Document:

<Page>

                                                                    Exhibit 4.16

                                    GUARANTY

         This GUARANTY ("GUARANTY"), dated as of January 31, 2002, is made by
ARC Service, Inc., a Delaware corporation ("SERVICE"), ARC Solutions, Inc., a
Delaware corporation ("SOLUTIONS"), ARC Midholding, Inc. , a Delaware
corporation ("MIDHOLDING"), and Writers Inc., a California corporation
("Writers") (each of Service, Solutions, Midholding and Writers a "GUARANTOR,"
and collectively, the "GUARANTORS"), for the benefit of Wynnchurch Capital
Partners, L.P., a Delaware limited partnership ("WYNNCHURCH") and Wynnchurch
Capital Partners Canada, L.P., an Alberta, Canada limited partnership
("WYNNCHURCH CANADA") (each of Wynnchurch and Wynnchurch Canada, a "PURCHASER",
and collectively, the "PURCHASERS.")

                                    RECITALS

         A. Alternative Resource Corporation, a Delaware corporation ("COMPANY")
and the Purchasers have entered into a Securities Purchase Agreement of even
date herewith (as the same may be amended, supplemented, modified or restated
from time to time, the "SECURITIES PURCHASE AGREEMENT") pursuant to which the
Company has issued the Notes and Warrants, subject to the terms and conditions
of the Securities Purchase Agreement.

         B. To secure the Company's Obligations, the Company has executed and
delivered a Company Security Agreement of even date herewith (as the same may be
amended, supplemented modified or restated from time to time, the "COMPANY
SECURITY AGREEMENT") in favor of the Purchasers.

         C. The Company owns 100% of the capital stock of each Guarantor.
Accordingly, each Guarantor has a direct financial interest in inducing
Purchasers to enter into the Securities Purchase Agreement and to purchase the
Notes and Warrants.

         D. To secure the Guarantors' Obligations, the Guarantors have
collectively executed and delivered a Guarantor Security Agreement of even date
herewith (as the same may be amended, supplemented, modified or restated from
time to time, the "GUARANTOR SECURITY AGREEMENT") in favor of the Purchasers.
The Company Security Agreement and the Guarantor Security Agreement are referred
to in this Guaranty collectively as the "SECURITY AGREEMENTS."

         E. The conditions precedent to the obligation of Purchasers to enter
into the Securities Purchase Agreement and purchase the Notes and Warrants
include the execution and delivery by Guarantors of this Guaranty and the
performance by Guarantors of their obligations hereunder.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, each Guarantor hereby agrees as
follows:

         1. DEFINITIONS. Capitalized terms used but not defined in this Guaranty
shall have the meanings ascribed to such terms in the Securities Purchase
Agreement. As used herein, the following terms have the following meanings:

<Page>

              1.1 COMPANY'S OBLIGATIONS means the obligations of the Company to
         the Purchasers arising under the Notes.

              1.2 GUARANTORS' OBLIGATIONS means the obligations of Guarantors
         under this Guaranty.

              1.3 INTERCREDITOR AGREEMENT means the Intercreditor and
         Subordination Agreement of even date herewith among the Purchasers, the
         Company, the Guarantors and FCC.

              1.4 TOTAL COLLATERAL means (i) the "Collateral," as defined in the
         Company Security Agreement, (ii) the "Collateral" as defined in the
         Guarantor Security Agreement and (iii) the "Collateral" as defined in
         the Pledge Agreement of even date herewith among the Company and the
         Purchasers.

         2. GUARANTY OF PAYMENT. Each Guarantor hereby unconditionally and
irrevocably guarantees to Purchasers the punctual payment and performance when
due, whether at stated maturity or by acceleration or otherwise, of the
Company's Obligations. Each Guarantor agrees that this Guaranty is a present and
continuing guaranty of payment and not of collectibility, and that neither
Purchaser shall be required to prosecute collection, enforcement or other
remedies against the Company or any other person or entity, or to enforce or
resort to any of the Total Collateral or other rights or remedies pertaining
thereto, before calling on any Guarantor for payment. When Company's Obligations
have been paid in full by the Company or any Guarantor to Purchasers, this
Guaranty shall terminate without further act or action.

         3. CONTINUING GUARANTY. Each Guarantor agrees that the Guarantors'
Obligations shall be primary obligations of such Guarantor, shall not be subject
to any counterclaim, set-off, abatement, deferment or defense based upon any
claim that such Guarantor may have against either Purchaser, the Company or any
other Person, and shall remain in full force and effect without regard to, and
shall not be released, discharged, limited or affected in any way by any
circumstance or condition (whether or not such Guarantor shall have any
knowledge thereof), including, without limitation:

              (a) any lack of validity or enforceability of any of the
         Investment Agreements;

              (b) any termination, restatement, amendment, modification or other
         change in any of the Investment Agreements;

              (c) any furnishing, exchange, substitution or release of any of
         the Total Collateral, or any failure to perfect any Lien in any of the
         Total Collateral;

              (d) any failure, omission or delay on the part of the Company or
         either Purchaser to conform or comply with any term of any of the
         Investment Agreements or any failure of either Purchaser to give notice
         of any Event of Default;

