Document:

exv4w1

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Asterisks [ * ] denote omissions.

 

EXHIBIT 4.1

Amended and Restated Technology and Service Provisioning Agreement

between Call-Net Enterprises Inc.
and Sprint Communications Company L.P.

 

 

AMENDED AND RESTATED

TECHNOLOGY AND SERVICE PROVISIONING AGREEMENT

By and Between Call-Net
Enterprises Inc.

And

Sprint Communications Company
L.P.

Dated April 1, 2002

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1. DEFINITIONS
	 	 	1	 
	2. LICENSING OF SERVICES
	 	 	1	 
	 	2.1 OBLIGATION TO LICENSE
	 	 	1	 
	 	 	2.1.1 General Rights to Licenses
	 	 	1	 
	 	 	2.1.2 Conditions on Obligation to License
	 	 	2	 
	 	2.2 LICENSED SERVICES FRAMEWORK PROCESS
	 	 	2	 
	 	 	2.2.1 Request for Information
	 	 	3	 
	 	 	2.2.2 Approval of Licensed Services Framework
	 	 	3	 
	 	 	2.2.3 Sprint Failure to Respond
	 	 	4	 
	 	 	2.2.4 License Schedule
	 	 	5	 
	 	 	2.2.5 Effect of License Schedule
	 	 	5	 
	 	2.3 PREVIOUSLY LICENSED SERVICES
	 	 	5	 
	 	2.4 SPRINT TRADEMARKS
	 	 	6	 
	 	2.5 POSSIBLE FUTURE SERVICES
	 	 	7	 
	 	 	2.5.1 General
	 	 	7	 
	 	 	2.5.2 Wireless Services
	 	 	8	 
	 	 	2.5.3 Procedure
	 	 	9	 
	 	2.6 SERVICES REQUESTED BY SPRINT
	 	 	9	 
	 	2.7 EXCLUSIONS
	 	 	10	 
	 	2.8 CROSS BORDER SALES
	 	 	10	 
	 	2.9 E/SOLUTIONS AGREEMENT
	 	 	11	 
	3. DISTRIBUTION OF PRODUCTS
	 	 	11	 
	 	3.1 PRODUCTS WITH THE SPRINT BRAND
	 	 	11	 
	 	3.2 PRODUCTS WITHOUT A SPRINT PRIMARY MARK
	 	 	11	 
	 	3.3 CREATION OF A PRODUCT
	 	 	11	 
	4. TRADEMARK LICENSE
	 	 	12	 
	 	4.1 GRANT OF LICENSE FOR LICENSED SERVICES TRADEMARKS
	 	 	12	 
	 	4.2 GRANT OF LICENSE FOR POSSIBLE FUTURE SERVICES TRADEMARKS
	 	 	12	 
	 	4.3 GRANT OF LICENSE FOR PRODUCTS TRADEMARKS
	 	 	12	 
	 	4.4 SPRINT USE OF AUTHORIZED MARKS IN TERRITORY
	 	 	12	 
	 	4.5 CALL-NET USE OF AUTHORIZED MARKS OUT OF TERRITORY
	 	 	13	 
	 	4.6 TRADEMARK STANDARDS
	 	 	14	 
	 	4.7 USE OF BRAND
	 	 	15	 
	 	4.8 SPRINT’S RIGHT TO MARKET POSSIBLE FUTURE SERVICES IN THE TERRITORY
	 	 	15	 
	 	4.9 RESERVATION OF RIGHTS
	 	 	15	 
	 	4.10 USE OF THE AUTHORIZED MARKS
	 	 	15	 
	 	4.11 USE OF SIMILAR AUTHORIZED MARKS
	 	 	16	 
	 	4.12 PROPRIETARY RIGHTS LEGENDS
	 	 	17	 
	 	4.13 NO SUBLICENSING
	 	 	17	 
	 	4.14 CALL-NET’S CORPORATE NAME
	 	 	17	 
	 	4.15 INSPECTION OF CALL-NET’S FACILITIES
	 	 	18	 
	 	4.16 APPROVAL OF MATERIALS
	 	 	18	 

 

 

	 	 	 	 	 	 	 
	 	4.17 REGISTRATION OF AUTHORIZED MARKS
	 	 	18	 
	 	4.18 RIGHTS TO THE AUTHORIZED MARKS
	 	 	19	 
	 	4.19 INTERNATIONAL MATTERS
	 	 	19	 
	 	4.20 INFRINGEMENT
	 	 	20	 
	 	4.21 FURTHER PROTECTION
	 	 	21	 
	 	4.22 ABANDONMENT OF SPRINT TRADEMARK
	 	 	21	 
	5. TECHNOLOGY
	 	 	22	 
	 	5.1 BUSINESS KNOW-HOW
	 	 	22	 
	 	5.2 LIMITATIONS
	 	 	22	 
	 	 	5.2.1 Sale of Intellectual Property
	 	 	22	 
	 	 	5.2.2 Adverse Effect
	 	 	22	 
	 	 	5.2.3 No Right to Transfer
	 	 	22	 
	 	 	5.2.4 Inadequate Preparation
	 	 	22	 
	 	5.3 INTELLECTUAL PROPERTY LICENSES AND RIGHTS TO USE
	 	 	23	 
	 	5.4 PERMITTED USE
	 	 	23	 
	 	5.5 SHARING OF CALL-NET BUSINESS KNOW-HOW
	 	 	23	 
	 	5.6 DELIVERY OF INTELLECTUAL PROPERTY
	 	 	23	 
	 	5.7 LIMITED DISCLOSURE
	 	 	24	 
	 	5.8 PROCESS
	 	 	24	 
	 	 	5.8.1 Negotiation
	 	 	24	 
	 	 	5.8.2 Other Methods
	 	 	25	 
	 	 	5.8.3 Grant of License
	 	 	25	 
	 	5.9 SPRINT’S INTELLECTUAL PROPERTY OWNERSHIP RIGHTS
	 	 	25	 
	 	5.10 CALL-NET LICENSING TO THIRD PARTIES
	 	 	25	 
	 	5.11 SPRINT USE AND LICENSING PROGRAM
	 	 	26	 
	 	5.12 COPYRIGHT NOTICE
	 	 	26	 
	 	5.13 NO RIGHT TO SOURCE CODE
	 	 	26	 
	 	5.14 PROGRAM DEFECTS
	 	 	26	 
	 	5.15 BAD DATA
	 	 	27	 
	 	5.16 SOFTWARE MEDIUM
	 	 	27	 
	 	5.17 LIMITED RIGHTS
	 	 	27	 
	 	5.18 THIRD PARTY INTELLECTUAL PROPERTY
	 	 	28	 
	 	5.19 NON-ASSERTS
	 	 	28	 
	 	 	5.19.1 Sprint Non-Assert
	 	 	28	 
	 	 	5.19.2 Call-Net End Users
	 	 	28	 
	 	 	5.19.3 Call-Net Non-assert
	 	 	28	 
	6. FUNCTIONAL SERVICES
	 	 	28	 
	 	6.1 GENERAL
	 	 	28	 
	 	6.2 LISTED FUNCTIONAL SERVICES
	 	 	29	 
	 	6.3 STATEMENT OF WORK
	 	 	29	 
	 	6.4 AMENDMENT
	 	 	29	 
	 	6.5 TERMS OF SERVICE
	 	 	29	 
	 	 	6.5.1 Performance Specifications
	 	 	30	 
	 	 	6.5.2 Costs
	 	 	30	 
	 	 	6.5.3 No Development Costs
	 	 	30	 
	 	 	6.5.4 Implementation
	 	 	30	 
	 	6.6 FRAUD CONTROL FUNCTIONALITY
	 	 	30	 

ii

 

	 	 	 	 	 	 	 
	 	6.7 PERFORMANCE STANDARD
	 	 	30	 
	 	 	6.7.1 General
	 	 	30	 
	 	 	6.7.2 Personnel
	 	 	31	 
	 	 	6.7.3 Prioritization
	 	 	31	 
	7. CONSULTING SERVICES
	 	 	31	 
	 	7.1 GENERAL
	 	 	31	 
	 	7.2 TERMS
	 	 	31	 
	 	7.3 PERSONNEL
	 	 	31	 
	 	7.4 CONSULTING SERVICES
	 	 	32	 
	 	7.5 CALL-NET CONSULTING SERVICES
	 	 	32	 
	8. OTHER AGREEMENTS
	 	 	32	 
	 	8.1 SEAMLESS SERVICES
	 	 	32	 
	 	8.2 MAXIMIZE MARKET SHARE
	 	 	33	 
	 	8.3 NORTEL DMS-250 SOFTWARE LOADS
	 	 	34	 
	 	8.4 WARRANTY
	 	 	34	 
	 	8.5 PERMITTED CALL-NET SERVICES
	 	 	35	 
	 	 	8.5.1 Call-Net or Sprint Products
	 	 	35	 
	 	 	8.5.2 Sprint Technology
	 	 	35	 
	 	 	8.5.3 Third Parties
	 	 	35	 
	 	8.6 PREFERRED PROVIDER COMMITMENT
	 	 	36	 
	 	 	8.6.1 Commitment
	 	 	36	 
	 	 	8.6.2 Exceptions
	 	 	36	 
	 	 	8.6.3 Process
	 	 	37	 
	 	 	8.6.4 Review
	 	 	37	 
	 	8.7 PERFORMANCE STANDARDS
	 	 	37	 
	 	8.8 PURCHASING ARRANGEMENTS
	 	 	38	 
	 	8.9 COMPLIANCE WITH LAWS
	 	 	39	 
	 	 	8.9.1 General
	 	 	39	 
	 	 	8.9.2 United States FCPA
	 	 	40	 
	 	 	8.9.3 Canadian CFPOA
	 	 	40	 
	 	 	8.9.4 Customer Information
	 	 	41	 
	 	8.10 ANTI-FLOW UP
	 	 	41	 
	 	8.11 STOCK
	 	 	42	 
	9. CHARGES, PAYMENT
	 	 	42	 
	 	9.1 ANNUAL FEE
	 	 	42	 
	 	9.2 TAXES
	 	 	43	 
	 	9.3 INVOICE AND PAYMENT METHOD
	 	 	43	 
	 	9.4 PAYMENT DISPUTES
	 	 	43	 
	 	 	9.4.1 General
	 	 	43	 
	 	 	9.4.2 Interest
	 	 	44	 
	 	9.5 RESPONSIBILITY FOR AND PAYMENT OF COSTS
	 	 	44	 
	10. TERM, TERMINATION
	 	 	44	 
	 	10.1 TERM
	 	 	44	 
	 	10.2 TRANSITION PERIOD
	 	 	44	 
	 	10.3 PROCEDURE
	 	 	44	 
	 	10.4 CHANGE OF CONTROL
	 	 	45	 
	 	10.5 SERVICES AND LICENSES
	 	 	46	 

iii

 

