.6 Functional Services and Consulting Services are to be paid for by TELUS
based on agreed rates, which shall be usage-based, taking into account
Genuity's economies of scale, applicable laws and regulations, and the
recovery of Genuity's fully-loaded costs including, by way of example,
reasonable incremental costs experienced by Genuity (such as out-of-pocket
costs such as insurance, shipping or taxes, other than income taxes) not
otherwise included by Genuity in such internal pricing.
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6.7 TELUS shall pay any travel, lodging, meals and related out-of-pocket
expenses reasonably incurred by Genuity to provide Functional Services and
Consulting Services in Canada.
7. IMPLEMENTATION AND SUPPORT
7.1 From and after the Effective Date:
(a) Genuity and TELUS shall forthwith form a joint marketing working
group composed of representatives of each party. Such group shall
meet regularly to address marketing issues, exchange marketing
plans and information, and plan and develop joint marketing
opportunities for the provision of Telecommunications Services in
and outside of Canada. In support thereof, Genuity will provide the
services set forth in this Agreement to TELUS to assist in the
timely introduction of Telecommunications Services in Canada based
on the Technology, in accordance with the principles set forth in
Section 3.4.
(b) Genuity will provide a reasonable level of Consulting Services to
TELUS necessary to implement a migration from TELUS' existing
product and service platforms in the event of a migration to
Genuity Technology, in accordance with the principles set forth in
Section 3.4.
(c) Genuity and TELUS shall agree upon the nature, extent and a process
for TELUS' participation in the Genuity Technology planning process
within the first year of the relationship, with the understanding
that TELUS will have the opportunity to provide ongoing input into
such Technology planning process in connection with the proposed
use of Technology to provide Telecommunications Services in Canada,
and such input shall be considered by Genuity.
(d) Genuity shall provide to TELUS support services customarily
provided by Genuity to its own Affiliates in accordance with the
principles set forth in Section 3.4.
8. [INTENTIONALLY DELETED]
9. OWNERSHIP RIGHTS
From and after the Effective Date:
(a) Without prejudice to TELUS' right of indemnity pursuant to Section
11, TELUS agrees that it will not challenge or otherwise contest
Genuity's ownership of the Marks or Technology (including any
Technology arising from input provided by TELUS pursuant to Section
7.1(c)), but excluding any Technology owned by TELUS referred to in
Section 9(b).
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(b) Subject to the prior ownership rights of Genuity in the Technology,
TELUS shall own TELUS-funded or TELUS-developed enhancements and
modifications to the Technology arising from Canadianization of the
same. TELUS hereby grants a non-exclusive, perpetual, irrevocable
and royalty free license for such enhancements and modifications:
(i) to Genuity for the provision of Telecommunications Services
outside of Canada and to perform Genuity Permitted Activities, and
(ii) to permit Genuity to grant and sub-license such enhancements
and modifications to third parties for the provision of
Telecommunications Services outside of Canada, provided that, where
Genuity sub-licenses such enhancements and modifications to third
parties, they shall be on terms mutually agreed to between TELUS
and Genuity, and TELUS shall be compensated by Genuity for the use
of such enhancements and modifications by third parties. Genuity
will own all other enhancements and modifications to the
Technology, but they shall be made available to TELUS as part of
the Technology under this Agreement. Nothing contained herein shall
require TELUS to license such enhancements or modifications to
third parties, or Genuity to license the Technology to third
parties.
(c) Genuity will apply for, prosecute to registration and maintain
registrations in Canada for all intellectual property rights in the
Marks, to the extent such protection is reasonably and commercially
available in Canada, and Genuity will apply for, prosecute to
issuance and maintain statutory protection in Canada for
intellectual property rights in the Technology as Genuity
reasonably determines to pursue. To the extent that Genuity has not
sought intellectual property protection in Canada for the Marks or
for the Technology and TELUS desires to seek such protection, TELUS
may request Genuity to seek such protection and, to the extent that
such protection is legally available in Canada, Genuity agrees to
seek such protection at TELUS' expense. TELUS and Genuity agree to
cooperate with respect to securing such intellectual property
protection.
10. SUB-LICENSES OF MARKS AND TECHNOLOGY
10.1 Sub-licensing to Joint Ventures and Alliances
From and after the Effective Date and subject to the restrictions and
limitations imposed on TELUS hereunder, TELUS may sub-license the Marks and
Technology to any Affiliate and to any third party with which TELUS forms a
joint venture or marketing or strategic alliance, in each instance for the
provision of Telecommunications Services in Canada, provided that:
(a) such sub-licenses shall be in writing and shall provide for a term
not to exceed the Term, and shall prohibit further sublicensing
without Genuity's consent;
(b) such sub-licenses shall contain terms for the benefit of TELUS and
Genuity no less favourable to TELUS and Genuity than the terms of
Sections 2.4, 11, 12, 14, 16 and 28 hereof;
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(c) where TELUS wishes to sub-license to a third party that is a
material Competitor of Genuity, TELUS shall have obtained Genuity's
prior written consent to such sub-license, provided that Genuity
shall have first consulted with TELUS and attempted to reconcile
its interest with that of TELUS regarding such licensee prior to
deciding whether to provide its consent; and
(d) such sublicense shall not include any Third Party Technology or
Third Party Property Rights unless permitted pursuant to the
agreement with the third party.
10.2 Sub-Licensing in Ordinary Course of Business:
In addition to the sub-licenses permitted pursuant to Section 10.1,
TELUS may (but subject to the terms and conditions of Section 10.1)
sub-license in the ordinary course of business, provided that such
sub-license shall not include any Third Party Technology or Third Party
Property Rights unless permitted pursuant to the agreement with the third
party:
(a) any of the Technology to its customers to the extent required to
enable such customers to use the Telecommunications Services
provided by TELUS in Canada; and
(b) any of the Marks to its dealers, distributors or other marketing or
sales agents for the purpose of enabling them on behalf of TELUS to
provide Telecommunications Services that are based on or using the
Technology or are in lines of business in which Genuity has been or
is engaged at the time of TELUS' grant of sublicense in Canada.