                                       2
<Page>

              (e) any waiver, compromise, release, settlement or extension of
         time of payment or performance or observance of any of the obligations
         or agreements contained in any of the Investment Agreements;

              (f) any action or inaction by either Purchaser under or in respect
         of any of the Investment Agreements, any failure, lack of diligence,
         omission or delay on the part of either Purchaser to enforce, assert or
         exercise any right, power or remedy conferred on either Purchaser in
         any of the Investment Agreements, or any other action or inaction on
         the part of either Purchaser;

              (g) any voluntary or involuntary bankruptcy, insolvency,
         reorganization, arrangement, readjustment, assignment for the benefit
         of creditors, composition, receivership, liquidation, marshalling of
         assets and liabilities or similar events or proceedings with respect to
         any Guarantor, the Company or any other person or entity or any of
         their respective property or creditors, or any action taken by any
         trustee or receiver or by any court in any such proceeding;

              (h) any merger or consolidation of any Guarantor, the Company or
         any other person or entity into or with any person or entity, or any
         sale, lease or transfer of any of the assets of any Guarantor, the
         Company or any other person or entity to any other person or entity;

              (i) any change in the ownership of any of the equity interests of
         the Company or any change in the relationship between any Guarantor and
         the Company, or any termination of any such relationship;

              (j) any release or discharge by operation of law of any other
         Guarantor or the Company from any obligation or agreement contained in
         any of the Investment Agreements; and

              (k) any other occurrence, circumstance, happening or event,
         whether similar or dissimilar to the foregoing and whether foreseen or
         unforeseen, which otherwise might constitute a legal or equitable
         defense or discharge of the liabilities of a guarantor or surety or
         which otherwise might limit recourse against any Guarantor or the
         Guarantors.

         4. WAIVERS. Each Guarantor unconditionally waives, to the extent
permitted by law, (i) notice of any of the matters referred to in SECTION 3
above, (ii) all notices which may be required by statute, rule of law or
otherwise, now or hereafter in effect, to preserve intact any rights against
such Guarantor, including, without limitation, any demand, presentment and
protest, proof of notice of non-payment under any of the Investment Agreements
and notice of any Event of Default or any failure on the part of any Guarantor
or the Company to perform or comply with any covenant, agreement, term or
condition of any of the Investment Agreements, (iii) any right to the
enforcement, assertion or exercise against any Guarantor or the Company of any
right or remedy conferred under any of the Investment Agreements, (iv) any
requirement of

                                       3
<Page>

diligence on the part of any person or entity, and (v) any requirement to
exhaust any remedies or to mitigate the damages resulting from any default under
any of the Investment Agreements.

         5. SUBORDINATION. Each Guarantor agrees that any and all present and
future debts and obligations of the Company to such Guarantor hereby are
subordinated to the claims of the Purchasers and hereby are assigned by such
Guarantor to the Purchasers as security for the payment and performance of the
Company's Obligations.

         6. REINSTATEMENT. The obligations of the Guarantors pursuant to this
Guaranty shall continue to be effective or automatically be reinstated, as the
case may be, if at any time payment of any of the Company's Obligations is
rescinded or otherwise must be restored or returned by either Purchaser upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Guarantor or the Company or for any other reason, all as though such payment had
not been made.

         7. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents to each
Purchaser as follows:

            7.1 ORGANIZATION AND QUALIFICATION. Each Guarantor other than
         Writers is a corporation duly organized, validity existing and in good
         standing under the laws of the State of Delaware. Writers is a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of California. Each Guarantor has the requisite
         corporate power and authority to own its properties and to carry on its
         business as now being conducted. Each Guarantor is duly qualified as a
         foreign corporation to do business and is in good standing in every
         jurisdiction where the failure to so qualify would have a Material
         Adverse Effect. No Guarantor has any subsidiaries.

            7.2 AUTHORIZATION; ENFORCEMENT. Each Guarantor has the requisite
         corporate power and authority to enter into, and perform its
         obligations under this Guaranty and the Guarantor Security Agreement.
         Each Guarantor's execution, delivery and performance of this Guaranty
         and the Guarantor Security Agreement and the consummation by it of each
         of the transactions contemplated hereby and thereby have been duly
         authorized by all necessary corporate action and no further consent or
         authorization of such Guarantor, its board of directors, or its
         stockholders or any other person, body or agency is required with
         respect to any of the transactions contemplated hereby or thereby. This
         Guaranty and the Guarantor Security Agreement have each been duly
         executed and delivered by such Guarantor. Each of this Guaranty and the
         Guarantor Security Agreement constitutes a legal, valid and binding
         obligation of such Guarantor enforceable against such Guarantor, in
         accordance with its terms.