	 	 	 	 	 	 	 
	11. NONDISCLOSURE
	 	 	46	 
	 	11.1 CONFIDENTIALITY
	 	 	46	 
	 	11.2 TREATMENT OF CONFIDENTIAL INFORMATION
	 	 	47	 
	 	11.3 MANDATORY DISCLOSURE
	 	 	47	 
	 	11.4 TERMINATION OF AGREEMENT
	 	 	47	 
	 	11.5 NO RIGHTS IN THE INFORMATION
	 	 	48	 
	 	11.6 DEGREE OF CARE
	 	 	48	 
	 	11.7 SURVIVE TERMINATION
	 	 	48	 
	12. INDEMNIFICATION
	 	 	48	 
	 	12.1 INDEMNIFICATION OF SPRINT FROM THIRD PARTY CLAIMS
	 	 	48	 
	 	12.2 TAX INDEMNITY OF SPRINT
	 	 	48	 
	 	12.3 INDEMNIFICATION OF CALL-NET FOR THIRD PARTY CLAIMS
	 	 	49	 
	 	12.4 NOTICE OF CLAIM
	 	 	49	 
	 	12.5 PROCEDURE
	 	 	49	 
	 	12.6 INFRINGEMENT
	 	 	50	 
	 	 	12.6.1 Sprint Indemnity
	 	 	50	 
	 	 	12.6.2 Limitations
	 	 	50	 
	 	 	12.6.3 Call-Net Indemnity
	 	 	51	 
	 	12.7 NORTEL
	 	 	52	 
	 	12.8 SEAMLESSNESS
	 	 	52	 
	13. LIMITATION ON LIABILITY
	 	 	52	 
	 	13.1 NO CONSEQUENTIAL DAMAGES
	 	 	52	 
	 	13.2 NO LIABILITY
	 	 	53	 
	 	13.3 DIRECT DAMAGES
	 	 	53	 
	14. BREACH AND REMEDIES
	 	 	53	 
	 	14.1 DEFAULT
	 	 	53	 
	 	14.2 SPRINT DEFAULT
	 	 	54	 
	 	14.3 CALL-NET DEFAULT
	 	 	54	 
	 	14.4 MAJOR DEFAULT
	 	 	55	 
	 	14.5 EFFECT OF A TERMINATION
	 	 	55	 
	 	14.6 DISPUTE RESOLUTION
	 	 	56	 
	15. FORCE MAJEURE
	 	 	56	 
	16. DISPUTE RESOLUTION
	 	 	57	 
	 	16.1 OPTION TO NEGOTIATE DISPUTES
	 	 	57	 
	 	16.2 NOTICE OF DISPUTE
	 	 	57	 
	 	16.3 INDEPENDENT ARBITRATOR
	 	 	57	 
	 	16.4 CONTINUING PERFORMANCE
	 	 	58	 
	 	16.5 WAIVER OF JURY TRIAL
	 	 	58	 
	 	16.6 ATTORNEYS FEES
	 	 	58	 
	17. MUTUAL RELEASES
	 	 	58	 
	 	17.1 RELEASE BY SPRINT
	 	 	58	 
	 	17.2 RELEASE BY CALL-NET
	 	 	59	 
	 	17.3 CLAIMS
	 	 	60	 
	 	17.4 INDEMNITY REGARDING ASSIGNMENT OF RELEASED CLAIMS
	 	 	60	 
	 	17.5 EFFECT
	 	 	60	 
	18. REPRESENTATIONS AND WARRANTIES
	 	 	60	 
	 	18.1 DUE INCORPORATION
	 	 	61	 

iv

 

	 	 	 	 	 	 	 
	 	18.2 POWER; AUTHORITY; EXECUTION; DELIVERY; ENFORCEABILITY
	 	 	61	 
	 	18.3 CONSENTS
	 	 	61	 
	 	18.4 NO CONFLICTS
	 	 	61	 
	 	18.5 REPRESENTATIONS AND WARRANTIES OF CALL-NET
	 	 	61	 
	19. ASSIGNMENT
	 	 	62	 
	20. NOTICES AND REQUESTS
	 	 	62	 
	 	20.1 NOTICE
	 	 	62	 
	 	20.2 CHANGE OF ADDRESS
	 	 	63	 
	 	20.3 REQUESTS
	 	 	63	 
	21. TERMINATION OF PRIOR AGREEMENTS
	 	 	63	 
	22. GENERAL PROVISIONS
	 	 	64	 
	 	22.1 INDEPENDENT CONTRACTOR
	 	 	64	 
	 	22.2 SUCCESSORS AND ASSIGNS
	 	 	64	 
	 	22.3 AMENDMENTS
	 	 	64	 
	 	22.4 WAIVER
	 	 	64	 
	 	22.5 NO LICENSE
	 	 	64	 
	 	22.6 ANNOUNCEMENTS
	 	 	64	 
	 	22.7 SEVERABILITY
	 	 	64	 
	 	22.8 CONSTRUCTION
	 	 	65	 
	 	22.9 FURTHER ASSURANCES
	 	 	65	 
	 	22.10 GOVERNING LAW
	 	 	65	 
	 	22.11 HEADINGS
	 	 	65	 
	 	22.12 EXHIBITS
	 	 	65	 
	 	22.13 INCONSISTENCY AMONG VARIOUS AGREEMENTS
	 	 	66	 
	 	22.14 COUNTERPARTS
	 	 	66	 

	 	 	 
	DEFINITIONS EXHIBIT
	EXHIBIT A:	 	
SAMPLE OF LICENSE SCHEDULE
	EXHIBIT B:	 	
PREVIOUSLY LICENSED SERVICES
	EXHIBIT C:	 	
FUNCTIONAL SERVICES
	EXHIBIT D:	 	
LIST OF AUTHORIZED MARKS
	EXHIBIT E:	 	
CROSS-BORDER SALES MEMORANDUM OF UNDERSTANDING
	EXHIBIT F:	 	
LICENSED SOFTWARE

v

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

AMENDED AND RESTATED

TECHNOLOGY AND SERVICE PROVISIONING AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT is made on and effective as of this
1st day of April, 2002 between CALL-NET ENTERPRISES INC., a company amalgamated
under the laws of Canada, and SPRINT COMMUNICATIONS COMPANY L.P., a limited
partnership formed under the laws of the State of Delaware, U.S.A. (“Sprint
Communications”). Call-Net and Sprint Communications are sometimes referred to
in this agreement individually as a “party” and collectively as the “parties”.

RECITALS

A.          Sprint Communications and Call-Net, among other related agreements, entered
into a Technology and Service Provisioning agreement, dated August 4, 1993, as
amended by a Letter agreement, dated August 4, 1993. That agreement requires
Sprint to make available to Call-Net the Sprint brand and related trademarks
and all functionality based on the technology and intellectual property used by
Sprint to provide long distance inter-exchange services in the United States.

B.          The parties desire to amend and restate the original agreement to extend the
scope of the original agreement.

C.          Call-Net and Sprint wish to offer seamless services: (i) within and between
Canada and the United States; and (ii) between Canada and other countries.

NOW, THEREFORE, in consideration of the mutual covenants contained in this
agreement, the sufficiency of which is acknowledged, Call-Net and Sprint amend
and restate the original agreement and covenant and agree as follows:

1. DEFINITIONS

The “Definitions” are in the “Definitions Exhibit”.

2. LICENSING OF SERVICES

2.1 Obligation to License

2.1.1 General Rights to Licenses

Sprint grants to Call-Net, and on the request of Call-Net, will grant to an
Affiliate of Call-Net, the right, subject to the terms of this agreement, to:

 

 

	 	(a)	 	obtain licenses to provide and market the Licensable Services and Possible
Future Services in the Territory;
	 
	 	(b)	 	provide and market the Licensed Services solely in the
Territory; and
	 
	 	(c)	 	obtain and use the Intellectual Property and Sprint
Trademarks related to Call-Net’s provision and marketing of each
Licensed Service in the Territory.

2.1.2 Conditions on Obligation to License

Sprint is required to grant to Call-Net, and on the request of Call-Net to an
Affiliate of Call-Net, a right to use any Licensable Service (other than a
Previously Licensed Service) or Possible Future Service if:

	 	(a)	 	Sprint or its Affiliates are providing the Licensable Service
or Possible Future Service to Sprint’s customers in the United
States;
	 
	 	(b)	 	Sprint or its Affiliates are planning to launch the
Licensable Service or Possible Future Service in the United States
and have selected the equipment, software and systems to implement
the product or service;
	 
	 	(c)	 	the Licensable Service or Possible Future Service is being
provided under the Sprint brand in the United States at the time
that Call-Net requests the service; or
	 
	 	(d)	 	Call-Net’s request in respect of the Licensable Service or
Possible Future Service is only with respect to Sprint Primary Marks
and not with respect to any Intellectual Property.

These conditions on Sprint’s obligation to permit use of Licensable Services
and Possible Future Services are in addition to, and not in lieu of, any other
terms and conditions of this agreement.

2.2 Licensed Services Framework Process

The parties desire through this section to provide an overview of their
intentions regarding this agreement.

The parties desire to establish a process that will enable Call-Net to learn of
the technology and know-how supporting certain Sprint products and services
that the parties define as “Licensable Services” and in certain circumstances,
“Possible Future Services”. In addition, the parties want to enable Call-Net
to license the technology, know-how or trademarks that apply to those products
and services, at which point the products and services for which Call-Net has
licensed a component are referred to as the “Licensed Services”. The process
the parties have created for the licensing is the “Licensed Services Framework”
process.

The output of the process is a document, the “Licensed Services Framework”,
that details how components of a product or service are to be used by Call-Net,
including appropriate brands, quality and performance standards, and any terms
of use in addition to those terms already

2

 

contained in this agreement. The parties intend that Sprint be obligated to
provide to Call-Net information regarding products and services, the
“Know-How”.

Generally, Call-Net will combine the licensed components with its own
components and operations to provide the product or service. If Call-Net wants
Sprint to provide or perform all or part of the product or service, that
provision or performance would be a “Functional Service”, a “Consulting
Service” or performed under the terms of a separate agreement, depending on the
nature of the product or service.

2.2.1 Request for Information

Call-Net may from time to time request that Sprint provide it with the Business
Know-How and other information reasonably required to complete a Licensed
Services Framework (including summaries of Documentation, if available),
regarding a product or service that Call-Net is considering for inclusion in a
Licensed Services Framework. Sprint will provide the requested Business
Know-How and other information, as applicable (including summaries of
Documentation, if available), in a reasonable amount of time. Sprint will use
commercially reasonable efforts to provide the information within 30 days.

Sprint will use commercially reasonable efforts to make Call-Net aware of the
Intellectual Property Sprint is developing or acquiring for products and
services not yet launched. Sprint will use commercially reasonable efforts to
make Call-Net aware sufficiently far in advance of the launch date in the
United States of those products or services to permit Call-Net to
simultaneously launch the products and services in the Territory with Sprint’s
launch in the United States of the product or service. Sprint will use
commercially reasonable efforts to provide the Intellectual Property to
Call-Net at the time that (or as soon as reasonably possible after that time)
Sprint makes its own technology decision regarding a product or service, if
Call-Net has submitted a Licensed Services Framework in respect of that product
or service.

Call-Net may identify particular Licensable Services that it wishes to become
Licensed Services. With respect to those Licensable Services, Call-Net will
deliver to Sprint a proposed Licensed Services Framework. Sprint will use
commercially reasonable efforts to review the proposed Licensed Services
Framework within 30 days of receipt.

2.2.2 Approval of Licensed Services Framework

Sprint will not unreasonably withhold or delay its approval of any proposed
Licensed Services Framework. Sprint will not object or withhold approval based
on any subjective business judgment regarding the wisdom or soundness of any
business or strategic element of the proposed Licensed Services Framework.
Sprint may only withhold approval of a Licensed Services Framework if it
reasonably believes that the use of the Sprint Trademarks, Technology (to the
extent part of the Licensed Services Framework), Technical Know-How (to the
extent part of the Licensed Services Framework) or equipment, software and
systems to be used by Call-Net in the deployment of the services the subject of
the proposed Licensed Services Framework:

	 	(a)	 	will adversely impact the value of the Sprint Primary Marks;

3

 

	 	(b)	 	will not meet the quality and performance standards described
in this agreement;
	 
	 	(c)	 	with respect to the Authorized Marks, will vary from the
Brand Identity Standards; or
	 
	 	(d)	 	subject to the applicable exceptions provided for
“Functionally equivalent and seamless” Licensed Services provided in
Section 8.1(i), (ii) and (iv), with respect to Technology and
Technical Know-How (to the extent part of the Licensed Services
Framework), will materially vary from the guidelines set forth in
Sprint’s Documentation relating to the Technology and Technical
Know-How, except as otherwise permitted under this agreement.

Sprint may also withhold approval of any proposed Licensed Services Framework
if Sprint reasonably determines that implementation of the services that are
the subject of the proposed Licensed Services Framework would have a material
adverse effect on Sprint or a material service or material product offered for
sale by Sprint.

2.2.3 Sprint Failure to Respond

Call-Net may give a notice of failure to respond to Sprint Management and to
Sprint, if Sprint fails to respond within 30 days of Call-Net’s submission to
Sprint of a Licensed Services Framework.