11. INDEMNIFICATION FOR INFRINGEMENT
(a) Subject to the terms hereof, in the event that use under this
Agreement of the Marks or the Technology in Canada (excluding Third
Party Technology and Third Party Property Rights) during the
duration of this Agreement is the subject of a claim by a third
party against TELUS for misappropriation of a third party trade
secret or infringement of a patent, copyright, or other
intellectual property right, Genuity shall defend (and at its
option, settle), any legal proceeding brought against TELUS
resulting from such claim, and indemnify TELUS with respect to any
settled claims and damages finally awarded against TELUS as a
result of such claim.
(b) In addition to Genuity's obligations in Section 11(a), in the event
of any such claim or in the event of a potential claim that would
be reasonably likely to result in a substantial indemnity
obligation on the part of Genuity, Genuity shall either:
(i) secure for TELUS the right to continue using the applicable
Marks or Technology;
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(ii) modify such Technology to make it non-infringing without
materially changing functionality or performance; or
(iii) replace such Technology with non-infringing comparable
Technology without materially changing functionality or
performance;
If the foregoing are not reasonably available after Genuity has
exercised diligent efforts to procure the same, upon the issuance
of an injunction, or a final judgement, terminating or prohibiting
continued use of the Marks or Technology as contemplated by this
Agreement, Genuity may terminate the license to TELUS for such
infringing component of the Marks or Technology and pay to TELUS a
reasonable amount therefor, taking into account all relevant
factors, including past use, if any, by TELUS of the infringing
Marks/Technology.
(c) It is agreed that Genuity shall have no obligation pursuant to
Section 11(a) to the extent that such claim would not have arisen
but for:
(i) the use by TELUS of other marks or technology with the Marks
or Technology;
(ii) modifications made to the Marks or Technology other than by
Genuity or its suppliers; or
(iii) the unreasonable failure of TELUS to use a current release of
the Technology available to TELUS from Genuity after a
reasonable transition period, if such infringement would have
been avoided by the use of the current release, provided that
Genuity offers such release to TELUS and advises TELUS that
such release avoids the infringement.
(d) TELUS shall give Genuity written notice of any such claims promptly
after TELUS receives notice thereof; provided that the failure to
give such notice shall not affect the rights of TELUS, except to
the extent that Genuity shall have suffered actual damage by reason
of such failure or such failure prejudices Genuity's ability to
settle or defend such claim.
(e) TELUS shall cooperate with and furnish reasonable assistance to
Genuity in defense of all such claims. TELUS may, at its own
expense, have its own counsel act reasonably in consultation with
Genuity in any proceeding, compromise or settlement which is under
the direction of Genuity.
(f) Notwithstanding anything in this Section 11 to the contrary,
Genuity shall not, without TELUS' prior written consent, settle or
compromise any claim where there is any reasonable probability that
such action may either: (i) result in monetary damages in excess of
the remaining balance available under the maximum liability; or
(ii) materially and adversely affect TELUS by reason of the
issuance of injunctive relief or a settlement that has the effect
thereof.
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(g) Genuity shall keep TELUS informed of the status of the defense of
all such claims and furnish TELUS with all documents, instruments
and information that TELUS shall reasonably request.
(h) Notwithstanding anything in this Section 11 to the contrary,
Genuity's maximum aggregate liability to TELUS pursuant to Section
11(a) shall be $15 Million during the Initial Term and a maximum of
$7.5 Million during any five year renewal of the Term; it being
understood that TELUS shall be responsible for damages against
TELUS in respect of claims by a third party in excess of the
foregoing maximums and TELUS shall assume control of the defense
and settlement of such claims.
(i) With respect to Third Party Technology and Third Party Property
Rights, Genuity shall have no liability to TELUS for infringement
and TELUS' sole rights and recourse shall be as set forth in the
agreement with the third party (or in the instance of a sublicense
by Genuity, as permitted in Genuity's agreement with the third
party).
(j) The foregoing sets forth Genuity's entire liability for
intellectual property infringement related to this Agreement.
12. WARRANTIES
Each of Genuity and TELUS has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder.
The execution and delivery by each of Genuity and TELUS of this
Agreement and the fulfilment of its obligations under this Agreement have
been duly authorized by all necessary corporate action.
The execution and delivery of this Agreement by each of Genuity and
TELUS does not, and the fulfilment by Genuity and TELUS of its obligations
under this Agreement will not, conflict with or violate any provision of its
certificate of incorporation or bylaws or conflict with, violate or result in
the breach of any provision of any material contract other than any such
conflict, violation or breach that would not have a material adverse effect.
The use of the Technology and Marks is not the subject of current
litigation and is not the subject of a written charge of infringement
received by Genuity as of the date hereof.
For a period of 6 months commencing on the date that any element of
Technology is installed at TELUS, or such longer warranty period as is
customarily provided by Genuity without the payment of additional
compensation to Genuity on the sale of such element of Technology to any
third party, Genuity shall warrant that such element of Technology, when
properly installed and/or used as designed for use by Genuity, shall
materially conform to the then current applicable specifications therefor,
provided that (i) TELUS shall have exercised
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commercially reasonable efforts to remedy the problem itself before
requesting the assistance of Genuity and (ii) in the event that it is
determined that the problem was caused by the improper installation and/or
use of the relevant Technology by TELUS, then Genuity shall have the right to
charge TELUS for its services under Section 5 (Consulting Services).
Notwithstanding the foregoing, Genuity is not required to provide any
warranty in respect of Technology developed by it and which is (i)
insignificant, and (ii) not generally made available for commercial use or
offered for sale to any person including third parties, Affiliates or
Genuity's own business units or divisions.
Genuity makes no other warranties, either express or implied, as to the
condition of the Technology, their merchantability, their fitness for any
particular purpose, their non-infringement of third party rights, that any
Technology is error-free or that operation of any technology will be secure
or uninterrupted.
13. TERM, TERMINATION AND POST-TERMINATION RIGHTS/OBLIGATIONS
(a) Unless there is early termination pursuant to this Section 13
during the Term, there shall be an initial term (the "Initial
Term") starting from the Effective Date and ending at midnight
(PST) on January 31, 2009. The Initial Term and any renewed term
thereafter (the "Term") shall be automatically renewed for five
years at the end of such Term, unless a party gives written notice
to the other party two years prior to the end of the Term that it
wishes to renegotiate, provided that any such renegotiation shall
not be based solely on those matters set out in Section 6. Any
renegotiation shall be concluded at least one year prior to the end
of the Term, and if such re-negotiation cannot be concluded
successfully, either party may at anytime at least one year prior
to the end of the Term provide written notice to the other party
that there shall be no renewal at the end of that Term. If no such
notice is received, the Term shall be automatically renewed as
stated above.