            7.3 CAPITALIZATION. The Company owns 100% of the capital stock of
         each Guarantor.

            7.4 CONSTITUENT DOCUMENTS; NO CONFLICTS. Each Guarantor has
         furnished to the Purchaser true and correct copies of such Guarantor's
         certificate of incorporation as currently in effect, and such
         Guarantor's by-laws as currently in effect. The execution, delivery and
         performance of each of this Guaranty and the Guarantor Security
         Agreement

                                       4

<Page>

         by the Guarantors and the consummation by the Guarantors of
         the transactions contemplated hereby and thereby do not and will not
         (a) result in a violation of the certificate of incorporation or
         by-laws of any Guarantor, (b) conflict with, or constitute a default
         (or an event which with notice or lapse of time or both would become a
         default) under, or give to others any rights of termination, amendment,
         acceleration or cancellation of, any agreement, indenture or instrument
         to which any Guarantor is a party, or (c) result in a violation of any
         law, rule, regulation, order, judgment or decree (including U.S.
         federal and state securities laws and regulations) applicable to any
         Guarantor, or by which any property or asset of any Guarantor is bound
         or affected. No Guarantor is in violation of its certificate of
         incorporation, by-laws or other organizational documents, and no
         Guarantor is in default (and no event has occurred which, with notice
         or lapse of time or both, would put any Guarantor in default) under,
         nor has there occurred any event giving others (with notice or lapse of
         time or both) any rights of termination, amendment, acceleration or
         cancellation of, any agreement, indenture or instrument to which any
         Guarantor is a party which would have a Material Adverse Effect. The
         business of the Guarantors is not being conducted in violation of any
         law, ordinance, rule, regulation, order, judgment or decree of any
         governmental entity, court or arbitration tribunal except for possible
         violations the sanctions for which either singly or in the aggregate
         would not have a Material Adverse Effect. No Guarantor is required to
         obtain any consent, authorization or order of, or make any filing or
         registration with, any court or governmental agency or any regulatory
         or self-regulatory agency or authority in order for it to execute,
         deliver or perform any of its obligations under this Guaranty or the
         Guarantor Security Agreement or to perform its obligations in
         accordance with the terms hereof or thereof.

            7.5 LIABILITIES AND OBLIGATIONS. Except as set forth in the
         Financial Statements, no Guarantor has any liabilities, contingent or
         otherwise, other than (i) liabilities incurred subsequent to the date
         of such financial statements in the ordinary course of business
         consistent with past practice and (ii) obligations under contracts and
         commitments incurred in the ordinary course of business and not
         required under generally accepted accounting principles to be reflected
         in such financial statements, in each case of clause (i) and (ii) next
         above which, individually and in the aggregate, are not material to the
         financial condition, business, operations, properties, operating
         results or prospects of the Company and its subsidiaries taken as a
         whole.

            7.6 CONTRACTS. Exhibit 3.8 to the Securities Purchase Agreement
         contains a complete and accurate list of all material undischarged
         written or oral contracts, agreements, leases or other instruments to
         which any Guarantor is a party or by which any Guarantor is bound or to
         which any of the properties or assets of any Guarantor is subject (each
         a "CONTRACT"). None of the Guarantors or, to the best knowledge of any
         Guarantor, any of the other parties thereto, is in breach or violation
         of any Contract, which breach or violation relates to indebtedness for
         borrowed money or otherwise would have a Material Adverse Effect. No
         event, occurrence or condition exists which, with the lapse of time,
         the giving of notice, or both, or the happening of any further event or
         condition, would become a breach or default by any Guarantor under any
         Contract which breach or default would have a Material Adverse Effect.

                                       5
<Page>

            7.7 TITLE TO PROPERTY AND ASSETS. Each Guarantor owns its property
         and assets free and clear of all mortgages, liens, loans and
         encumbrances, except such mortgages, encumbrances, loans and liens
         which arise in the ordinary course of business and do not materially
         impair such Guarantor's ownership or use of such property or any assets
         and those set forth on SCHEDULE 3.9 of the Securities Purchase
         Agreement. With respect to the property and assets it leases, each
         Guarantor is in compliance in all material respects with such leases
         and holds a valid leasehold interest free of any material liens,
         claims, loans or encumbrances. All material facilities, equipment and
         other material items of tangible property and assets owned by each
         Guarantor are in good operating condition and repair, subject to normal
         wear and maintenance, are usable in the regular and ordinary course of
         business and conform to all applicable laws relating to their use and
         operation, except where such failure, individually or in the aggregate,
         would not have a Material Adverse Effect.

            7.8 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3.10
         of the Securities Purchase Agreement, since December 31, 2001, there
         has been no change or development in the business, properties,
         operations, financial condition, results of operations or prospects of
         any Guarantor that has had or would reasonably be expected to have a
         Material Adverse Effect. Without limiting the generality of the
         foregoing, since such date, there have not been:

            (a) any change in the business, assets, properties, liabilities,
         condition (financial or otherwise) or operating results of any
         Guarantor from that reflected in the Financial Statements, other than
         changes in the ordinary course of business that have not been,
         individually or in the aggregate, materially adverse;

            (b) any damage, destruction or loss, whether or not covered by
         insurance, materially and adversely affecting the business (as such
         business is presently conducted and as it is proposed to be conducted),
         assets, properties, liabilities, prospects, or condition (financial or
         otherwise) or operating results of any Guarantor;

            (c) any material adverse change to a Contract;

            (d) any material change in any compensation arrangement or agreement
         with any employee, officer, director, stockholder, consultant or finder
         other than in the ordinary course of business;

            (e) any sale, assignment or transfer of any material tangible assets
         of any Guarantor;

            (f) receipt of notice that there has been a loss of, or order
         cancellation by or material reduction in orders from, any major
         customer of any Guarantor or any of its subsidiaries or cancellation or
         discontinuance by any major supplier or service provider of any
         Guarantor.