The notice will be in writing and include:

	 	(a)	 	the date the proposed Licensed Services Framework was
delivered to Sprint;
	 
	 	(b)	 	the date on which the Licensed Services Framework is deemed
approved if Sprint Management does not respond, which date must be
at least 14 days after the date of the notice;
	 
	 	(c)	 	a copy of the proposed Licensed Services Framework; and
	 
	 	(d)	 	contact information for Call-Net.

If Sprint management does not respond to the proposed Licensed Services
Framework within 14 days of receipt of the notice, then the Licensed Services
Framework is deemed approved on the terms contained in the Licensed Services
Framework, but only to the extent that:

	 	(i)	 	the terms are consistent with this agreement;
	 
	 	(ii)	 	the terms do not impose any obligation on Sprint
to pay money to Call-Net or any third party; and
	 
	 	(iii)	 	the terms do not impose any obligation on Sprint
to purchase items from Call-Net or any third party, subject to
Sprint’s obligations in Section 8.8.

4

 

2.2.4 License Schedule

When the parties have agreed on the terms of a Licensed Services Framework with
respect to a service or one is deemed approved, the parties will execute a
License Schedule in the form of the attached Exhibit A. The License Schedule
will contain the agreed to Licensed Services Framework and identify particular
services, Sprint Trademarks, Call-Net Product Marks, Technology and Know-How,
all as applicable, to be used in connection with the Licensed Services
Framework, and a description of the warranties relating to the Intellectual
Property, if any.

2.2.5 Effect of License Schedule

On the execution of each License Schedule:

	 	(a)	 	the service becomes a Licensed Service under this agreement,
	 
	 	(b)	 	the terms and conditions of the trademark license in Section
4 apply to the Sprint Trademarks identified in the License Schedule
and they become Authorized Marks, and the Call-Net Product Marks (if
any) become approved; and
	 
	 	(c)	 	the Intellectual Property licenses in Section 5 apply to all
Intellectual Property delivered or disclosed to Call-Net in
connection with the Licensed Services.

If the parties are unable to agree on the terms of the Licensed Services
Framework, then either party may submit the matter to the dispute resolution
process under Section 16. The parties will use commercially reasonable efforts
to cause the dispute to be resolved within 30 days of the submission of the
dispute to dispute resolution.

2.3 Previously Licensed Services

As of the date of this agreement, the Previously Licensed Services are deemed
by the parties to be Licensed Services to be provided to customers at the same
level of quality as existed for them immediately before the execution of this
agreement. The Sprint Trademarks and Intellectual Property delivered or
disclosed by Sprint to Call-Net and its Affiliates in connection with those
Previously Licensed Services are deemed licensed to Call-Net and its Affiliates
for the term, or transferred for the term, and the Call-Net Product Marks are
deemed authorized for the term, subject to the terms and conditions contained
in this agreement.

The parties have listed on Exhibit B all of the Previously Licensed Services
and Call-Net has provided information to Sprint indicating the quality levels
at which Call-Net presently provides the services. Call-Net is not aware of
any current disputes with Sprint regarding the quality of any Previously
Licensed Service included on Exhibit B. If the parties after the date of this
agreement determine that a service should have been listed as a Previously
Licensed Service on Exhibit B, the parties will amend Exhibit B to include that
service. If the parties do not reasonably agree on inclusion of that service
in Exhibit B, Call-Net will prepare a Licensed Services Framework for the
service.

5

 

Before the date of this agreement, Call-Net has provided to Sprint a list of
all Sprint Trademarks and Call-Net Product Marks used by Call-Net in connection
with any Previously Licensed Services, along with a reasonably detailed
description of the use for each trademark. Those trademarks are listed on
Exhibit D.

2.4 Sprint Trademarks

Call-Net, and on the request of Call-Net, an Affiliate of Call-Net, has the
right to use in accordance with the terms of this agreement the Sprint Primary
Marks in the Territory for any product or service that is the subject of a
Licensed Services Framework or is in respect of a Previously Licensed Service.

If the Call-Net product or service that is the subject of a proposed Licensed
Services Framework is substantially the same (after taking into account the
exceptions in (i) and (ii) of Section 8.1) as a Sprint product or service
offered in the United States, from the perspective of the customer, Call-Net’s
proposed Licensed Services Framework will state that the trademarks that
Call-Net will use in the Territory for the product of service will be identical
to the Sprint Trademarks that Sprint uses for the product or service in the
United States, if the Sprint Trademarks are available for use in the Territory
and are not inconsistent with marketing the product or service in Canada or
with Canadian regulatory restrictions. For example, a product name of “The
MostTM for the Big 10 States” would not be applicable in Canada. Call-Net may
continue to use the Sprint Trademarks, including any Call-Net Product Marks, it
has been using on a Previously Licensed Service, regardless of whether the
Previously Licensed Service involves a product or service substantially the
same as the Sprint product or service offered in the United States from the
perspective of the customer.

If the Call-Net product or service is not substantially the same as any Sprint
product or service offered in the United States from the perspective of the
customer, Call-Net’s proposed Licensed Services Framework will state that the
Call-Net Product Marks that Call-Net uses for the product or service in the
Territory will not be substantially similar to any Sprint Trademarks that
Sprint is using in the United States as the trademarks in the Territory for the
product or service, except for all Sprint Trademarks already used with
Previously Licensed Services and the Sprint Primary Marks.

If Call-Net requests, Sprint will cooperate with Call-Net in Call-Net’s
registering and protecting in the Territory a Call-Net Product Mark. Sprint
may establish standards in the Brand Identity Standards for the use of a
trademark for any product or service that is not substantially the same as any
Sprint product or service offered in the United States if that trademark is
used in conjunction with the Sprint Primary Marks. The Brand Identity
Standards for such a trademark will not be inconsistent with the use of the
trademark as described in the Licensed Services Framework related to that
trademark. No Call-Net Product Mark will use any unique part of any Sprint
Trademarks, nor will any Call-Net Product Mark be confusingly similar to any
Sprint Trademark.

6

 

2.5 Possible Future Services

2.5.1 General

Call-Net may request that Sprint permit it to market and provide a
Sprint-branded telecommunications product or service that is not a Licensable
Service (e.g., Sprint-branded products or services such as wireless,
Information Services, satellite services, and similar products or services)
(“Possible Future Services”) by delivering to Sprint a proposed Licensed
Services Framework in which the Possible Future Service will be treated as if
it is a Licensable Service. Sprint will reasonably cooperate in providing
Call-Net with the Business Know-How and other information reasonably required
by Call-Net (including summary Documentation, if available) in preparing the
Licensed Services Framework and will provide to Call-Net a written list of
objective criteria reasonably established by Sprint that Call-Net must meet in
order to market and provide the Possible Future Service. Sprint will be acting
reasonably if the criteria reflect Sprint’s own reasonable internal plans with
respect to Possible Future Services, including Sprint’s reasonable time frames
for implementing the Possible Future Services. Sprint will not unreasonably
withhold or delay its approval of the proposed Licensed Services Framework.

The proposed Licensed Services Framework will include a business case showing
the economic impact of the proposed Possible Future Service on the business of
Call-Net. The business case will be in sufficient detail and for sufficient
time periods to permit Sprint to reasonably understand the implications of
deployment of the Possible Future Service. Among other reasons, Sprint can
refuse to approve the Licensed Services Framework if Sprint reasonably believes
that the business case does not support the implementation of the Possible
Future Service.

Sprint may withhold approval of the Licensed Services Framework if Call-Net
fails to satisfy the objective criteria provided by Sprint to Call-Net,
including without limitation if:

2.5.1.1 Adverse Impact

Sprint reasonably believes that the use of the Sprint Primary Marks, Technology
(to the extent part of the Licensed Services Framework), Technical Know-How (to
the extent part of the Licensed Services Framework), or equipment, software or
systems to be used by Call-Net in the deployment of the service:

	 	(a)	 	will adversely impact the value of the Sprint Primary Marks;
	 
	 	(b)	 	subject to the exceptions provided for “Functionally
equivalent and seamless” Licensed Services provided in Section
8.1(i), (ii) and (iv), will not meet the quality and performance
standards described in this agreement;
	 
	 	(c)	 	with respect to the Authorized Marks, will vary from the
Brand Identity Standards; or
	 
	 	(d)	 	subject to the exceptions provided for “Functionally
equivalent and seamless” Licensed Services provided in Section
8.1(i), (ii) and (iv), with respect to Technology and Technical
Know-How, will materially vary from the guidelines

7

 

	 	 	 	set forth in Sprint’s or Sprint’s Affiliates’ Documentation
relating to the Technology and Technical Know-How.

2.5.1.2 Material Adverse Effect

Sprint reasonably determines that implementation of the Licensed Service as
proposed in the proposed Licensed Services Framework would have a material
adverse effect on Sprint.

2.5.1.3 Proper Utilization

Sprint reasonably concludes that the product or service will not be or is not
capable of being properly utilized, as determined by Sprint (e.g., the customer
support levels proposed by Call-Net are significantly less than the customer
support levels Sprint maintains for the product or service, or Call-Net does
not have the underlying infrastructure to deliver the product or service at
least at the level of quality that Sprint delivers the product or service
subject to the exceptions provided for “Functionally equivalent and seamless”
Licensed Services provided in Section 8.1(i), (ii) and (iv)).

2.5.1.4 Association

Sprint concludes that it does not desire to have the Sprint brand associated
with the service or product the subject of the proposed Licensed Services
Framework, if it has reached the same conclusion in respect of the United
States market.

2.5.2 Wireless Services

In addition to the criteria in Section 2.5.1, any approval by Sprint of a
Licensed Services Framework permitting Call-Net to offer mobile telephony
services in the Territory using the Sprint Trademarks or Intellectual Property
is subject to the following additional criteria:

	 	(a)	 	[ * ]
	 
	 	(b)	 	[ * ]
	 
	 	(c)	 	[ * ]

8

 

2.5.3 Procedure

If the Licensed Services Framework with respect to the Possible Future Services
meets the objective criteria provided by Sprint to Call-Net, the parties will
execute a License Schedule in the form of Exhibit A. The License Schedule will
include the Licensed Services Framework.

On the execution of the License Schedule:

	 	(a)	 	the Possible Future Services identified in the License
Schedule is a Licensable Service and a Licensed Service under the
terms and conditions of this agreement (including, without
limitation, all territorial restrictions), except in the case of
Know-How transfers, the Possible Future Services will not be treated
as Licensable Services nor Licensed Services and Call-Net will only
have access to Know-How for Possible Future Services to the extent
set out in the License Schedule;
	 
	 	(b)	 	the terms and conditions of the trademark license in Section
4 apply to the Sprint Trademarks identified in the License Schedule
and they become Authorized Marks, and the Call-Net Product Marks (if
any) become approved; and
	 
	 	(c)	 	the Intellectual Property licenses in Section 5 apply to all
Intellectual Property delivered or disclosed to Call-Net in
connection with the Possible Future Services.

If the parties are unable to agree on the terms of the Licensed Services
Framework, then either party may submit the matter to the dispute resolution
process under Section 16. The parties will use commercially reasonable efforts
to cause the dispute to be resolved within 30 days of the submission of the
dispute to dispute resolution.

2.6 Services Requested by Sprint

If Sprint wants to have a product or service that is either a Licensable
Service or a Possible Future Service offered in the Territory and is at the
time of the request not offered in the Territory, then Sprint will first
request that Call-Net provide to customers in the Territory the product or
service. The request from Sprint will be in writing and describe: (i) the
requested product or service, (ii) the terms on which Sprint requests the
products or services to be offered, and (iii) any other relevant information
that Call-Net may need to evaluate its ability to provision the product or
service.

Call-Net agrees to take all reasonable steps to implement the requested product
or service as promptly as possible in accordance with the provisions in this
section. However, Call-Net is not obligated to take any steps to implement a
requested product or service if Call-Net is already providing a functionally
equivalent and seamless product or service from the perspective of the
customer, subject to Canadian Requirements, at the time of the request; in such
circumstances, Sprint’s rights to offer the product or service in the Territory
as provided below does not apply.