(b) Following the end of any Term without any renewal, or the
termination of this Agreement for any reason, as the case may be,
there shall be a two-year period (the "Extended Term") during which
TELUS and Genuity will co-operate with each other to facilitate an
orderly transition from the use of the Technology, and/or to
alternate service providers, but TELUS shall not be entitled to use
the Marks during the Extended Term.
(c) Following the end of the Term or earlier termination of this
Agreement (and the Extended Term), except as set forth below, TELUS
will continue to retain the right to use, on a perpetual,
irrevocable and royalty-free but non-exclusive basis, the
Technology, including source codes, used by TELUS prior to the end
of the Term or termination (including the Technology resident in
and used by Genuity to provide Functional Services to TELUS) to
provide Telecommunications Services in Canada.
-14-
Following the termination of this Agreement by Genuity under
Sections (f), (h) or (i), TELUS shall have the right to use the
Technology (including source codes and the Technology resident in
and used by Genuity to provide Functional Services to TELUS), on a
royalty-free but non-exclusive basis, during the Extended Term only.
Following the termination of this Agreement by Genuity under
Section (l), TELUS shall have the following rights:
(i) where TELUS is acquired by a party or parties who do not fall
within subsection (ii) below, TELUS shall have the rights set
forth in the first paragraph of this Section 13(c) with
respect to the Technology; or
(ii) where TELUS is acquired by a party who is a material
Competitor of Genuity, or is acquired by parties any one of
whom is a material Competitor of Genuity and such material
Competitor controls the acquiror, TELUS shall have the rights
set forth in the second paragraph of this Section 13(c) with
respect to the Technology, except that the term for the
Extended Term shall be three (3) years.
(d) Throughout the Extended Term, Genuity will continue to provide (and
TELUS shall pay the prices in effect at the end of the Term for)
Functional Services and will also provide such Consulting Services
as requested by TELUS to assist it in its efforts to migrate from
the Technology used by TELUS at the end of the Term or upon
termination of this Agreement. Further, Genuity will provide
limited Consulting Services for up to four years from the end of
the Term or termination of this Agreement required for disaster
recovery so as to maintain TELUS operations as at the end of the
Term or termination of this Agreement and for source code changes
to conform to exogenous factors (e.g. regulatory changes, change in
industry standards, etc.)
(e) [INTENTIONALLY DELETED]
(f) [INTENTIONALLY DELETED]
(g) TELUS shall have the right to terminate this Agreement (i) if
Genuity fails (without cause) to provide TELUS with the rights to
use the Marks or the Technology as provided herein after providing
Genuity with notice and an opportunity to cure in accordance with
Section 13(h), (ii) upon the termination of the GTE Agreement for
any reason whatsoever, provided that TELUS shall provide Genuity
with at least six months' prior written notice of such termination,
or (iii) upon Genuity becoming an Affiliate of Verizon as a result
of Verizon's conversion of Genuity's Class B common stock into
Class C common stock or upon Genuity becoming an Affiliate of
Verizon in any other manner.
-15-
(h) Either TELUS or Genuity shall have the right to terminate this
Agreement if the other party is in material breach of Section 15 or
16, and Genuity shall have the right to terminate this Agreement if
TELUS is in material breach of Section 10, or if the sublicensee is
in material breach of its sublicense from TELUS and TELUS fails to
use commercially reasonable efforts to cause such sublicensee to
cure the breach or, failing that, TELUS fails to terminate the
sublicense, unless in any of such cases such breach is cured within
90 days after such party has received written notice of such
breach. Notwithstanding the foregoing, if the nature of the breach
is such that it cannot reasonably be cured within such period, the
party in breach shall have such longer period to cure such breach
as may be reasonably necessary, provided that the party in breach
diligently pursues such cure.
(i) Should TELUS become bankrupt, or file a petition in bankruptcy, or
if the business of TELUS should be placed in the hands of a
receiver, assignee or trustee for the benefit of creditors, whether
by the voluntary act of TELUS or otherwise, all licenses and rights
granted herein to TELUS shall terminate/cancel automatically,
unless stated otherwise in this Agreement. TELUS shall include in
each sublicense equivalent provisions to this Section 13(i).
(j) No waiver of any breach of, or default under, this Agreement shall
constitute a waiver of any other breach of, or default under, this
Agreement, and no waiver shall be effective unless made in writing
and signed by an authorized representative of the party waiving the
breach or default.
(k) Termination/cancellation of this Agreement or the licenses and
rights granted herein shall not relieve either party from any
obligations that matured prior to the effective date of such
termination/cancellation. The termination/cancellation rights of each
party provided herein are in addition to all other rights and
remedies available to such party.
(l) Either TELUS or Genuity shall have the right to terminate this
Agreement if any person or any two or more persons (excluding
Verizon, Genuity and any of their Affiliates) acting jointly or in
concert shall acquire beneficial ownership, directly or indirectly,
of more than 50% of the voting capital stock, or acquire all or
substantially all of the assets, of TELUS.
(m) Nothing contained in this Agreement (including the Exhibits) shall,
following the termination or expiry thereof, be interpreted in any
way to prejudice, limit or in any way derogate from, any rights
which TELUS has or may have pursuant to the GTE Agreement,
including without limitation any rights to the Marks and Technology.
14. CONFIDENTIALITY
(a) Subject to Section 14(c), TELUS shall not use (except to the extent
expressly permitted hereunder) and shall take reasonable
precautions to prevent the
-16-
disclosure of the Technology and all non-public documentation and
information of Genuity, whether in written, electronic or other
tangible form (the "Genuity Information") obtained by TELUS in the
course of exploiting its rights or performing its obligations
under, or in connection with entering into, this Agreement.
(b) Subject to Section 14(c), Genuity shall not use (except to the
extent expressly permitted hereunder) and shall take reasonable
precautions to prevent the disclosure of all non-public
documentation and information of TELUS, whether in written,
electronic or other tangible form (the "TELUS Information")
obtained by Genuity in the course of exploiting its rights or
performing its obligations under, or in connection with entering
into, this Agreement.