            7.9 ABSENCE OF LITIGATION. Except as disclosed in SCHEDULE 3.11 to
         the

                                       6

<Page>

         Securities Purchase Agreement, there is no action, suit,
         proceeding, inquiry or investigation before or by any court, public
         board, governmental agency or authority, or self-regulatory
         organization or body pending or, to the knowledge of any Guarantor,
         threatened against or affecting any Guarantor or any of their
         respective directors or officers in their capacities as such, wherein
         an unfavorable decision, ruling or finding could have a Material
         Adverse Effect. There are no facts which, if known by a potential
         claimant or governmental agency or authority, could give rise to a
         claim or proceeding which, if asserted or conducted with results
         unfavorable to any Guarantor, could have a Material Adverse Effect.

            7.10 ENVIRONMENTAL MATTERS. (a) Except as would not reasonably be
         expected to have a Material Adverse Effect each Guarantor is in
         compliance with all applicable Environmental Laws (as defined herein),
         (b) no Guarantor has received any written notice with respect to the
         business of, or any property owned or leased by, such Guarantor from
         any governmental authority or third party alleging that such Guarantor
         is not in compliance with any Environmental Law, and (c) there has been
         no "release" of petroleum, petroleum-based products, oil or a
         "hazardous substance," as those quoted terms are defined in the
         Comprehensive Environmental Response, Compensation, and Liability Act,
         42 U.S.C. Section 9601 et seq., on any real property owned by any
         Guarantor or that is used for the business of any Guarantor except a
         release not reasonably expected to have a Material Adverse Effect.

            7.11 COMPLIANCE WITH LAWS. To the knowledge of such Guarantor, each
         Guarantor has complied in all material respects with all material laws,
         rules and regulations, ordinances, judgments, decrees, orders, writs
         and injunctions of all United States federal, state, local and foreign
         governments and agencies thereof that apply to the business, properties
         or assets of such Guarantor.

            7.12 TAX MATTERS.

            (a) Each Guarantor has timely filed (or there have been filed on
         their behalf) in correct form with appropriate taxing authorities all
         material Tax Returns (as defined herein) required to be filed by them
         on or prior to the date hereof. Such Tax Returns are true, accurate and
         complete in all material respects. With respect to all amounts in
         respect of Taxes imposed upon any Guarantor or for which any Guarantor
         is or could be liable, all applicable Tax laws have been complied with
         in all material respects, and all such amounts in respect of Taxes
         required to be paid by any Guarantor to taxing authorities or others,
         have been paid.

            (b) Each Guarantor has complied in all material respects with all
         applicable laws relating to the withholding of Taxes, and subject to
         the foregoing, have, within the time and manner prescribed by law,
         withheld and paid over to the proper governmental authorities all
         amounts required to be withheld and paid over under all applicable
         laws.

            (c) No federal, state, local or foreign audits or other
         administrative proceedings have formally commenced or are presently
         pending with regard to any Taxes

                                       7
<Page>

         due from or with respect to any Guarantor. There are no outstanding
         requests, agreements, consents or waivers to extend the statutory
         period of limitations applicable to the assessment of any Taxes or
         deficiencies against any Guarantor.

            (d) No Guarantor is a party to any material Tax sharing, Tax
         indemnity or other similar agreement or arrangement with any person or
         entity other than a Tax sharing, Tax indemnity or other similar
         agreement to which the Company and/or one of the Guarantors are the
         sole parties.

            7.13 INTELLECTUAL PROPERTY. Each Guarantor owns or possesses
         adequate and enforceable rights to use all patents, patent
         applications, trademarks, trademark applications, trade names, service
         marks, copyrights, copyright applications, licenses, know-how
         (including trade secrets and other unpatented and/or unpatentable
         proprietary or confidential information, systems or procedures) and
         other similar rights and proprietary knowledge (collectively,
         "INTANGIBLES") used or necessary for the conduct of its business as now
         being conducted and as previously described in the Company's Annual
         Report on Form 10-K most recently filed and any subsequently filed
         reports on Form 10-Q and Form 8-K. No Guarantor infringes on or is in
         conflict with any right of any other person with respect to any
         Intangibles nor is there any claim of infringement made by a third
         party against or involving any Guarantor, which infringement, conflict
         or claim, individually or in the aggregate, if the subject of an
         unfavorable decision, ruling or finding, would have a Material Adverse
         Effect.