If Call-Net’s provisioning of the product or service in the Territory is not
reasonably expected by Call-Net to produce sufficient revenues to cover all
Incremental Costs (modified as necessary for this context) to Call-Net and a
reasonable operating margin for Call-Net, the parties will

9

 

endeavor to agree on fair and equitable financial arrangements to assure that
Call-Net can provide the product or service on a basis that covers all
Incremental Costs and a reasonable operating margin for Call-Net.

If within 60 days after Sprint’s request the parties cannot reach agreement
with respect to the financial arrangements, Sprint has the right for
[ * ] after the end of the 60 day period to enter into agreements with its Affiliates
or third parties for the implementation and operation of the product or service
in the Territory, on terms no more favorable to the other party than those last
offered to Call-Net. If Sprint decides to provide the product or service
itself or through an Affiliate, Sprint must use commercially reasonable efforts
to utilize Call-Net’s facilities in providing the product or service, except
Sprint does not have to approach Call-Net regarding utilization of Call-Net’s
facilities for the product or service if Call-Net refused to offer the product
or service primarily because it did not have the facilities to provide the
product or service.

With respect to a Sprint request for any wireless Possible Future Services, the
60 day period referred to in the paragraph above becomes a [ * ].

If Sprint enters into an agreement with a Sprint Affiliate or a third party as
set forth in this section, Call-Net will during the term of the agreement:

	 	(a)	 	not have the right to license, or otherwise obtain from
Sprint access to and the right to implement, the Technology for the
purpose of implementing and operating the requested product or
service in the territory;
	 
	 	(b)	 	not, directly or indirectly, establish and operate the
requested product or service in the Territory on substantially the
same terms; and
	 
	 	(c)	 	have no rights with respect to the Authorized Marks related
to the requested product or service.

Call-Net has the first right to offer the product or service in the Territory,
if the agreement with the third party terminates, or comes up for renewal and
Sprint or the third party indicate in writing that they are not renewing the
agreement.

2.7 Exclusions

Sprint is not obligated to license, transfer, share or otherwise provide to
Call-Net those portions of Licensed Services, Know-How or Technology or any
other information or intellectual property that Sprint or any of its Affiliates
is not permitted to license, transfer, share or otherwise provide to Call-Net
because of the terms and conditions of any laws, rules, or regulations, or any
third party agreements, subject to Sprint’s obligations under Section 8.8.

2.8 Cross Border Sales

The parties will co-ordinate sales efforts to multi-national customers in
accordance with the Cross Border Sales Memorandum contained in Exhibit E. The
parties will at least once a year review the terms of Exhibit E and modify
those terms as they mutually agree. As to any

10

 

inconsistency between the Cross Border Sales Memorandum and this agreement, the
terms of this agreement control.

2.9 E | Solutions Agreement

The parties are parties to a Hosting Services Wholesale Distribution Agreement
dated July 11, 2001, which will remain in full force and effect after execution
of this agreement. As to any inconsistency between this agreement and the
Hosting agreement regarding the subject matter of the Hosting agreement, the
Hosting agreement will control, unless the parties execute a Licensed Services
Framework regarding hosting in which case this agreement will control.

3. DISTRIBUTION OF PRODUCTS

3.1 Products with the Sprint Brand

Sprint grants to Call-Net and, on the request of Call-Net, will grant to an
Affiliate of Call-Net, the non-exclusive, non-transferable right to sell,
distribute for sale, and promote the Products solely in the Territory.
Call-Net and North Supply will meet as soon as reasonably possible following a
request by Call-Net or Sprint, in order to discuss the Products that may be
supplied by North Supply for distribution in the Territory. If Call-Net
desires to sell Products in the Territory that are not supplied to Call-Net
from North Supply, Call-Net will obtain Sprint’s approval before any sale,
which approval will not be unreasonably withheld or delayed. Each party will
cooperate with the other and co-ordinate with the other its activities related
to the distribution of the Products in order to minimize any brand confusion in
the Territory. If Call-Net decides to purchase Products from Sprint for sale
in Canada, the parties will use commercially agreeable efforts to agree on a
distribution agreement. Sprint has no obligation to sell any Products to
Call-Net if a distribution agreement has not been made between the parties.

3.2 Products without a Sprint Primary Mark

Call-Net has the right to sell or distribute products that do not have a Sprint
Primary Mark if the sale or distribution of the products is incidental and
related to the provision of Licensed Services that use a Sprint Primary Mark.
Call-Net must give to Sprint at least 30 days’ prior written notice of its
intention to sell or distribute those products, and Sprint has the right to
review the products before the distribution of the products to ensure that the
products are of an acceptable quality (other than for products currently sold
in conjunction with Previously Licensed Services). If in the reasonable
opinion of Sprint the Products are not of an acceptable quality, within the 30
days’ notice period, Sprint may object to the sale of such Products by Call-Net
and Call-Net will not sell the Products.

3.3 Creation of a Product

Call-Net may request that Sprint grant a third party manufacturer or
distributor the right to put a Sprint Primary Mark on an item of tangible
personal property if Call-Net desires that item to become a Product. Sprint
will consider the request, but may refuse to grant the request for any reason.

11

 

4. TRADEMARK LICENSE

4.1 Grant of License for Licensed Services Trademarks

Subject to the terms and conditions set forth in this agreement, Sprint grants
to Call-Net and, on the request of Call-Net, will grant to an Affiliate of
Call-Net, an exclusive, non-transferable license, with no right to sub-license,
to use solely in the Territory during the term of this agreement the Licensed
Services Trademarks identified in the Licensed Services Framework approved
under Section 2.2 or listed on Exhibit D. For purposes of this section 4,
“exclusive” means exclusive to Call-Net and its Affiliates, as a group. The
Licensed Services Trademarks may only be used by Call-Net to sell, distribute
for sale, and promote the products and services the subject of the Licensed
Services Frameworks, or the Previously Licensed Service; except that the Sprint
Primary Marks may be used for general corporate marketing and internal
purposes. When Sprint grants licenses to Call-Net or its Affiliates for
additional Licensed Services Trademarks, then Exhibit D of this agreement is
deemed amended to reflect the addition of the trademarks.

4.2 Grant of License for Possible Future Services Trademarks

If Sprint and Call-Net agree under the terms of Section 2.5 that Call-Net or
its Affiliates may have the license to a Possible Future Service, then, subject
to the terms and conditions of this agreement, Sprint will grant to Call-Net
and, on the request of Call-Net, will grant to an Affiliate of Call-Net, an
exclusive, non-transferable license, with no right to sub-license, to use
solely in the Territory during the term of this agreement the Possible Future
Services Trademarks identified in the Licensed Services Framework approved
under Section 2.5. The Possible Future Services Trademarks may only be used by
Call-Net to sell, distribute for sale, and promote the products and services
the subject of the Licensed Services Framework. When Sprint grants licenses to
Call-Net or its Affiliates, then Exhibit D of this agreement is deemed amended
to reflect the addition of the trademarks.

4.3 Grant of License for Products Trademarks

Subject to the terms and conditions of this agreement, Sprint grants to
Call-Net or, on the request of Call-Net, will grant to an Affiliate of
Call-Net, a non-exclusive, non-transferable license to use solely in the
Territory during the term of this agreement the Products Trademarks. When
Sprint grants licenses to Call-Net or its Affiliates for additional Products
Trademarks then Exhibit D of this agreement is deemed amended to reflect the
addition of the trademarks.

4.4 Sprint Use of Authorized Marks in Territory

Notwithstanding any grant of exclusivity, Sprint, its Affiliates or other third
parties authorized by and acting on behalf of Sprint may use the Sprint
Trademarks in the Territory only if:

	 	(a)	 	the use is incidental to the offering of a Licensable Service
by Sprint or its Affiliates to customers who primarily reside or
primarily conduct business outside of the Territory (e.g., Sprint
Trademarks that appear on a Canadian resident’s screen when the
resident visits a Sprint web site primarily intended for residents

12

 

	 	 	 	outside of the Territory; or the use by individuals residing in the
United States of their phone cards while travelling within the
Territory);
	 
	 	(b)	 	Sprint’s advertising or web content/marketing originating
outside the Territory and directed primarily to the public residing
or conducting business outside of the Territory, reaches the
Territory incidentally;
	 
	 	(c)	 	Sprint may use the Sprint Trademarks on any product or
service that Sprint has the right to sell in the Territory as
provided in this agreement, including, without limitation, use on a
Possible Future Service that Call-Net has chosen not to provide
after a request by Sprint under Section 2.6; or
	 
	 	(d)	 	the Sprint Trademarks are being used by those parties in the
Territory as of the date of this agreement on a Possible Future
Service (e.g., advertising by Bell Canada of its wireless roaming
agreement with Sprint), but such use will be limited to the current
uses of the Possible Future Service.

In addition to Sprint reserving the right to use the Sprint Trademarks or
license their use to third parties in accordance with Sections 2.6 and 4.8,
Sprint may use the Sprint Trademarks in the Territory strictly for the purpose
of marketing products and services, if the marketing:

	 	(i)	 	is to Canadian telecommunications carriers (i.e.,
ILECs, CLECs, cable companies, alternate inter-exchange
carriers and substantially similar companies);
	 
	 	(ii)	 	is in respect of products or services that Sprint
can provide without using any facilities in the Territory
(e.g., termination in or origination from the Unites States of
voice calls); and
	 
	 	(iii)	 	involves a “meet me” or interconnection point
outside of the Territory.

4.5 Call-Net Use of Authorized Marks out of Territory

Call-Net, its Affiliates or other third parties authorized by and acting on
behalf of Call-Net may use the Authorized Marks outside of the Territory only
if:

	 	(a)	 	the use is incidental to the offering of a Licensable Service
by Call-Net or its Affiliates to customers who primarily reside or
primarily conduct business in the Territory and the use is not
related to any Call-Net telecommunications services offered in the
United States (e.g., Authorized Marks that appear on a United States
resident’s screen when the resident visits a Call-Net web site
primarily intended for residents inside the Territory; or the use by
individuals residing in Canada of their phone cards while travelling
within the United States); and
	 
	 	(b)	 	Call-Net’s advertising or web content/marketing originating
inside the Territory and directed primarily to the public residing
or conducting business inside the Territory, reaches outside the
Territory incidentally.

13

 

4.6 Trademark Standards

Sprint will deliver to Call-Net on or immediately after the date of this
agreement the most recent version of the Brand Identity Standards. If there is
an inconsistency between the terms of this agreement and the Brand Identity
Standards, the terms of this agreement control.

The parties acknowledge that the Brand Identity Standards are currently
embodied in a document written for Sprint’s internal departments, and as such,
their application to Call-Net under this agreement should be read and
interpreted with logical modifications, it being understood that the document
may be modified in the future to apply more specifically to Call-Net. For
example, with respect to the current Brand Identity Standards and without
limitation:

	 	(a)	 	most references to “Sprint Legal” or “Sprint Law Department”
should be read as “Call-Net Legal” or “Call-Net Law Department”;
	 
	 	(b)	 	many references to “Sprint” with respect to the introduction
of new products and co-branding arrangements should be read as
“Call-Net”;
	 
	 	(c)	 	limitations on name creation to English names should be read
as English or French in recognition of the Canadian market;
	 
	 	(d)	 	references to US-specific legal analysis (e.g., service
marks, trademark search rules) should be modified as necessary to
reflect the Canadian legal system;
	 
	 	(e)	 	upon request, Sprint will promptly make available forms
referred to by intranet hotlink which are inaccessible to Call-Net
users;
	 
	 	(f)	 	the Section titled “Copyright and Trademark Notices” does not
apply, and reference instead should be made to Section 4.12 of this
agreement. For greater certainty, Call-Net retains all copyright in
its own produced material;
	 
	 	(g)	 	in Canada where a vendor or contractor wishes to mention
Sprint Canada in a list of clients, or where there is a description
of Sprint Canada, Sprint Canada business units, Sprint Canada
products or the relationship between Sprint Canada and another
company, Call-Net legal and business approval is sufficient; and
	 
	 	(h)	 	subject to Section 4.16 of this agreement, marketing
materials do not have to be pre-approved by Sprint Corporate Brand
Management.