(c) If either party is requested to disclose the Genuity Information or
the TELUS Information as a legal requirement or as part of a legal
or regulatory process, the party may make such disclosure provided
that it has given prompt notice (to the extent that it is able to
do so) to the other party so that the other party can seek a
protective order or other appropriate remedy prior to such
disclosure.
15. JOINT MARKETING
(a) The parties agree that it is their intention that TELUS shall be
the vehicle for Genuity's strategy for the provision of
Telecommunications Services in Canada. Subject to existing
obligations, the parties will use reasonable efforts to appear to
their respective customers as a single network with common user
interfaces, and to provide products and services that are seamless
with each other.
(b) Each party shall negotiate in good faith and make reasonable
efforts to agree to purchase Telecommunications Services for itself
and its customers in the Other Party's Home Territory from the
other party to the fullest extent practicable except to the extent
otherwise required by law and subject to existing contracts at the
Effective Date, Capability and commercial reasonableness, or where
a customer specifically requests to use another service provider.
In the event of any such exceptions, provided that the purchasing
party has given the provisioning party the first opportunity to
provide the required services, the purchasing party may make
alternate arrangements to provide the Telecommunications Service in
the Other Party's Home Territory, for that customer in those
locations where the other party is unable to provide the services
as required.
For clarification purposes:
(i) "Capability" means the ability of the provisioning party to
meet the purchasing party's availability and coverage
requirements, requirements for commercially reasonable
pricing and service delivery and performance standards,
provided that such requirements and standards are
commercially reasonable in the circumstances, and are no more
onerous
-17-
than the requirements and standards generally used by the
purchasing party in its home territory for the provisioning
of such Telecommunications Services. Such requirements and
standards shall be reciprocal and the purchasing party shall
be required to fulfil the same requirements and perform at
the same standards when selling its equivalent services to
the provisioning party.
(ii) Where TELUS is the purchasing party, it shall be entitled to
terms and pricing from Genuity that are no less favourable
than those offered by Genuity to its most favoured customers,
including Verizon, but specifically excluding America Online.
(iii) A party may use subcontractors to provide in whole or in part
the Telecommunications Services that the other party seeks to
purchase, provided that the provisioning party shall ensure
that any such subcontractors perform in accordance with the
requirements and standards of the purchasing party.
(iv) Where a purchasing party is entitled, after compliance with
Section 15(b), to make alternate arrangements for the
provision of the required Telecommunications Services to a
specific customer in the Other Party's Home Territory, by
reason of the provisioning party not having the capability to
meet the standard/general technical service delivery and
performance standards of the purchasing party for the
required Telecommunications Services, and not by reason of
pricing or the requirements of the specific customer, in
addition to its rights under Section 15(b), the purchasing
party shall then be entitled to make alternate arrangements
to meet such standard/general service requirements, but only
on terms (including without limitation, scope and type of
service, geographical coverage, customer and market
segments), for a duration and at pricing no more favourable
than those offered to the provisioning party, and provided
that, prior to making such alternate arrangements, the
purchasing party has consulted with the other party to
determine whether the specific customer or general service
requirements can be met in a manner that benefits both
parties. If the provisioning party provides to the purchasing
party a time period after which the provisioning party
reasonably expects to be able to meet the standard/general
technical service delivery and performance standards of the
purchasing party, the purchasing party shall make alternate
arrangements that may be ended at such time and shall use
reasonable commercial efforts to migrate the services to the
provisioning party after such time.
(v) parties acknowledge and agree that Genuity shall provide
Telecommunications Services to TELUS under Section 15(b)
without any adjustment for TELUS' rights to use and modify
the Technology.
-18-
(c) In any negotiations of Genuity for an [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT]
for [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] of Telecommunications Services which ought reasonably
to include a [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION
FOR CONFIDENTIAL TREATMENT] for [*MATERIAL OMITTED AND SEPARATELY FILED
PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT], Genuity shall use
commercially reasonable efforts and negotiate in good faith to obtain for
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] the opportunity to [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] in such
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] as [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT
TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] of Telecommunications Services
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] on substantially the same terms offered to
other[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION
FOR CONFIDENTIAL TREATMENT].
16. NON-COMPETE
From and after the Effective Date and during the Term:
16.1 EXCLUSIVITY OF LICENCES IN CANADA
Except as specifically permitted in this Section 16 (provided however
that none of the following limitations shall prevent Genuity from engaging in
the Genuity Permitted Activities to the extent not prohibited by Section
16.2(c)), Genuity will not, during the Term, sell, license or make available
any of the Marks or Technology, in each instance for the provision of
Telecommunications Services in Canada to any person other than TELUS.
16.2 GENUITY NON-COMPETE IN CANADA
Genuity will not directly or indirectly compete with TELUS in the
provision of Telecommunications Services in Canada, except that:
(a) Genuity may offer Telecommunications Services (including the use of
any of its Marks and Technology) in Canada to a non-American
business customer who requires Telecommunications Services in
Canada, if and only to the extent that (i) such services are
specifically requested by that business customer without
solicitation by Genuity as to the Telecommunications Services in
Canada; (ii) such services are to be provided by Genuity to that
customer ancillary to other Genuity Telecommunications Services
outside of Canada to that customer or its Affiliates; and (iii)
Genuity is unsuccessful in providing the Telecommunications
Services in question through TELUS in accordance with Section 15(b);
-19-
(b) Genuity may offer Telecommunications Services (including the use of
any of its Marks and Technology) in Canada to an American business
customer who requires Telecommunications Services in Canada if
Genuity is unsuccessful in providing TELUS' Telecommunications
Services to that customer in accordance with Section 15(b); and
(c) Genuity may carry on in Canada the activities described in
paragraphs 1 to 6 inclusive in Exhibit A (the "Genuity Permitted
Activities") including licensing Marks and Technology, provided
that such activities do not prevent TELUS from (i) being the
exclusive provider of Telecommunications Services in Canada using
the Technology, or (ii) exclusively providing services which
provide a substantial competitive advantage to TELUS or materially
differentiate TELUS from its Competitors in providing
Telecommunications Services in Canada (and for greater certainty,
the sale or license or offering by Genuity of customer support,
back office or similar services offered generally by Genuity to
providers of Telecommunications Services in the U.S. which are
Genuity's Competitors shall be conclusive evidence that such
activities do not create any such prejudice.)