            7.14 FOREIGN CORRUPT PRACTICES. To such Guarantor's knowledge, no
         Guarantor nor any director, officer, agent, employee or other person
         acting on behalf of any Guarantor has, in the course of his actions
         for, or on behalf of, such Guarantor, used any corporate funds for any
         unlawful contribution, gift, entertainment or other unlawful expenses
         relating to political activity; made any direct or indirect unlawful
         payment to any foreign or domestic government official or employee from
         corporate funds; violated or is in violation of any provision of the
         U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any
         bribe, rebate, payoff, influence payment, kickback or other unlawful
         payment to any foreign or domestic government official or employee.
         Without limiting the generality of the foregoing, no Guarantor has
         directly or indirectly made or agreed to make (whether or not said
         payment is lawful) any payment to obtain sales other than usual and
         regular compensation to its employees and sales representatives with
         respect to such sales.

         8. AFFIRMATIVE COVENANTS. Until all of the Company's Obligations and
the Guarantors' Obligations are paid and performed in full, each Guarantor shall
do the following, unless such Guarantor receives the written consent of the
Required Note Holders as to a waiver of the covenant:

            8.1 CORPORATE EXISTENCE. Each Guarantor shall maintain and preserve
         its corporate existence, good standing, certificates of authority,
         licenses, permits, franchises, patents, trademarks, trade names,
         service marks, copyrights, leases and all other contracts and rights
         necessary or desirable to continue its operations and business as now

                                       8

<Page>

         conducted and will generally continue its existing lines of business or
         such businesses as are substantially related to those being presently
         conducted by such Guarantor.

            8.2 TAXES AND LAWS. Each Guarantor will pay when due all Taxes,
         including excise taxes and duty, assessments, charges and levies
         imposed on such Guarantor or any of its income, profits, property or
         assets, or which they are required to withhold and pay out, and will
         comply with all applicable present and future laws or contractual
         obligations unless such Guarantor is contesting in good faith, by an
         appropriate proceeding, the validity, amount or imposition of the
         above, subject to appropriate reserves, and such contest does not have
         or cause a Material Adverse Effect or impair such Guarantor's ability
         to perform any of its material obligations.

            8.3 REPAIR AND MAINTENANCE. Each Guarantor will maintain all of
         their assets and properties in good condition and repair and in proper
         working order, normal wear and tear excepted, and will pay and
         discharge, or cause to be paid and discharged, when due, the cost of
         repairs, replacement or maintenance to the foregoing and all rentals or
         mortgage payments on the foregoing. Notwithstanding the foregoing, a
         Guarantor may determine not to repair and maintain certain of its
         asset(s) so long as such determination and failure to repair and
         maintain such asset(s) shall not have a Material Adverse Effect on the
         business of the Guarantors and the Company, taken as a whole. To the
         extent not covered by the Company's insurance, each Guarantor shall
         maintain insurance on its properties and business with reputable
         insurance companies in amounts and against risks as are customarily
         maintained by similar businesses.

            8.4 EMPLOYEE PLANS. Each Guarantor shall (i) keep in full force and
         effect any and all Plans and Employee Benefit Plans which are presently
         in existence or may, from time to time, come into existence under
         ERISA, and not withdraw from any such Plans or Employee Benefit Plans,
         unless such withdrawal can be effected or such Plans or Employee
         Benefit Plans can be terminated without material liability to such
         Guarantor; (ii) make contributions to all of such Plans and Employee
         Benefit Plans in a timely manner and in a sufficient amount to comply
         with the requirements of ERISA, including the minimum funding standards
         of Section 302 of ERISA; (iii) comply with all material requirements of
         ERISA which relate to such Plans and Employee Benefit Plans; (iv)
         notify each Purchaser immediately upon receipt by such Guarantor of any
         notice concerning the imposition of any withdrawal liability or of the
         institution of any proceeding or other action which may result in the
         termination of any such Plans or Employee Benefit Plans or the
         appointment of a trustee to administer such Plans and Employee Benefit
         Plans; and (v) promptly advise the Purchaser of the occurrence of any
         Reportable Event or Prohibited Transaction, as defined in ERISA, that
         is not exempt by statute with respect to any such Plans and Employee
         Benefit Plans.

            8.5 ENVIRONMENTAL MATTERS - INDEMNIFICATION. Each Guarantor shall
         take or cause to be taken all actions to comply in all material
         respects with the requirements of all Environmental Laws including, all
         filing and reporting requirements thereof. Each Guarantor hereby agrees
         to indemnify, hold harmless and reimburse each Purchaser for any and
         all loss, damage, expenses or costs of any kind or nature arising out
         of or

                                       9

<Page>

         incurred in connection with any prior, existing or future violations
         by such Guarantor of any Environmental Laws.

            8.6 NOTICES. As promptly as practicable, and in any event not later
         than five business days after senior management of a Guarantor becomes
         aware thereof, such Guarantor shall provide each Purchaser with written
         notice of any breach by such Guarantor of any provision of this of this
         Guaranty or the Guarantor Security Agreement, the Credit Agreement or
         any note representing Indebtedness, specifying the nature of such
         breach and any actions proposed to be taken by such Guarantor to cure
         such breach. Each Guarantor shall also provide each Purchaser with the
         notices it is to provide to FCC pursuant to Section 7.2 of the Credit
         Agreement at the same time it is required to provide such notices to
         FCC thereunder.