Subject to the paragraph above, Call-Net and its Affiliates must comply at all
times with the Brand Identity Standards established by Sprint from time to time
for each Authorized Mark. In addition to the foregoing Call-Net and its
Affiliates must at all times use each Authorized Mark in a manner that will
preserve and protect the goodwill, reputation and name of Sprint with respect
to the Authorized Mark.

If Call-Net’s use of any Authorized Mark varies from the Brand Identity
Standards because of a change to the Brand Identity Standards by Sprint,
Call-Net may exhaust its existing stocks of materials displaying the Authorized
Mark within a commercially reasonable period of time, but

14

 

Call-Net will promptly modify those materials that can be changed (e.g., web
materials) without waiting for its complete inventory of other materials to be
depleted. If, however, Call-Net’s use of any Authorized Mark varies from the
Brand Identity Standards and any variance agreed on by the parties in writing,
for any other reason, Call-Net will immediately cease using all materials
displaying the Authorized Mark.

Call-Net may request in writing that Sprint permit Call-Net to vary from the
Brand Identity Standards for Authorized Marks associated with certain Licensed
Services.

Sprint will consider the requested deviations and will not unreasonably
withhold or delay approval. Sprint may refuse approval in its discretion if
Sprint reasonably concludes that the deviation may impair the goodwill or
reputation associated with the Authorized Mark in question.

At all times any display or advertising of the Sprint Trademarks by Call-Net
must be of a standard substantially equivalent or better than those set by
Sprint and disclosed to Call-Net for the provision of its own products and
services.

4.7 Use of Brand

Call-Net will use the Authorized Marks in accordance with Section 2.4 for all
Licensable Services it provides, except: (i) where the nature of the service
offered is inconsistent with the use of the brand and Sprint Trademarks (e.g.,
extreme discount long distance services, etc.); and (ii) for services provided
on a wholesale basis where the end user is not a customer of Call-Net.

4.8 Sprint’s Right to Market Possible Future Services in the Territory

Subject to the terms and conditions of Section 2.5 and 2.6, Sprint may utilize
the Possible Future Services Trademarks to market, sell and distribute in the
Territory a product or service that is a Possible Future Service. If Call-Net
and Sprint subsequently agree that Call-Net may offer the product or service as
a Licensed Service then the parties will establish in the Licensed Services
Framework for that product or service a reasonable transition from Sprint to
Call-Net of the Sprint customers for the product or service.

4.9 Reservation of Rights

Sprint reserves the right to use the Authorized Marks or license their use to
third parties in connection with any activities within or outside of the
Territory that Sprint or its Affiliates are not precluded from engaging in
under the terms of this agreement.

4.10 Use of the Authorized Marks

Except for co-branding arrangements and Call-Net Product Marks existing as of
the date of this agreement, Call-Net must not use any other trademark, service
mark, phrase, word or symbol, whether owned by Call-Net, its Affiliates or by
third parties, in conjunction with the Authorized Marks, without first
consulting with Sprint and obtaining Sprint’s prior approval in writing with
respect to the use of the trademarks, service mark, Call-Net Product Mark,
phrase, word or symbol, which approval will not be unreasonably withheld or
delayed. Sprint may refuse

15

 

approval in its discretion, if Sprint reasonably concludes that the use of any
other trademark, service mark, Call-Net Product Mark, phrase, word, or symbol
by Call-Net may impair the goodwill or reputation associated with the
Authorized Marks in question. Except as explicitly set forth in this
agreement, Call-Net’s use of each Authorized Mark must at all times comply with
the Brand Identity Standards for that trademark. Call-Net agrees that if
Sprint reasonably concludes that the use of any co-branding arrangements or
Call-Net Product Marks existing as of the date of this agreement may impair the
goodwill or reputation associated with the Authorized Marks in question,
Call-Net will make commercially reasonable efforts to rectify the situation.

Call-Net may request approval to use the other mark in conjunction with the
Authorized Marks by delivering to Sprint a written request (which, in the case
of a Call-Net Product Mark, may be included in the Licensed Services Framework
process described above) for trademark use detailing the intended use and how
the mark is to be used in conjunction with the Sprint mark. Call-Net may give
a notice of failure to respond to Sprint Management and to Sprint, if Sprint
fails to respond within 7 days.

The notice of failure to respond will be in writing and include:

	 	(a)	 	the date the request for trademark use was delivered to
Sprint;
	 
	 	(b)	 	the date on which the trademark use is deemed approved if
Sprint Management does not respond, which date must be at least 14
days after the date of the notice;
	 
	 	(c)	 	a copy of the request for trademark use; and
	 
	 	(d)	 	contact information for Call-Net.

If Sprint Management does not respond to the request for trademark use within
14 days of receipt of the notice, then the request for trademark use is deemed
approved on the terms contained in the request for trademark use but only to
the extent that:

	 	(i)	 	the terms are consistent with this agreement;
	 
	 	(ii)	 	the terms do not impose any obligation on Sprint
to pay money to Call-Net or any third party;
	 
	 	(iii)	 	the terms do not impose any obligation on Sprint
to purchase items from Call-Net or any third party; and
	 
	 	(iv)	 	the proposed use does not infringe on another
trademark or violate any third party’s rights to a trademark.

4.11 Use of Similar Authorized Marks

Call-Net may not use:

16

 

	 	(a)	 	any trademark or phrase colorably imitating or confusingly
similar to any Authorized Mark or any part thereof, whether in a
Roman or any other alphabet or otherwise; or
	 
	 	(b)	 	any word, symbol, character, or set of words, symbols, or
characters, which in any language would be identified as
substantially the equivalent of an Authorized Mark.

4.12 Proprietary Rights Legends

Call-Net must place the following notice on all licensed material that an
Authorized Mark appears: “[Authorized Mark] is a trademark of Sprint
Communications Company L.P. used under license by [Name of Call-Net entity]”.
If a third party is the owner of the relevant Authorized Mark, Sprint must
advise Call-Net and Call-Net must refer to the third party in any notice with
respect to the relevant Authorized Mark and indicate that the relevant
Authorized Mark is used under license from Sprint.

4.13 No Sublicensing

The grant of rights under this agreement by Sprint to Call-Net or Call-Net’s
Affiliates is personal to Call-Net or Call-Net’s Affiliates, as the case may
be, and does not include the right to appoint any sub-licensee. Sprint
acknowledges that Call-Net maintains a selling agent program and from time to
time may enter into co-branding arrangements with customers, portals and other
strategic relationships, as well as outsourcing arrangements such as mailing,
billing and printing, and that, provided the arrangements comply with the Brand
Identity Standards (including the sublicensing standards, if any) and with
Section 4.10 and that Call-Net at all times retains proper oversight over use
of the Authorized Marks, such situations do not constitute sub-licensing for
purposes of this section.

4.14 Call-Net’s Corporate Name

Call-Net must not use any Authorized Mark in its corporate or business name,
nor allow any of its Affiliates to use an Authorized Mark in their respective
corporate or business names, without first consulting with Sprint as to the
manner of the use and obtaining the prior written consent of Sprint, which
consent will not be unreasonably withheld. Sprint consents to the use of the
name “Sprint Canada Inc.” or “Sprint Canada” by a Call-Net Affiliate in the
Territory during the term of this agreement.

Call-Net has the right to register domain names incorporating “Sprint Canada”,
“sprint.ca” and other “.ca” names incorporating the Authorized Marks, during
the term of the Agreement (collectively, the “Domain Names”). Other than as
provided above, if Call-Net wishes to register domain names with the name
“Sprint”, it may do so only with Sprint’s prior written approval, which
approval must not be unreasonably withheld. Call-Net agrees that on the
termination of the Agreement, it must cooperate with Sprint in the transfer of
all Domain Names to Sprint.

17

 

4.15 Inspection of Call-Net’s Facilities

Sprint has the right, at all reasonable times on at least 24 hours prior
written notice, to inspect Call-Net’s facilities and to take the other
reasonable actions in order to ensure that each Authorized Mark is being used
in a manner that complies with the Brand Identity Standards for the Authorized
Mark. Call-Net will provide to Sprint all information that Sprint reasonably
requests regarding Call-Net’s compliance with the Licensed Services Frameworks,
the Brand Identity Standards, or this agreement.

4.16 Approval of Materials

On request, Call-Net will provide to Sprint for approval all material on which
an Authorized Mark appears and Call-Net agrees to amend any packaging, labels,
advertising and other material if the use of an Authorized Mark is not approved
by Sprint; except, that approval may not be withheld if use of the Authorized
Marks is consistent with the Brand Identity Standards. If Sprint provides to
Call-Net examples of how an Authorized Mark should be used on packaging,
labels, advertising and other material, the use of the Authorized Mark by
Call-Net in substantially the same manner (whether in English or in French) is
deemed approved by Sprint, if the use is consistent with the Authorized Mark as
registered.

4.17 Registration of Authorized Marks

Sprint represents and warrants that Exhibit D sets forth the current status of
registrations or applications for registration under the Trademarks Act of
Canada for the Authorized Marks on the Exhibit. For any Authorized Marks,
whether registered in the Territory or not, Sprint will use commercially
reasonable efforts at its own expense and in its own name to register,
prosecute or to maintain the trademark applications and registrations as may be
necessary as determined by Sprint in its discretion, exercised reasonably, to
obtain or maintain protection for each Authorized Mark in the Territory at
least equivalent to any trademark protection sought or obtained by Sprint in
the United States for the Authorized Mark.

On request, Sprint will use commercially reasonable efforts to amend any
applications or registrations to the extent necessary to include an accurate
description of the Licensed Services in association with how the Authorized
Marks are used. If Call-Net is enjoined from the use of the mark “Sprint” in
the provision of the Licensed Services, the parties agree that the event will
constitute a Default under Section 14.4 (unless the right to use the mark had
been previously terminated under the provisions of this agreement).

Subject to the provisions of this section, Sprint makes no representation or
warranty to Call-Net that any Authorized Marks are capable of being registered
or are available for registration in the Territory.

If any Authorized Mark that Call-Net wishes to use from time to time is not
capable of being used in Canada at any time, the parties will consult with each
other as to any other trademark or other mark owned by Sprint to be used in
substitution, which will then be deemed to be an Authorized Mark under this
agreement, or alternatively agree to a reasonably acceptable Call-Net Product
Mark.

18

 

4.18 Rights to the Authorized Marks

Call-Net agrees that the Authorized Marks are proprietary to Sprint and nothing
in this agreement constitutes the grant of a general license for their use;
rather they may only be used in accordance with this agreement. Call-Net
acquires no right, title, or interest in the Authorized Marks or the goodwill
associated with the Authorized Marks due to its use of the Authorized Marks,
other than the right to use the Authorized Marks in accordance with this
agreement. All uses of the Authorized Marks by Call-Net must inure to the
benefit of Sprint or a third party owner that has authorized Sprint to grant
Call-Net rights to the Authorized Marks.

Sprint represents and warrants that it owns the Authorized Marks or has been
authorized to sublicense their use as provided in this agreement. In accepting
this agreement, Call-Net acknowledges Sprint’s ownership of the Authorized
Marks, the goodwill connected with them and the validity of the Authorized
Marks. Call-Net agrees that it will not acquire rights in the Authorized Marks
due to their use by Call-Net. Call-Net will not attack the Authorized Marks in
any manner whatsoever nor assist anyone in attacking the Authorized Marks.

Call-Net agrees that it will not:

	 	(a)	 	make any application to register the Authorized Marks; nor
	 
	 	(b)	 	use any confusingly similar trademark, service mark, trade
name or derivation;

during and after expiration or termination of this agreement. Call-Net will
not adopt, use, file for registration, or register any trademark, service mark,
or tradename that may be an infringement of any Authorized Mark or result in a
likelihood of confusion with an Authorized Mark, but for greater certainty may
register and use its own proprietary Call-Net Product Marks both during this
agreement and following termination, provided the marks comply with the
foregoing.