16.3 TELUS NON-COMPETE
TELUS will not directly or indirectly compete with Genuity in the
provision of Telecommunications Services:
(a) in the U.S.; or
(b) outside Canada and the U.S. using any of the Marks or Technology,
except for insignificant competition arising from and incidental to the
provision of Telecommunications Services in Canada by TELUS.
Notwithstanding the foregoing, TELUS may:
(i) carry on in the U.S. the activities described in Exhibit C
(the "TELUS Permitted Activities");
(ii) offer Telecommunications Services (including the use of any
of the Technology) in the U.S. to a non-Canadian business
customer who requires Telecommunications Services in the
U.S., if and only to the extent that (i) such services are
specifically requested by that business customer without
solicitation by TELUS as to the Telecommunications Services
in the U.S.; (ii) such services are to be provided by TELUS
to that customer ancillary to other TELUS Telecommunications
Services outside of the United States to that customer or its
Affiliates; and (iii) subject to the waiver in Section 17,
TELUS is unsuccessful in providing the Telecommunications
Services in question through Genuity in accordance with
Section 15(b); and
-20-
(iii) subject to the waiver in Section 17, offer Telecommunications
Services (including the use of any of the Technology) in the U.S.
to a Canadian business customer who requires Telecommunications
Services in the U.S. if TELUS is unsuccessful in providing
Genuity's Telecommunications Services to that customer in
accordance with Section 15(b).
16.4 SUBSEQUENT ACQUISITIONS
(a) The foregoing provisions do not prohibit the acquisition by a party
or any of its Affiliates of an interest in any person or entity that
would cause such party to be in breach of Section 16 if (i) such
breach is [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT]by the other party or (ii)
promptly after the consummation of such acquisition, such party or
Affiliate provides the other party with a written offer to sell to
the other party the portion of the acquired person or entity
relating to the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] for the portion of the
price paid by the offering party or Affiliate, fairly allocated to
such [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] (including any [*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] or [*MATERIAL OMITTED AND SEPARATELY FILED
PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] to acquire
such [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT].
(b) Subject in all instances to the offering party's obligations under
Section 15(b), if the offered party does not accept an offer
within [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] days, the offering party may
(i) [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] of the [*MATERIAL OMITTED
AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] to an [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT
TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] party, but only on
terms no more favorable than the terms provided to the offered party,
or (ii) [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] and [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] under [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] from that relating to the offering party and without
sharing any confidential information of the offered party with the
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION
FOR CONFIDENTIAL TREATMENT] or (iii) [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] and
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] the [*MATERIAL OMITTED AND SEPARATELY FILED
PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] under the
[*MATERIAL OMITTED AND
-21-
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT]of the offering party unless (with respect to this
Section 16.4(b)(iii) only):
(1) the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT
TO AN APPLICATION FOR CONFIDENTIAL TREATMENT]
constitutes a [*MATERIAL OMITTED AND SEPARATELY FILED
PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] portion of the acquired business in terms
of[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] or
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT]or is not
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] to the
focus of the acquisition; or
(2) the offering party[*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT], within [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] days of the consummation of the
acquisition of the [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT], to [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] the [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] and [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] of the [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] in a prompt and orderly manner, or
thereafter fails to proceed to do so in a prompt and
orderly manner; or
(3) (a) the offered party, within [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] days of the offering party's
written request, certifies in writing that it
currently is able, or will be able within [*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] years of the
date of its certification, to satisfy the[*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] requirements
of [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT
TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] at the
time of acquisition; or
(b) the offering party fails to request such
certification within [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] days after the earlier of the
end of the
-22-
[*MATERIAL OMITTED AND SEPARATELY FILED
PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
Treatment] day period referenced above or the refusal
of the offer referenced in Section 16.4(a).
In the event that an offering party is not [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] to
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] a [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] under Section 16.4(b)(iii), such party
shall [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] of the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT
TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] in accordance with, at its
election, either Section 16.4(b)(i) or Section 16.4(b)(ii). In the event that an
offering party is not [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] to [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] a [*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] due to Section 16.4(b)(iii)(3), the offering party, if necessary and
subject to its obligations under Section 15(b), may make [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] to
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO
AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the [*MATERIAL OMITTED AND
SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the
[*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] until the offered party is able to [*MATERIAL OMITTED
AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT]
those [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT]. As and when the offered party is able to[*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT] the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN
APPLICATION FOR CONFIDENTIAL TREATMENT] of [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the [*MATERIAL
OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL
TREATMENT], the offering party shall promptly [*MATERIAL OMITTED AND SEPARATELY
FILED PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT] of the portions of
the [*MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT] which support such requirements in accordance with, at
its election, either Section 16.4(b)(i) or Section 16.4(b)(ii).
(c) Prior to making any acquisition, a prospective offering party shall
consult with the prospective offered party so that such party may
provide input on the value of the Competing Business, its
customers and assets, future business plans regarding the
Competing Business and the service requirements of the customers
of the Competing Business.
(d) If, during the Term, Genuity enters into any business combination
which materially increases the size and scope of Genuity's (or its
successors') business or the marks or technology available to
Genuity in connection with Telecommunications Services,
-23-
Genuity will use commercially reasonable efforts to cause the
other parties to such combination to grant to TELUS licences to
such parties' marks and technology as part of the Marks and
Technology, to the extent that they are not otherwise included in
the Marks and Technology, without additional payment by TELUS.
16.5 PASSIVE OWNERSHIP
The foregoing provisions do not prohibit the ownership by any party for
passive investment purposes of less than 10% of the capital stock of any entity
providing Telecommunications Services in the Other Party's Home Territory.
16.6 SPECIFIC PERFORMANCE
The parties acknowledge and agree that the foregoing restrictions are
reasonable and necessary to protect the legitimate business interests of the
parties and that any violation of such restrictions would result in irreparable
harm to the parties and that the remedy for breach of this Section 16 shall
include, in addition to damages and any other remedy available at law or in
equity, the right to seek an order that the defaulting party and its Affiliates
shall immediately cease the prohibited activity.