         9. NEGATIVE COVENANTS. Until the Company's Obligations and the
Guarantors' Obligations are paid and performed in full, no Guarantor shall do
the following unless it receives the written consent of the Required Note
Holders as to a waiver of the covenant:

            9.1 SALES AND LIQUIDATION. Except as permitted in Section 8.4(c) of
         the Credit Agreement, unless the Company exercises its option under
         Section 1.1(b) of the Note, no Guarantor may (a) liquidate, wind up or
         dissolve such Guarantor, (b) sell, convey, or otherwise dispose of or
         encumber a material portion of its property or business (in one or in a
         related series of transactions), (c) merge with or into or consolidate
         with any other corporation or other entity (other than the merger of a
         Guarantor into the Company or another Guarantor) or (d) enter into or
         effect any transaction or series of related transactions in which any
         of the voting power or equity economic interest of the such Guarantor
         is disposed of, or otherwise suffer a Change of Control.

            9.2 INVESTMENTS AND LOANS. No Guarantor may make any loans to or
         investments in any person or entity, including any officer, director or
         employee, except that a Guarantor may make a loan to the Company or
         another Guarantor.

            9.3 PREPAYMENT OR MODIFICATION OF INDEBTEDNESS; NEW INDEBTEDNESS. No
         Guarantor may (i) prepay any Indebtedness except as permitted under the
         Credit Agreement, (ii) enter into or modify any agreement as a result
         of which the terms of payment of any Indebtedness are amended or
         modified in a manner which would accelerate its payment, or (ii) enter
         into any note or other arrangement which would result in, or otherwise
         incur, additional Indebtedness in an amount in excess of One Hundred
         Thousand dollars ($100,000.00) other than in the case of this clause
         (iii), (w) the Indebtedness being incurred pursuant to the existing
         Credit Agreement or any extension, renewal or replacement thereof
         provided that the aggregate principal amount of Indebtedness thereunder
         or under any replacement shall not exceed $33,000,000, (x) Indebtedness
         listed on Schedule 8.1 of the Credit Agreement (as of the date hereof)
         that has been designated on such schedule as Indebtedness that will
         remain outstanding following the funding of the initial Loans (as
         defined in the Credit Agreement), and any extension, renewal, refunding
         or replacement of any such Indebtedness that does not increase the
         principal amount thereof, except as permitted under the terms of the
         Subordination Agreement, (y) Indebtedness permitted by Section 8.1(e)
         and (f) of the

                                       10

<Page>

         Credit Agreement, and (z) Indebtedness used to prepay the Notes in full
         pursuant to Section 1.1 of the Notes.

            9.4 TRANSACTIONS WITH AFFILIATES. No Guarantor may enter into any
         agreement or arrangement, written or oral, directly or indirectly, with
         an Affiliate, or provide services or sell goods to, or for the benefit
         of, or pay or otherwise distribute monies, goods or other valuable
         consideration to, an Affiliate, except (w) upon terms determined by the
         board of directors of such Guarantor to be fair and reasonable and no
         less favorable to such Guarantor than terms in a comparable arm's
         length transaction with an unaffiliated person or entity and except for
         existing intercompany debt, (x) any Affiliate who is an individual may
         serve as a director, officer, employee or consultant of a Guarantor,
         receive reasonable compensation for his or her services in such
         capacity and benefit from Permitted Investments to the extent specified
         in clause (e) of the definition thereof; or (y) such Guarantor may
         engage in and continue the transactions with or for the benefit of
         Affiliates which are permitted pursuant to the terms of the Securities
         Purchase Agreement and (z) transactions to which a Purchaser is a
         party.

            9.5 GUARANTEES. Except as permitted under the Credit Agreement, no
         Guarantor may guarantee, assume, endorse or otherwise, in any way,
         become directly or contingently liable in any manner with respect to
         the obligations or liabilities of any other person or entity.

            9.6 CHANGE IN BUSINESS. No Guarantor may form or acquire any
         subsidiary (except as permitted in Section 8.4(a) or (c) of the Credit
         Agreement), enter into any new business or make any material change in
         their business objectives, purposes and operations.

            9.7 LIENS. No Guarantor may create or suffer to exist any Lien upon
         any of its property now owned or hereafter acquired, or acquire any
         property upon any conditional sale or other title retention device or
         arrangement or any purchase money security agreement other than may be
         permitted under the Security Agreements or the Credit Agreement.

            9.8 AMENDMENT OF CONSTITUENT DOCUMENTS. No Guarantor may amend its
         certificate of incorporation or by-laws.

            9.9 REDEMPTION OF EQUITY SECURITIES. No Guarantor may, nor may they
         subject themselves to any obligation to, redeem, repurchase or
         otherwise acquire or retire any of the Notes or any of such Guarantor's
         equity interests or any securities convertible into or exchangeable for
         any of the Company's equity interests, including the Equity Securities
         except as otherwise permitted in this Article VII.

            9.10 INTENTIONALLY OMITTED.

            9.11 ISSUANCES. No Guarantor may issue any Equity Securities,
         including securities convertible or exchangeable (directly or
         indirectly) into Equity Securities or other securities (including debt
         securities) having features substantially similar to that of

                                       11

<Page>

         Equity Securities, other than Common Stock, so long as no person or
         group (as defined under the Exchange Act) owns in excess of 25% of the
         outstanding Common Stock as a result of such issuance.