This Section 4.18 survives the termination of this agreement. On termination
of this agreement, subject to the transition provisions in this agreement, all
rights of Call-Net to use the Authorized Marks will expire; Call-Net must
discontinue use of the Authorized Marks, but for greater certainty may continue
to use its own proprietary Call-Net Product Marks.

4.19 International Matters

Sprint retains the right to license the use of the Authorized Marks in the
Territory in connection with global telecommunications services provided by a
global alliance with which Sprint may become affiliated from time to time if:

	 	(a)	 	[ * ]

19

 

	 	 	 	[ * ]
	 
	 	(b)	 	in any event, the Authorized Marks cannot be licensed to the
global alliance or otherwise in respect of global telecommunications
services that include or involve, Licensed Services under this
agreement as at the date that the global alliance is formed.

For purposes of this section a global alliance is a venture that is:

	 	(i)	 	international in scope in that it will sell
products on and have a material presence in [ * ];
	 
	 	(ii)	 	the alliance primarily sells telecommunications
products;
	 
	 	(iii)	 	if in the form of a joint venture where no third
party holds significant negative control, Sprint has more than
[ * ] of
the Voting Equity Securities, but less than [ * ] of the
Voting Equity Securities; and
	 
	 	(iv)	 	if in the form of a joint venture where a third
party holds significant negative control, Sprint holds more
than [ * ] of the Voting Equity, but less than
[ * ] of the Voting
Equity Securities.

An example of a global alliance under this section is Global One when Sprint
was a member of Global One.

If Sprint grants rights to use the Authorized Marks to a global alliance as
permitted under this section, Sprint and Call-Net will exercise commercially
reasonable efforts to minimize channel conflict and customer confusion.

4.20 Infringement

Call-Net must promptly notify Sprint of any infringement of an Authorized Mark
that comes to Call-Net’s attention. Sprint in its sole discretion may take
such action as may be required to terminate the infringement. If Sprint
decides that action should be taken, Sprint may take the action either in its
own name or, alternatively, Sprint may authorize Call-Net to initiate the
action in Call-Net’s name.

If Sprint does not decide to take any action within 30 days of its notification
of the infringement, Call-Net may notify Sprint in writing of its intention to
prosecute the action at its own expense. Sprint will have 10 days in which to
respond to Call-Net regarding its planned action in response to the
notification, which action is in Sprint’s sole discretion. If the response
does not entail Sprint responding to the infringement, or if Sprint fails to
respond to Call-Net within the 10 day period, Call-Net will be entitled to
undertake the action at Call-Net’s expense. Call-Net must keep Sprint apprised
of all material developments in the case and must make no settlement of the
action that Sprint reasonably concludes would impair the goodwill or reputation
of the Authorized Marks.

20

 

Call-Net agrees to cooperate fully with Sprint to whatever extent necessary to
prosecute any action, with all expenses being borne by Sprint.

If Call-Net has commenced prosecution of an infringement action as permitted
above, Sprint has the right to assume the prosecution of the action on written
notice to Call-Net, except Sprint must promptly reimburse Call-Net for all
costs and expenses (if any) incurred by Call-Net in the prosecution of the
claim.

Regardless of which party prosecutes an Authorized Mark infringement claim, the
damages recovered by the parties will first be used to reimburse the expenses
on a pro rata basis that each party incurred in pursuing the prosecution.
Expenses include time spent by in-house lawyers (as provided in Section 16.6)
in managing and pursuing the prosecution. If there are damages in excess of
expenses then the damages will be allocated between the parties in accordance
with the damage suffered by each. The provisions of this section must not be
construed as limiting the rights of either party to recover damages from, or to
exercise any other right or remedy against, any third parties in respect of any
other claim that either party may have against the third parties.

4.21 Further Protection

At the reasonable request of Call-Net or Sprint, as the case may be, the other
party must execute any papers or documents necessary to protect the rights of
Sprint in the Authorized Marks, or Call-Net in the Call-Net Product Marks, as
the case may be, and execute and deliver the other documents as may be
reasonably requested by the party.

4.22 Abandonment of Sprint Trademark

If Sprint abandons the Sprint brand in the United States, then Call-Net’s sole
and exclusive remedy is:

	 	(a)	 	Call-Net may continue to use the Authorized Marks in the
Territory until the expiration or other termination of this
agreement; and
	 
	 	(b)	 	at the end of the term, Call-Net has the right for the next [ * ] days to purchase the rights to the Authorized Marks in the
Territory at a price and at terms to be agreed on by the parties at
the time (or, if the parties cannot agree on the price and terms of
the purchase, at the price and terms determined by an arbitrator
under the provisions of Section 16).

If in a Change of Control of Sprint, Sprint determines to abandon Sprint
Trademarks that are also Authorized Marks in use by Call-Net, then Sprint will
immediately advise Call-Net, and, for a reasonable royalty to be determined in
the circumstances, permit Call-Net to use those marks in the Territory, for at
a minimum until what otherwise would have been the Termination Date and will
renew, at Call-Net’s expense, the trademark registrations for the Sprint
Primary Marks, as necessary. In recognition of Call-Net’s requirement under
Section 10.4 to otherwise transition from the Authorized Marks, Sprint will
endeavor to make such determination in respect of ongoing use of the Authorized
Marks in the Territory as soon as reasonably possible.

21

 

5. TECHNOLOGY

5.1 Business Know-How

Call-Net may request that Sprint provide to it particular Intellectual
Property. Each party agrees to reasonably cooperate with the other party in
responding to the request.

Call-Net will include sufficient detail in the request to enable Sprint to
adequately respond to the request. Call-Net will make all requests to Sprint’s
Project Management Office. The parties will meet from time to time to
establish further particulars, if any, regarding the process to give effect to
the foregoing. Any process agreed to in writing by the parties will supersede
the process set out in this section.

5.2 Limitations

A party is not obligated to license to the other any of the Intellectual
Property of a party under this agreement if:

5.2.1 Sale of Intellectual Property

the Intellectual Property itself (e.g., software or content), rather than a
product or service using the Intellectual Property, is what is being sold to
third parties.

5.2.2 Adverse Effect

a party reasonably believes that making available that Intellectual Property
would:

	 	(a)	 	compromise the security or integrity of any of its networks
or systems, other than the ordinary compromise experienced in the
interconnection of networks;
	 
	 	(b)	 	unreasonably adversely affect a material product, material
technology, material software, or material development program of a
party (for purposes of this subsection only the materiality
threshold is [ * ] ); or
	 
	 	(c)	 	adversely affect the prosecution or maintenance of any
patents or patent rights.

5.2.3 No Right to Transfer

the Intellectual Property cannot be shared or disclosed because of the terms
and conditions of any laws, rules, or regulations, or any third party
agreements, subject to Sprint’s obligations in Section 8.8.

5.2.4 Inadequate Preparation

if the party reasonably believes that the other party has not made adequate
preparations reasonably necessary to use the requested Intellectual Property.

22

 

5.3 Intellectual Property Licenses and Rights to Use

Subject to the terms and conditions set forth in this agreement, Sprint grants
to Call-Net and, on the request of Call-Net, will grant to an Affiliate of
Call-Net, a non-exclusive, non-transferable license, with no right to
sub-license, to use solely in the Territory during the term of this agreement
the Know-How disclosed to Call-Net by Sprint. Call-Net may use that Know-How
outside the Territory to the extent reasonable or necessary for purposes of
providing Licensed Services outside the Territory as permitted by this
agreement or if the use is as described in Sections 4.5(a) or (b).

Subject to the terms and conditions set forth in this agreement, Sprint grants
to Call-Net and, on the request of Call-Net, will grant to an Affiliate of
Call-Net, a non-exclusive, non-transferable license, with no right to
sub-license, to use solely in the Territory during the term of this agreement
the Sprint Software (the “Licensed Software”) and Technology. Call-Net may use
the Licensed Software and Technology outside the Territory to the extent
reasonable or necessary for purposes of providing Licensed Services outside the
Territory as permitted by this agreement or if the use is as described in
Section 4.5(a). A complete list of the Licensed Software as of the date of
this agreement is set forth on Exhibit F. As Software is licensed to Call-Net,
Exhibit F is deemed amended to incorporate the Licensed Software. The Licensed
Software includes any modifications, upgrades, revisions or new releases of the
Licensed Software as of the date any of it is provided to Call-Net by Sprint.

5.4 Permitted Use

Subject to the terms of this agreement, Call-Net has the right to use the
Licensed Intellectual Property, and use and make a reasonable number of copies
of the Documentation, only in the Territory and solely for the purpose of
enabling Call-Net to provide in the Territory, Licensed Services in accordance
with the terms this agreement, and for reasonable back-up purposes.

5.5 Sharing of Call-Net Business Know-How

Call-Net grants to Sprint the right to use solely outside the Territory all
Call-Net know-how that is equivalent to the Business Know-How disclosed by
Sprint to Call-Net (“Call-Net Business Know-How”), subject to any restrictions
on Call-Net’s ability to do so imposed by the terms and conditions of any laws,
rules, or regulations, or any third party agreements. Sprint may use the
Call-Net Business Know-How within the Territory to the extent reasonable or
necessary for purposes of providing incidental services within the Territory as
permitted by this agreement.

5.6 Delivery of Intellectual Property

Any Intellectual Property delivered to a party under this agreement is
delivered on an “As Is” basis, except to the extent that the Intellectual
Property is delivered to a party as part of Functional Services or Consulting
Services. During the term, Sprint will make personnel reasonably available at
their normal place of work to representatives of Call-Net to discuss Know-How
relating to the Intellectual Property and related Licensed Services, at no
extra charge to Call-Net. For example, Sprint will provide Call-Net, during
the term, with access to Sprint’s advertising materials, operating and sales
practices and procedures, marketing materials, training

23

 

course materials and initial training to enable Call-Net to provide training
for marketing Licensed Services utilizing the Technology or Know-How.

Call-Net will accept installed software on its successful completion in
Call-Net’s reasonable opinion of acceptance criteria set forth in the Licensed
Services Framework for the software. On acceptance, or on initial commercial
use by Call-Net, whichever first occurs, the installed software will be the
Licensed Software. On completion of installation, Sprint will provide, one
time, at no additional cost to Call-Net (other than travelling expenses, as
applicable), such training packages and other training and know-how to Call-Net
personnel sufficient to permit Call-Net to train Call-Net’s operational
personnel to use the Licensed Software and provide the functionality, including
training with respect to the use of any enhancements or modifications included
in the Licensed Software, and a reasonable number of copies of Sprint’s
existing marketing, product support and technical literature.

5.7 Limited Disclosure

Sprint will share with or disclose to Call-Net before the grant of licenses for
Licensed Intellectual Property, Intellectual Property only to the extent that
the sharing is reasonably necessary for Call-Net to develop a proposed Licensed
Services Framework, subject to the terms and conditions of any laws, rules or
regulations, any third party agreements and any prior grant of exclusivity.

5.8 Process

If Call-Net requests modifications of Sprint’s Licensed Software, including
modifications needed to meet Canadian Requirements, Call-Net must request the
modifications in a written proposal submitted to the Project Management Office
of Sprint in accordance with procedures mutually agreed on by the parties from
time to time. The anticipated procedures will include procedures to
sufficiently apprise Call-Net of the nature and use of the Licensed Software to
enable Call-Net to have the proposed modifications made.

5.8.1 Negotiation

The parties will discuss and negotiate each modification proposed by Call-Net.
The agreed to terms and conditions of the proposed modification will include:

	 	(a)	 	any Incremental Costs associated with the provision of the
requested modification of Licensed Software;
	 
	 	(b)	 	any additional cost for obtaining third party rights in it;
	 
	 	(c)	 	any investigations required to ascertain the nature and
extent of required third party rights if the parties agree the
investigations are reasonably required; and
	 
	 	(d)	 	the cost for performing the representations, warranties, and
indemnifications to be provided with the modification of Licensed
Software, if any.