17. CONDITIONS SUBSEQUENT
The parties acknowledge and agree that this Agreement shall be effective
and binding on the parties as of the Effective Date, unless on or before
October 15, 2000:
(a) the parties fail to conclude a definitive amendment to this
Agreement with respect to the following matters:
(i) resolution of TELUS' potentially conflicting obligations to
Verizon and Genuity for the duration of this Agreement;
(ii) TELUS' right to cure any defaults in payment that may occur
between Verizon and Genuity;
(iii) assurance that TELUS is not limited in the recourse and
remedies that would otherwise be available to it if not for
the payment mechanism in Section 6 in the event of any
default by Genuity under this Agreement or default by Verizon
under the GTE Agreement and assurance that such default under
one agreement will not adversely affect TELUS under the other
agreement, and assurance that Genuity is not limited in the
recourse and remedies that would otherwise be available to it
if not for the payment mechanism in Section 6 in the event of
any default by TELUS or Verizon under the GTE Agreement which
adversely affects Genuity under this Agreement;
(iv) clarification of Genuity's right to re-negotiate the payment
mechanism in this Agreement in the event that the
Genuity-Verizon arrangement as to
-24-
payment ends by reason of Verizon selling or being unable to
exercise its conversion rights with respect to Genuity's
common stock, or in the event that the GTE Agreement
terminates prior to the termination or expiry of this
Agreement; and
(v) agreement on an updated version of Genuity Existing Contracts
in Exhibit A; or
(b) TELUS and Verizon fail to conclude a definitive amendment to or
replacement of the GTE Agreement, where such failure is not waived
by TELUS at its sole discretion; or
(c) TELUS and Verizon conclude a definitive amendment to or replacement
of the GTE Agreement in a manner that results in a strategic
relationship between TELUS and Verizon that fundamentally deviates
from the relationship set forth in the GTE Agreement as it existed
on the Effective Date.
In the event that (1) the parties fail to conclude a definitive
amendment with respect to the matters described in subparagraph (a) above, or
(2) TELUS and Verizon fail to conclude a definitive amendment to or
replacement of the GTE Agreement and such failure is not waived by TELUS, or
(3) TELUS and Verizon conclude a definitive amendment to or replacement of
the GTE Agreement that has the effect described in subparagraph (c) above and
such condition (c) is not waived by each of TELUS and Genuity, in each case
on or before October 15, 2000, this Agreement shall terminate automatically,
and the parties shall be fully released from their obligations under this
Agreement.
Notwithstanding any other provision herein to the contrary, in order to
avoid any conflict between TELUS' obligations under this Agreement and its
obligations under the GTE Agreement, for the period from the Effective Date
until such time that the parties conclude a definitive amendment to this
Agreement as contemplated in this Section 17, Genuity releases TELUS from its
obligations pursuant to Sections 15(a) and 15(b) of this Agreement to use
Genuity as its preferred provider of Telecommunications Services in the
United States.
18. ALLOCATION AND WITHHOLDING TAX
The parties agree to allocate the purchase price referred to in Section
6 between the properties, services and benefits to be provided to the parties
under this Agreement in a reasonable and tax efficient manner, taking into
account the fair market value of each of the properties, services and
benefits to be provided under this Agreement. The parties will use their best
efforts to make such allocation as soon as possible after completing this
Agreement and, in any event, prior to the Effective Date. The Parties agree
that the allocation referred to in this paragraph will be used for all
reporting purposes.
All payments to Genuity under this Agreement will be subject to any
applicable Canadian withholding taxes, and any such taxes withheld from a
payment and remitted by TELUS or its Affiliates to the Canadian tax
authorities will be considered to be a payment in that amount to Genuity
under this Agreement. TELUS shall provide Genuity with proof of payment to the
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Canadian taxation authorities and shall use its best efforts to satisfy the
U.S. Internal Revenue Service that such payment has been made.
19. MANAGEMENT OF STRATEGIC RELATIONSHIP
19.1 EXECUTIVE COUNCIL
The parties agree to designate senior executives to serve as members of
a committee (the "Executive Council") to take actions necessary to fulfill
the parties' obligations under this Agreement and address requests for
waivers and amendments of the provisions of this Agreement. Either party may
change its representatives on such Executive Council at any time in its sole
discretion and shall make reasonable efforts to inform the other party of
such change. The Executive Council shall be co-chaired by one representative
of each party. The Executive Council shall be authorized to take all actions
necessary to further the principles and to mutually agree on how to implement
all matters contemplated by this Agreement.
The Executive Council shall establish an administrative office (the
"Alliance Management Office") to oversee and coordinate the implementation
and ongoing administration of this Agreement. The parties shall each
designate one representative who shall manage and operate the Alliance
Management Office, each of whom will be a senior representative of his/her
respective organization. Either party may change its representative at any
time in its sole discretion and shall make reasonable efforts to inform the
other party of such change. The mandate of the Alliance Management Office is
to oversee and coordinate, subject to the direction of the Executive Council,
the implementation of this Agreement including, without limitation,
coordinating the activities of any working groups designated by the Executive
Council and monitoring and reporting upon the success of implementation
activities. The Executive Council shall also establish such joint working
groups as it deems necessary and desirable to promote the effective
implementation of this Agreement.
19.2 DISPUTE RESOLUTION
Either party shall refer any dispute in respect of this Agreement to the
Executive Council for resolution. The Executive Council shall meet as soon as
is reasonably possible after a dispute is referred to it, giving due regard
to the nature and impact of the issue under consideration, to attempt to
resolve such dispute. If a dispute cannot be resolved by the Executive
Council by unanimous action and mutual agreement within 20 days after
submission to the Executive Council, or such other time period that is
acceptable to the parties, either party may refer the dispute to arbitration
in accordance with Section 19.3. Nothing in this Section 19.2 shall prevent a
party from taking any action for injunctive relief permitted by Section 16.6
which such party concludes, in the exercise of its sole discretion, is
necessary to preserve its rights or benefits, including preserving the status
quo, pending resolution of a dispute.
19.3 ARBITRATION
The arbitral proceedings shall be confidential, and any information
disclosed therein shall be treated by the parties as proprietary and
confidential information in accordance with the provisions of Section 14.
There shall be three arbitrators to be selected as follows, one arbitrator
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shall be selected by the petitioning party ("Petitioning Party"), one
arbitrator shall be selected by the party defending the arbitration
("Defending Party"), and the third arbitrator shall be selected by the two
arbitrators selected by the Petitioning Party and the Defending Party, or, if
such arbitrators cannot agree within 30 days on the third arbitrator, such
arbitrator will be selected by the International Chamber of Commerce ("ICC")
pursuant to ICC rules. The arbitration shall take place in Vancouver and
shall be administered by the ICC. In the event that the Defending Party
within 30 days of any notification made to the Defending Party of the demand
for arbitration by the Petitioning Party (containing the name, address and
profession of the arbitrator selected, the subject matter of the dispute and
the relief sought) does not name its arbitrator (providing the same
information), such arbitrator shall be appointed by the ICC at the request of
the Petitioning Party.