            9.12 ACQUISITIONS. No Guarantor may acquire (whether directly or
         through acquisition of stock, merger, consolidation or otherwise, in
         one transaction or a series of related transactions) any business or
         entity or any material portion of the assets thereof other than
         Permitted Investments.

            9.13 CERTAIN AMENDMENTS OF CREDIT AGREEMENT. No Guarantor may enter
         into any amendment or modification (including in any replacement) of
         the Credit Agreement that would require the consent of the Subordinated
         Creditors (as defined in the Subordination Agreement) pursuant to
         Section 9(a) or 9(b) of the Subordination Agreement.

         10. INTERCREDITOR AGREEMENT. This Guaranty is subject to an
Intercreditor and Subordination Agreement of even date herewith among the
Purchasers, the Company, the Guarantors and FCC, which among other things,
subordinates the Guarantors' Obligations to the Purchasers to the Company's and
Guarantors' obligations to the holders of Senior Obligations as defined in that
agreement.

         11. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default ("EVENT OF DEFAULT") under this Guaranty:

            11.1 COMPANY'S OBLIGATIONS. If an Event of Default under the Notes
         shall have occurred.

            11.2 BREACH OF COVENANTS. If any Guarantor fails to observe or
         perform any covenant or agreement made by such Guarantor contained in
         this Guaranty or the Guarantor Security Agreement.

            11.3 BREACH OF WARRANTY. If any representation or warranty made by
         any Guarantor in this Guaranty or the Guarantor Security Agreement
         proves to be false or misleading in any material respect on the day on
         which it is made.

         12. REMEDIES ON DEFAULT. Subject to the provisions of the Intercreditor
Agreement, if any Event of Default occurs and is continuing, (i) the Guarantors
shall pay the Guarantors' Obligations in full, immediately upon demand and (ii)
each Purchaser, at its option, may enforce its rights and remedies under this
Guaranty or the Guarantor Security Agreement in accordance with their respective
terms and enforce any other rights or remedies accorded to the Purchasers at
equity or law, by virtue of statute or otherwise.

         13. SUCCESSORS AND ASSIGNS. This Guaranty shall inure to the benefit of
the Purchasers and their respective successors and assigns of whom the
Guarantors have notice. After the transfer of a Note or any portion thereof, no
Guarantor will have any further obligation under this Guaranty to the transferor
of the Note with respect to the obligations arising under the transferred Note
to the extent transferred. This Guaranty shall be binding on each Guarantor and

                                       12

<Page>

its successors and assigns, and shall continue in full force and effect until
all of the Company's Obligations are indefeasibly paid and performed in full, at
which time the Guaranty shall terminate. Notwithstanding the foregoing, no
Guarantor may assign all or any of its obligations hereunder.

         14. NO WAIVER OF RIGHTS. Neither any delay in exercising, nor any
failure on the part of any Purchaser to exercise any right, power or privilege
under this Guaranty or any of the other Investment Agreements shall operate as a
waiver thereof, and no single or partial exercise of any right, power or
privilege shall preclude any other or further exercise thereof or the exercise
of any other power or right, or be deemed to establish a custom or course of
dealing or performance among the parties hereto. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law. No notice to or demand on any Guarantor in any case shall entitle such
Guarantor or any other Guarantor to any other or further notice or demand in the
same, similar or any other circumstance.

         15. MODIFICATION. The terms of this Guaranty may be waived, discharged
or terminated only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of any of the terms of this
Guaranty shall be effective without the prior written consent of the Required
Note Holders.

         16. COSTS AND EXPENSES. Each Guarantor agrees to pay on demand all
costs and expenses incurred by or on behalf of either Purchaser (including,
without limitation, reasonable attorneys' fees and expenses) in enforcing the
Guarantors' Obligations, provided that if Purchasers receive any amount in
excess of the costs and expenses described in this Section 16 as a result of
demanding payment therefor from more than one Guarantor, the Purchasers will
return such excess pro rata to any Guarantors that made such payments.

         17. GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
contracts made and to be performed in the State of Illinois. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of Illinois and the State Courts in the County of Cook in
the State of Illinois in any suit or proceeding based on or arising under this
Guaranty or the transactions contemplated hereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
Each Guarantor irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding. Each Guarantor further agrees that
service of process upon such Guarantor mailed by the first class mail shall be
deemed in every respect effective service of process upon such Guarantor in any
suit or proceeding arising hereunder. Nothing herein shall affect either
Purchaser's right to serve process in any other manner permitted by law. The
parties hereto agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner

         18. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE GUARANTORS AND PURCHASERS HEREBY WAIVE
AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY

                                       13

<Page>

JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS GUARANTY OR THE SUBJECT MATTER HEREOF
OR ANY OBLIGATION HEREUNDER OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PURCHASERS OR SUCH GUARANTOR OR ANY OF THEM IN
CONNECTION WITH ANY OF THE ABOVE, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE
GUARANTORS AND THE PURCHASERS ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 17
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH EACH OF THE GUARANTORS AND THE
PURCHASERS HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS GUARANTY
AND THE GUARANTOR SECURITY AGREEMENT. Either Purchaser or any Guarantor may file
an original counterpart or a copy of this Section 17 with any court as written
evidence of the consent of the parties hereto to the waiver of their respective
right to trial by jury.