24

 

If a proposal is accepted and agreed on by both parties, then Sprint will
provide the requested modification of Licensed Software on the terms and
conditions set forth in the accepted proposal. Call-Net will accept the
modification on the successful completion of a mutually agreed acceptance test
based on performance of the functionalities intended to be performed as set
forth in the proposal. On acceptance by Call-Net, or on initial commercial use
by Call-Net (whichever first occurs), the modifications will be Licensed
Software under this agreement.

5.8.2 Other Methods

If Sprint does not agree to Call-Net’s proposed modification of Licensed
Software, the parties will cooperate with each other in order to determine
other methods by which Call-Net may obtain the benefits of the requested
modification of Licensed Software.

Sprint will make reasonable access available to the Source Code owned by Sprint
to enable Call-Net to make a modification if:

	 	(a)	 	the modification is necessary to implement Canadian
Requirements;
	 
	 	(b)	 	the modification requires access to the Source Code owned by
Sprint; and
	 
	 	(c)	 	there is not a commercially reasonable alternative to the
modification that does not involve the modification of the Source
Code.

Call-Net owns any modification to the Source Code that it pays for, without any
compromise to the fact that Sprint at all times retains full ownership of the
Source Code itself. Sprint will have the right to use the modification to the
Source Code outside the Territory on the terms provided in this agreement.

5.8.3 Grant of License

Call-Net grants to Sprint an irrevocable, non-exclusive, transferable,
perpetual license, to make, have made, use, sell, offer to sell, copy,
reproduce, publish, distribute, prepare derivative works, perform, display,
sublicense and to exercise all other rights whether now known or later created
relating to any modifications of the Source Code. Sprint’s use, if any, of the
modified Source Code in Canada remains subject to the terms of this agreement.

5.9 Sprint’s Intellectual Property Ownership Rights

Sprint retains all right, title to and ownership of any and all Intellectual
Property provided to Call-Net under this agreement.

5.10 Call-Net Licensing to Third Parties

Subject to any confidentiality restrictions, Call-Net will advise Sprint of the
terms and conditions that Call-Net licenses or sub-licenses to any third party
providing Licensable Services in the United States any proprietary technology
owned by Call-Net or licensed by Call-Net from a party other than Sprint or a
Sprint Affiliate that Call-Net uses to provide Licensed Services in the
Territory. Sprint may from time to time request a license, or as appropriate a
sub-license, on the

25

 

same terms and conditions that Call-Net is providing the proprietary Technology
to the other party in the United States, subject to the terms and conditions of
any laws, rules or regulations, any third party agreements and any prior grant
of exclusivity. Sprint may from time to time ask Call-Net to provide
information on the status of the licenses with third parties and Call-Net will,
subject to any confidentiality restrictions, provide the information within 30
days of receiving the request from Sprint.

5.11 Sprint Use and Licensing Program

The grant of any License to Intellectual Property under this agreement does not
exclude or preclude Sprint or its Affiliates from using the Licensed
Intellectual Property in the Territory in connection with the performance of
Licensed Services in the Territory as permitted by this agreement.

Subject to the restrictions provided in this section, Sprint may license the
Intellectual Property to third parties in the Territory. Sprint will license
the Intellectual Property in the Territory generally consistent with how it
licenses the Intellectual Property in the United States, except that Sprint may
make changes in the licensing program to account for different legal,
regulatory, tax and other differences between Canada and the United States.
Sprint will not license Intellectual Property to material competitors of
Call-Net in the Territory unless Sprint is offering similar licenses to similar
companies in the United States. For this purpose, a “competitor” includes any
entity competing with Call-Net in the Territory with respect to the marketing
or sale of a Licensed Service that is material to Call-Net’s business plans.

5.12 Copyright Notice

Each copy of the Licensed Intellectual Property and Documentation made by
Call-Net must include the copyright or other proprietary notice contained in
the copy delivered to Call-Net.

5.13 No Right to Source Code

Call-Net has no rights to own, obtain, use, or modify the Source Code versions
of any Licensed Software that forms part of the Licensed Intellectual Property,
except as provided in Section 5.8.

5.14 Program Defects

Sprint will advise, and provide copies to, Call-Net of any new release of
Licensed Software (including upgrades and software to correct Program Defects)
to Call-Net no later than 10 business days after Sprint implements the new
release in a live production environment. The parties will agree on a process
of notification if either party discovers a billing error or Program Defect
that affects a Licensed Service or that will have a material adverse effect on
customers. If the parties cannot agree then the dispute resolution provisions
under this agreement will be used. Sprint will employ at least the same level
of support in correcting the Program Defects as it employs in supporting its
internal systems as of the date that Call-Net notifies Sprint of the needed
correction.

For purposes of this section, “same level of support” means the same number of
people with the same skill sets as Sprint would use for its own similar
corrections, with each correction being

26

 

given the same priority level or code that Sprint would assign to its own
similar problems. Sprint has the right to invoice Call-Net for Sprint’s costs
incurred in the correction of any billing errors, other service failures or
Program Defects arising out of or related to defective, incorrect or improper
material or data provided by Call-Net. Each party will provide the other with
whatever information it has or acquires to help identify the cause of an error
and its correction. Sprint is not responsible for the consequences of Call-Net
putting any Technology into commercial use before acceptance.

5.15 Bad Data

For any transmission or magnetic medium received from either party that is
determined to be unreadable, unprocessable, or contain bad data of which no
portion can be processed by the other party’s system, the receiving party must
notify the sending party immediately on, and in no event longer than 24 hours
after, discovery of the condition. In addition, the receiving party must
return any applicable tapes or files to the sender for recovery within that
same 24-hour period. If a transmission containing the unreadable,
unprocessable or bad data is discovered on a Saturday, Sunday or holiday for
either party, the 24-hour period begins the next business day. Sprint and
Call-Net must work together and use all commercially reasonable efforts to
recover and process any initially unprocessable data under the terms of this
agreement as soon as reasonably possible.

5.16 Software Medium

Sprint warrants that the media in which the Licensed Software is contained will
be free from defects in materials and workmanship under normal use for a period
of [ * ] after it is provided to Call-Net. In the event the media is
defective, Sprint’s sole obligation is to replace it at no cost to Call-Net.

5.17 Limited Rights

The rights granted by Sprint to Call-Net do not include:

	 	(a)	 	the right to sublicense the Licensed Intellectual Property;
or
	 
	 	(b)	 	the right to alter or modify the Licensed Intellectual
Property without Sprint’s prior written consent, except as provided
otherwise in this agreement.

The rights granted by Sprint are personal to Call-Net and do not extend to any
other person or entity.

Except as specifically set forth in this agreement, no express or implied
license or right of any kind is granted to Call-Net regarding the Licensed
Intellectual Property, including, but not limited to, any right to use,
produce, receive, reproduce, copy, market, sell, distribute, transfer,
translate, modify, adapt, disassemble, decompile, or reverse-engineer the
Licensed Intellectual Property or create derivative works based on the Licensed
Intellectual Property or any portions of the Licensed Intellectual Property.

27

 

5.18 Third Party Intellectual Property

If any of the Licensed Intellectual Property is licensed to Sprint under the
terms of a license agreement entered into at arm’s length with any third party,
the license to the Licensed Intellectual Property granted under this agreement
is subject to the applicable terms of that license agreement (if Sprint makes
Call-Net aware of the terms), including, without limitation, the applicable
confidentiality provisions thereof; except that notwithstanding the terms of
any such agreement:

	 	(a)	 	Call-Net is obligated to pay all additional costs incurred by
Sprint; and
	 
	 	(b)	 	Call-Net is entitled to exercise the rights set out in this
section 5 with respect to any of the Licensed Intellectual Property.

5.19 Non-Asserts

5.19.1 Sprint Non-Assert

Sprint, on behalf of itself and its Affiliates, will not assert against
Call-Net or its Affiliates any claim in respect of Licensed Intellectual
Property if Call-Net and its Affiliates have used, and are only using, the
Licensed Intellectual Property in accordance with this agreement.

5.19.2 Call-Net End Users

Sprint, on behalf of itself and its Affiliates, will not assert against any end
user any claim in respect of Licensed Intellectual Property if Call-Net and its
Affiliates have used, and are only using, the Licensed Intellectual Property in
accordance with this agreement.

5.19.3 Call-Net Non-assert

Call-Net, on behalf of itself and its Affiliates, will not assert against
Sprint or its Affiliates any claim of any patent infringement occurring during
the term of this agreement, except that nothing in this section will prohibit
Call-Net from enforcing Sprint’s obligation to indemnify Call-Net under this
agreement.

6. FUNCTIONAL SERVICES

6.1 General

Call-Net has the right to request that Sprint or Sprint’s Affiliates provide
Functional Services to Call-Net in order that Call-Net may provide and market
Licensed Services. Sprint will provide the requested Functional Services in
accordance with the provisions of this Section 6.

Sprint is required to provide the Functional Services if:

	 	(a)	 	Sprint and Call-Net agree to reasonable terms (other than the
cost) for the services; and

28

 

	 	(b)	 	the Functional Services are to be delivered in accordance
with Sprint’s standard policies and procedures for the delivery of
services other than Licensed Services.

Call-Net will be treated like other Sprint business units in terms of access to
development resources.

Sprint does not have to provide a Functional Service that is not related to
implementing a Licensed Service.

The Functional Services are to be provided at Incremental Cost. Three years
after the date of this agreement the parties will review the definition of
Incremental Cost and, if the parties agree, the definition will be modified.

6.2 Listed Functional Services

The Functional Services that Sprint will provide to Call-Net as of the date of
this agreement are described in Exhibit C. Those Functional Services are to be
performed by Sprint in accordance with the cost, performance and operational
specifications for the Functional Service specified in Exhibit C. Unless
otherwise agreed by the parties, those Functional Services will be provided on
the pricing terms in effect on the date of this agreement.

6.3 Statement of Work

Call-Net may request that Sprint provide a Functional Service that is not
described in Exhibit C. In that event, Call-Net and Sprint will use
commercially reasonable efforts to develop and agree on a Statement of Work,
including acceptance testing, if any.

An agreed to Statement of Work will set forth the performance specifications of
the Functional Service, any relevant interfacing, acceptance testing, if any,
or other requirements to be provided by Call-Net to enable Sprint to provide
the Functional Service, estimated development costs, an implementation
schedule, and recurring rates, which will be determined using standard Sprint
analysis and development processes and timelines. Any delay by Call-Net in
completing a Statement of Work may affect the availability of Sprint’s
resources.

6.4 Amendment

The parties will enter into an amended Exhibit C setting forth the agreed on
terms and conditions for any new Functional Service.

6.5 Terms of Service

The terms under which Sprint will provide additional Functional Services to
Call-Net will be based in each case on the principles that:

29

 

6.5.1 Performance Specifications

the performance specifications to be established for each requested service are
consistent with the performance standards in this agreement and include any
relevant Canadian Requirements, as determined in consultation with Call-Net.

6.5.2 Costs

the costs incurred to analyze and satisfy all Call-Net requirements, including
Canadian Requirements, is borne by Call-Net and calculated and reimbursed to
Sprint on an Incremental Cost basis.

6.5.3 No Development Costs

Sprint’s charges to Call-Net for performing the service is determined on the
basis of Incremental Costs for the service, without regard to costs incurred by
Sprint in developing the relevant Technology for Sprint’s use. Development
costs associated with modifications requested by Call-Net are Incremental
Costs.

Each agreement to provide additional Functional Services is subject to the
terms and conditions of this agreement, except as otherwise specified in
Exhibit C.

6.5.4 Implementation

on execution by the parties of an amended Exhibit C, Sprint will implement the
Functional Service in accordance with the mutually agreed implementation
schedule.

6.6 Fraud Control Functionality

The fraud control functionality used by Sprint in conjunction with Licensed
Services will be provided to Call-Net only as a Functional Service under
Section 6 and no applications software used in providing fraud control
functionality will be licensed to Call-Net. If Sprint or any of its Affiliates
licenses the software to any other party, Call-Net is entitled to require that
the same applications software be licensed to it under Section 5.