20. LEGAL AND OTHER COMPLIANCE
This Agreement and the relationship of the parties is subject to
compliance with all applicable laws, including export control laws.
TELUS shall obtain all regulatory consents, approvals or licenses
necessary to offer Telecommunications Services in Canada using any of the
Marks or Technology.
21. OBLIGATIONS OF COVENANTOR
During the term of this Agreement, Covenantor guarantees the obligations
of Genuity hereunder. If, during the term of this Agreement, Genuity
Solutions Inc. ceases to be an Affiliate of the Covenantor, the Covenantor
shall thereupon automatically become the primary contracting party to this
Agreement in place of Genuity Solutions Inc. For the purposes of
clarification, any entity that is or becomes an Affiliate of Genuity at any
time during the term of this Agreement shall be considered to be an Affiliate
of Genuity for the purpose and duration of this Agreement.
22. BINDING AGREEMENT
This Agreement, including Exhibits A, B and C, shall constitute a
binding agreement among the parties and, subject to Sections 13(m) and 17
hereof, contains the complete and final agreement between the parties with
respect to the subject matter of this Agreement and supersedes any prior or
contemporaneous negotiations, proposals, understandings or agreements between
the parties with respect to the subject matter hereof. No modification,
amendment or alteration of this Agreement shall be effective, unless set
forth in a writing signed by the duly authorized representatives of the
parties.
Each of the parties shall be responsible for its own fees and other
expenses incurred with respect to the negotiation of this Agreement, the
agreements contemplated hereby and the closing of this transaction.
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23. PUBLIC ANNOUNCEMENTS
Each of the parties agrees not to make any public announcements
concerning the proposed transaction or the related negotiations without the
prior approval of the other party, except as may be required by law or
applicable stock exchange rules, in which case disclosure may only be made
after making all reasonable efforts to advise the other party of such
disclosure and to obtain their comments prior to making such disclosure.
24. FUNDS
All dollar amounts referred to herein are expressed in U.S. funds unless
otherwise specifically provided.
25. LAW OF CONTRACT
This Agreement shall be governed by the laws of the State of New York.
26. ASSIGNMENT
Neither TELUS nor Genuity shall assign or transfer directly or
indirectly (including to a Competitor of Genuity by merger or operation of
law) any of its rights and obligations, except with the prior written consent
of the other party; provided that nothing in this section shall prohibit:
(a) either party from assigning or transferring this Agreement to an
Affiliate; or
(b) TELUS from granting a sub-license in accordance with Section 10.
27. NO PARTNERSHIP
This Agreement is not intended, nor should anything herein be construed,
to create the relationship of partners, principal and agent, or employer and
employee among or between any parties. No party shall have any authority to
represent or to bind any other party in any manner whatsoever, and each party
shall be solely responsible and liable for its own acts.
28. SEVERABILITY
If any one or more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality, and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
29. NOTICES
All notices and other communications to be given under this Agreement
shall be in writing and shall be hand delivered, delivered by courier,
delivered by mail postage prepaid, or
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sent by facsimile (with another copy being mailed or delivered in accordance
with this Agreement) to the parties at their respective addresses set forth
below or at such other addresses as a party shall notify the other in
accordance with the provisions of this section. Any such notice, (a) if
delivered by hand or by courier in accordance herewith, shall be deemed given
as of the time of such delivery or the date receipt would have been
effectuated if delivery were not refused, (b) if mailed in accordance
herewith, shall be deemed given on the fourth business day following the
posting of such mail, unless there is any postal strike or disruption between
the time of posting and the fourth business day in which case such notice
shall not be deemed given until actually received, and (c) if validly
transmitted by fax in accordance herewith, shall be deemed given on the day
of transmission.
If to Genuity: Genuity Solutions Inc.
Attn: General Counsel
0 Xxx xx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
XXX
Fax: x0-000-000-0000
If to the Covenantor: Genuity Inc.
Attn: General Counsel
0 Xxx xx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
XXX
Fax: x0-000-000-0000
If to TELUS: TELUS Corporation
Attn: General Counsel
00 - 0000 Xxxxxxxx
Xxxxxxx, X. X. X0X 0X0
Xxxxxx
Fax: (000) 000-0000
30. SURVIVAL
Notwithstanding the termination or expiry of this Agreement, the
provisions contained in Section 14 shall survive for ten years following the
expiry or earlier termination of the Term and any Extended Term, and the
provisions contained in Sections 6, 11, 12, 13, 17, 18, 19, 20, 21, 25, 28,
29 and 30, and any other provisions which by their terms are intended to so
survive, shall survive the termination of this Agreement indefinitely or for
such shorter period(s) as stated in such provisions.
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Agreed to and accepted as at this 30th day of JUNE, 2000.
TELUS CORPORATION
Per: /S/ TELUS CORPORATION
------------------------------------------------
Per:
------------------------------------------------
GENUITY SOLUTIONS INC.
Per: /S/ GENUITY SOLUTIONS INC.
------------------------------------------------
Per:
------------------------------------------------
GENUITY INC.
Per: /S/ GENUITY INC.
------------------------------------------------
Per:
------------------------------------------------
EXHIBIT A
GENUITY PERMITTED ACTIVITIES
1. Sales and services to U.S. government and U.S. governmental agencies,
including U.S. military authorities.
2. Technical, engineering, supply and similar services, including network
monitoring, provided by subsidiaries, divisions and Affiliates of
Genuity, to the extent that they constitute Telecommunications Services,
provided that the provision of any such services shall also be offered
outside of Canada and shall not result in material competition to TELUS
in the provision of Telecommunications Services in Canada.
3. Data processing, system sales, installation, provision of employee
services, disaster recovery services and related services provided by
subsidiaries, divisions and Affiliates of Genuity, excluding data
transmission, to the extent that they constitute Telecommunications
Services, provided that the provision of any such services shall also be
offered outside of Canada and shall not result in material competition
to TELUS in the provision of Telecommunications Services in Canada.