         19. WAIVER OF RIGHTS AGAINST THE COMPANY. Notwithstanding anything to
the contrary which may be contained herein, each Guarantor hereby
unconditionally and irrevocably agrees that, until the Company's Obligations are
indefeasibly paid and performed in full, such Guarantor (i) will not at any time
assert against the Company (or the Company's estate if the Company becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America) any right or claim, at law or in equity,
to indemnification, reimbursement, contribution, restitution or payment for or
with respect to any and all amounts any Guarantor may pay or be obligated to pay
to Purchaser, including, without limitation, the Guarantor's Obligations under
or with respect to this Guaranty, and (ii) waives and releases all such rights
and claims, at law or in equity, to indemnification, reimbursement,
contribution, restitution or payment which such Guarantor may have now or at any
time against the Company (or the Company's estate if the Company becomes
bankrupt or becomes the subject of any case or proceeding under the bankruptcy
laws of the United States of America). Each Guarantor further unconditionally
and irrevocably agrees that, until the Company's Obligations are indefeasibly
paid and performed in full, such Guarantor shall have no right of subrogation,
and waives any right to enforce any remedy which either Purchaser now has or
hereafter may have against the Company, and waives any defense based upon an
election of remedies by either Purchaser, which destroys or otherwise impairs
any subrogation rights of such Guarantor and/or the right of such Guarantor to
proceed against the Company for reimbursement.

         20. NO JOINDER. Each Guarantor agrees that any action to enforce this
Guaranty may be brought against such Guarantor without any reimbursement or
joinder of the Company or any other person or entity in such action.

         21. SEVERABILITY. In the event that any provision of this Guaranty is
deemed to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court, the validity, legality and
enforceability of the remaining terms and provisions of this Guaranty shall not
in any way be affected or impaired thereby, all of which shall remain in full
force and effect, and the affected term or provision shall be modified to the
minimum extent permitted by law so as to achieve most fully the intention of
this Guaranty.

                                       14
<Page>

                [remainder of this page intentionally left blank]

                                       15
<Page>

         IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of
the date first above written.

ARC SERVICE, INC.

By:      /s/ Steven Purcell
         ----------------------------
Name:    Steven Purcell
Title:   Vice President and Secretary

ARC SOLUTIONS, INC.

By:      /s/ Steven Purcell
         ----------------------------
Name:    Steven Purcell
Title:   Vice President and Secretary

ARC MIDHOLDING, INC.

By:      /s/ Steven Purcell
         ----------------------------
Name:    Steven Purcell
Title:   Vice President and Secretary

WRITERS INC.

By:      /s/ Steven Purcell
         ----------------------------
Name:    Steven Purcell
Title:   Vice President and Secretary<PAGE>

                           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.

     "Bell Atlantic" shall mean Bell Atlantic Corporation and its Affiliates and
their successors and permitted assigns.

<PAGE>
                                      -2-

     "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.

<PAGE>

                                      -3-

     "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, Bell 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

<PAGE>

                                      -4-

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

<PAGE>

                                      -5-

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.

<PAGE>

                                      -6-

     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:

<PAGE>

                                      -7-

     (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]

6.3  [INTENTIONALLY DELETED]

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.

<PAGE>

                                      -8-

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).

<PAGE>

                                      -9-

     (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;

<PAGE>

                                      -10-

     (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;

<PAGE>

                                     -11-

          (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.

<PAGE>

                                     -12-

     (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

<PAGE>

                                     -13-

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.

<PAGE>

                                     -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.

<PAGE>

                                     -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

<PAGE>

                                     -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

<PAGE>

                                     -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.

<PAGE>

                                     -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);

<PAGE>

                                     -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

<PAGE>

                                     -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

<PAGE>

                                     -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

<PAGE>

                                     -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,

<PAGE>

                                     -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

<PAGE>

                                     -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

<PAGE>

                                     -25-

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

<PAGE>

                                     -26-

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.

<PAGE>

                                     -27-

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

<PAGE>

                                     -28-

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
                                    3 Van de Graaff Drive
                                    Burlington, MA  01803
                                    USA

                                    Fax:  +1-781-262-3408

         If to the Covenantor:      Genuity Inc.
                                    Attn:  General Counsel
                                    3 Van de Graaff Drive
                                    Burlington, MA  01803
                                    USA

                                    Fax:  +1-781-262-3408

         If to TELUS:               TELUS Corporation
                                    Attn:  General Counsel
                                    21 - 3777 Kingsway
                                    Burnaby, B. C. V5H 3Z7
                                    Canada

                                    Fax:  (604) 432-9681

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.

<PAGE>

                                     -29-

     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:
     ------------------------------------------------

<PAGE>

                                    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 Andersen Consulting by Genuity and its
     Affiliates pursuant to an agreement (existing as of October 19, 1998)
     with Andersen 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.

<PAGE>

                                    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.

<PAGE>

     (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.

<PAGE>

                                    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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]