4. The advertisement and promotion of Telecommunications Services offered
and billed outside of Canada directed to non-Canadians temporarily
inside of Canada. Genuity may use the Technology and Marks inside of
Canada for the purpose of carrying on such advertisement and promotion.
5. Provision of services that may be used by Canadian customers or in
Canada that are not directed at or billed to such customers. Examples
including American terminating 1-800 numbers and electronic commerce
with a retailer outside Canada.
6. Sale of Internet Services to America Online in Canada, without any
reduction in obligation to comply with Section 15(b) of the Agreement.
Genuity Existing Contracts (see sections 2.1 and 3.1)
7. Provision of Internet Services to Xxxxxxxx Consulting by Genuity and its
Affiliates pursuant to an agreement (existing as of October 19, 1998)
with Xxxxxxxx Consulting Service Net.
8. Provision of automatic Internet registration services distributed by
personal computer manufacturers, such as Compaq, Acer and Hewlett
Packard, pursuant to contracts with Genuity existing as of October 19,
1998.
EXHIBIT B
TRADEMARK LICENSING AND OTHER PROVISIONS REGARDING SERVICES
1. Genuity has the right to control the quality of any Telecommunications
Services that TELUS advertises and renders in connection with the Marks
as specifically described in this Section 1.
(a) TELUS agrees that it shall maintain standards of quality in the
advertising and rendering of the Telecommunications Services under
this Agreement consistent with those prevalent in the
telecommunications industry in Canada. TELUS agrees that it shall
not advertise or render under the Marks any Telecommunications
Services that do not meet such quality standards.
(b) TELUS agrees that it will not utilize the Marks or any confusingly
similar trademarks, service marks, trade names or domain names,
except in connection with the Telecommunications Services and then
only during the Term and as permitted hereunder.
(c) TELUS agrees to allow Genuity or Genuity's authorized
representative at reasonable times upon reasonable notice to enter
the premises of TELUS, or any premise under the control of TELUS,
to inspect the services in connection with which the Marks are used
by TELUS. Such an inspection shall be at Genuity's expense.
(d) TELUS agrees that the style and manner of use of the Marks in
connection with the advertising and rendering of the
Telecommunications Services shall be in the form, style and manner
as may be reasonably approved by Genuity in writing from time to
time.
(e) TELUS agrees to use with the Marks any and all legal notices
evidencing ownership of and/or registration by Genuity of the Marks
as may be reasonably required by Genuity.
(f) Without prejudice to TELUS' right of indemnity pursuant to Section
11, TELUS agrees that it will not challenge or otherwise contest
the right of Genuity to register the Marks during the Term.
(g) TELUS agrees that nothing herein shall give TELUS any right to or
interest in the Marks, except the right to use the same in
accordance with the terms of this Agreement, and that all and any
uses of the Marks by TELUS shall inure to the benefit of Genuity.
(h) TELUS agrees that it will not hereafter seek registration of the
Marks in its own name or in the name of an Affiliate.
(i) TELUS agrees to cooperate reasonably with Genuity, at Genuity's
expense, in the procurement of any registration of the Marks which
Genuity may choose to undertake at Genuity's sole discretion,
including but not limited to supplying evidence of use of the Marks
to Genuity.
(j) TELUS agrees to provide within a reasonable period of time written
notice to Genuity of any conduct on the part of third parties which
TELUS deems to be an infringement of the Marks or Technology in
Canada or a challenge to the validity of any registration of an
intellectual property right in same. Genuity shall have a period of
sixty (60) days from the date of TELUS' notice in which to determine
whether or not Genuity elects to bring an action for infringement of
the Marks or Technology or the defence of any registration of same,
and to advise TELUS in writing of Genuity's decision. In any action
brought by Genuity, the action will be brought in the name of TELUS
and Genuity. The failure of Genuity to advise TELUS of Genuity's
decision shall be treated as a decision by Genuity not to take any
action against such third parties.
If Genuity elects not to take any action against such third parties,
TELUS has the right to bring an action for infringement of the Marks, or to
take any other action related to the Marks, against such third parties. In
any action brought by TELUS, the action will be brought in the name of TELUS
and Genuity, shall be at the sole cost and expense of TELUS, including all
out-of-pocket expenses of Genuity, and Genuity shall co-operate reasonably
with TELUS in respect of such action.
If Genuity decides to take action against such third parties, Genuity
will pay all costs and expenses, including all attorney's fees. If Genuity
and TELUS both decide to take such action, each of Genuity and TELUS will pay
all of their own respective costs and expenses, including attorney's fees. If
only TELUS decides to take such action, TELUS will pay all of its cost and
expenses, including all attorney's fees.
In all such actions: (i) except where Genuity has decided not to take
any action, Genuity shall control the litigation, acting reasonably, in
consultation with TELUS; (ii) if Genuity has decided not to take any action,
TELUS shall control the litigation, acting reasonably in consultation with
Genuity; and, in any event (iii) no settlement shall be made by either party
without the consent of the other party, such consent not to be unreasonably
withheld.
2. Nothing contained in this Agreement shall be construed as conferring by
implication, estoppel or otherwise any license or other right under any
trademark except as expressly granted herein.
EXHIBIT C
TELUS PERMITTED ACTIVITIES
1. Sales and services to Canadian government and Canadian governmental
agencies, including Canadian military authorities.
2. Technical, engineering, supply and similar services, including network
monitoring, provided by subsidiaries, divisions and Affiliates of TELUS,
to the extent that they constitute Telecommunications Services, provided
that the provision of any such services shall also be offered in Canada
and shall not result in material competition to Genuity in the provision
of Telecommunications Services in the United States.
3. Data processing, system sales, installation, provision of employee
services, disaster recovery services and related services provided by
subsidiaries, divisions and Affiliates of TELUS, excluding data
transmission, to the extent that they constitute Telecommunications
Services, provided that the provision of any such services shall also be
offered in Canada and shall not result in material competition to
Genuity in the provision of Telecommunications Services in the United
States.
4. The advertisement and promotion of Telecommunications Services offered
and billed in Canada directed to Canadians temporarily outside of
Canada. TELUS may use the Technology and Marks outside of Canada for the
purpose of carrying on such advertisement and promotion.
5. Provision of services that may be used by American customers or in the
United States that are not directed at or billed to such customers.
Examples including Canadian terminating 1-800 numbers and electronic
commerce with a retailer in Canada.