On the termination of this agreement under Section 10, Sprint will continue to
provide Sprint’s fraud control functionality as a Functional Service for a
period not exceeding 1 year from the effective date of the termination.

Sprint’s recurring charge for the service following the last day of the term,
or last day of the Transition Period, if applicable, continues to be the
Incremental Cost of providing the service.

6.7 Performance Standard

6.7.1 General

Sprint will perform the Functional Services in accordance with the
specifications contained in the Statement of Work prepared under Section 6.3,
or the specifications agreed to under Section

30

 

6 or if no specifications are identified in the Statement of Work, then in a
manner substantially consistent with the performance of similar services
performed internally at Sprint.

6.7.2 Personnel

The Sprint personnel performing the Functional Services and the services
provided under Section 6 will be the same personnel who perform services for
Sprint that are similar to the Functional Services and the services provided
under Section 6, respectively.

6.7.3 Prioritization

The Sprint personnel performing the Functional Services or services under
Section 6 will prioritize the performance of the Functional Services or the
services under Section 6 in the same manner as they prioritize the performance
of similar services for Sprint.

7. CONSULTING SERVICES

7.1 General

Call-Net may submit from time to time written requests to Sprint requesting
that Sprint provide other technical assistance and consulting services, to be
performed by Sprint subject matter experts in areas relating to Technology,
including but not limited to, network topology, information services, training,
customer/financial services, marketing sales assistance and administration
(other than those covered under either the grant of Licensed Services or the
provision of Functional Services) (the “Consulting Services”).

7.2 Terms

Sprint and Call-Net will consult as appropriate to enable Sprint to ascertain
the most effective means of providing the requested Consulting Services.
Sprint is not required to provide any Consulting Services unless Call-Net and
Sprint agree in writing on the terms and conditions of the Consulting Services,
including Sprint’s compensation.

7.3 Personnel

For any Consulting Services requested by Call-Net, Sprint will provide to
Call-Net the names and qualifications of Sprint personnel who would provide the
requested Consulting Services. Call-Net may interview and select personnel
from this group to provide the requested Consulting Services. Sprint
represents and warrants that, to the best of its knowledge, the personnel will
have the qualifications and competencies that Sprint represents to Call-Net at
the time of the request and that the Consulting Services will be performed in a
manner substantially consistent with the performance of similar services
performed internally at Sprint.

If Call-Net is acting in a commercially reasonable manner, it may request that
Sprint replace any Sprint personnel who are providing Consulting Services. If
Sprint does not have any replacement personnel available, Sprint does not have
to provide the Consulting Services.

31

 

All Sprint personnel, to the extent advised of them by Call-Net, will at
Call-Net’s expense, comply with Call-Net’s security measures while on
Call-Net’s premises. Further, the personnel will comply with the
non-disclosure obligations of Sprint under this agreement, and Sprint will be
responsible for any failure to do so.

At Call-Net’s expense, the parties will work together to resolve any
immigration issues arising in connection with the provision by Sprint personnel
of Consulting Services.

7.4 Consulting Services

Within 10 business days after Call-Net requests Consulting Services or requests
that Sprint replace any personnel under Section 7.3, Sprint will provide
Call-Net with the names and qualifications of Sprint’s or Sprint’s Affiliates’
designees who are available to provide the services. Call-Net may interview
and select personnel from this group in its discretion. Sprint represents and
warrants that to the best of its knowledge, at the time Call-Net selects any of
the designees, those designees have the qualifications and competencies that
Sprint listed and provided to Call-Net.

7.5 Call-Net Consulting Services

Call-Net may from time to time bundle its own consulting services with its
other products and services using the Sprint Primary Marks. Call-Net’s
bundling of its consulting services with a Licensed Service does not make
Sprint’s consulting services Functional Services for the purpose of Call-Net
providing its consulting services to its customers.

8. OTHER AGREEMENTS

8.1 Seamless Services

Call-Net will, subject to limitations imposed by Canadian regulatory
requirements, and except as otherwise provided in this agreement, provide the
Licensed Services actually deployed in the Territory to its end user customers
that are functionally equivalent to and seamless with the corresponding
Licensed Services offered by Sprint to its customers in the United States by
making commercially reasonable efforts to implement and operate network
architectures, interfaces and other systems and facilities, by providing
sufficient personnel, and where commercially preferable, by obtaining
Functional Services from Sprint, or otherwise obtaining the services as
required.

“Functionally equivalent and seamless” Licensed Services means Call-Net will:

	 	(a)	 	design, engineer, implement and maintain its facilities in
order to provide Licensed Services in the Territory that provide
functionality to the end user that is substantially similar to the
end user functionality provided by Sprint in the United States; and
	 
	 	(b)	 	design, engineer, implement and maintain its facilities to
provide a quality, reliable service that provides to the end user a
service level that is functionally indistinguishable from that
provided by Sprint in the United States;

32

 

except to the extent restricted;

	 	(i)	 	by Canadian Requirements; or
	 
	 	(ii)	 	because Call-Net does not have rights to the
requisite underlying Intellectual Property; or
	 
	 	(iii)	 	because the product or service is a Previously
Licensed Service; or
	 
	 	(iv)	 	the Canadian market dictates a different solution
in respect of a given Licensable Service.

For greater certainty, in respect of the restrictions described above, where
Sprint’s Intellectual Property is not available to Call-Net or where the
Canadian market otherwise dictates a different solution in respect of a given
Licensable Service, Call-Net’s Licensed Services Framework in respect of the
Licensable Service cannot be rejected for that reason, notwithstanding that
Call-Net may have developed on its own or outsourced to a third party certain
intellectual property or technology elements, so long as the other requirements
in Section 2.2.2 are met; and except if the Licensable Service will be
different from the customer’s perspective, the Authorized Marks will only be
the Sprint Primary Marks.

Call-Net will procure Services from Sprint or third parties, if commercially
preferable, under this agreement, including, without limitation, technical
assistance, engineering or management support services and Functional Services
or licensing of Technology, to the extent necessary or cost-effective as Sprint
and Call-Net, each acting reasonably, agree from time to time to achieve that
functionally equivalent and seamless service.

For purposes of this section “the Canadian market dictates a different
solution” if:

	 	(c)	 	Call-Net reasonably determines that there be an exception in
the Licensed Service because of differences between the Canadian
market and the United States market; and
	 
	 	(d)	 	Call-Net documents the differences to Sprint in writing with
sufficient details to show the differences, including as
appropriate, marketing studies, focus group research and other
commonly used means of measuring and analyzing markets.

8.2 Maximize Market Share

The parties will cooperate with each other and co-ordinate their efforts with a
view to maximizing joint market share of total cross-border, Canada/United
States telecommunications traffic. The parties will endeavor to agree on a
brand co-ordination process designed to gain maximum advantage for their
respective uses of the Authorized Marks while minimizing channel conflict and
customer confusion.

33

 

8.3 Nortel DMS-250 Software Loads

The parties agree to cooperate in assuring that Call-Net acquires and maintains
the same software loads for its Nortel DMS-250 switches that Sprint maintains
in its switches. Call-Net will bear all load costs associated with its
switches, including hardware and software costs incurred in connection with the
implementation.

 

[ * ]

 

8.4 Warranty

The Business Know-How is provided “As Is” and Sprint makes no warranty relating
to the Technology, Know-How or services or any of the hardware or software
systems used in

34

 

providing the Licensed Services, Technology or services, except as otherwise
provided in this agreement.

Sprint will use commercially reasonable efforts to obtain a pass-through of
warranties from a vendor to Call-Net in situations in which Sprint has the
protection of a vendor warranty on Technology or Know-How to which Sprint can
provide Call-Net. Sprint has no obligation to pay additional amounts to the
vendor to obtain the pass-through nor to agree to a warranty of any kind that
Sprint does not want for its own purposes.

Except for any Licensed Software warranties that the parties mutually agree to
in any License Schedule executed by the parties under this agreement and those
warranties contained in this agreement, the party granting a license under this
agreement makes no warranty of non-infringement and no warranty relating to the
Licensed Intellectual Property or Documentation, and specifically disclaims any
and all other warranties, representations or conditions, express or implied,
including, without limitation, any warranty or conditions of merchantability or
fitness for any particular purpose or that any hardware or software system used
in connection with the Licensed Services or Technology is error free, that its
use will be uninterrupted, or that it accurately processes and provides
date/time data (including calculating, comparing, and sequencing), within,
from, into, and between centuries (including the twentieth and twenty-first
centuries and the years 1999 and 2000), including leap year calculations.

8.5 Permitted Call-Net Services

Call-Net will market and provide to its customers only:

8.5.1 Call-Net or Sprint Products

products and services (a) developed by Call-Net or Sprint; (b) developed for
Call-Net by a third party (subject to Section 8.5.3); or (c) subject to Section
8.5.3, licensed by Call-Net from a third party; (d) that are Previously
Licensed Services using an Authorized Mark, or (e) that are bundled with
Licensed Services as permitted under this agreement;

8.5.2 Sprint Technology

Services based on or utilizing the Intellectual Property; and

8.5.3 Third Parties

for purposes of Section 8.5.1, subsections (b) and (c), products and services
obtained from third parties only if:

35

 

	 	(a)	 	Sprint received a Licensed Services Framework from Call-Net
under Section 2.1 and Sprint refused to execute the License Schedule
contemplated by the Licensed Services Framework;
	 
	 	(b)	 	a Licensed Service was terminated under this agreement; or
	 
	 	(c)	 	Sprint was unable or unwilling to provide the requisite
Technology and Know-How due to third party restrictions or
otherwise, or with respect to Functional Services, was unable or
unwilling to provide the services on commercially preferable terms.

If the requested Licensed Services were not provided because of the situation
described in (a), (b) or (c) above, Call-Net may obtain those services from a
third party (or provide those services for itself), if the provision of the
services is on the same terms and conditions as were included in the Licensed
Services Framework submitted to Sprint for the services.

8.6 Preferred Provider Commitment

8.6.1 Commitment

If in offering a Licensed Service within the Territory, Call-Net must procure
complementary services outside of the Territory from a third party (for
example, consumer long distance with United States or other international
termination), Call-Net will provide Sprint with a right of refusal on any third
party offer with respect to the service, or part of the service, as applicable.
Unless Call-Net claims an exception as provided in Section 8.6.2 or upon the
condition that no third party offer exists, Call-Net will provide the business
to Sprint.

If in offering a Licensed Service outside the Territory, Sprint must procure
complementary services inside of the Territory from a third party (for example,
consumer long distance with Canadian termination), Sprint will provide Call-Net
with a right of refusal on any third party offer with respect to the service,
or part of the service, as applicable. Unless Sprint claims an exception as
provided in Section 8.6.2 or upon the condition that no third party offer
exists, Sprint will provide the business to Call-Net.

The foregoing is referred to as the parties’ reciprocal “Preferred Provider” obligation.

8.6.2 Exceptions

The Parties may not be each other’s Preferred Provider where:

	 	(a)	 	the providing party cannot provide the complementary service
on comparable terms and conditions (including, without limitation,
pricing, quality and timing);
	 
	 	(b)	 	[ * ] ;

36

 

	 	(c)	 	[ * ] ;
	 
	 	(d)	 	the product or service requested by the purchasing party
cannot be supplied by the other party due to technical or geographic
network constraints; or
	 
	 	(e)	 	the providing party is unable to meet special (i.e., out of
the ordinary course of business) pricing or provisioning requests.

In any of the excepted situations in this Section 8.6.2, the party purchasing
services from a third party as an alternative to the Preferred Provider, must
keep appropriate records or documentation, within reason, indicating the
circumstances and reasons for not using the other party as the Preferred
Provider.

8.6.3 Process

In fulfilling its obligations under this section, where a purchasing party is
procuring complementary services as described above, the purchasing party must
inform the other party in writing of the existence of any bona fide competing
offer and the details of the offer, to the extent that no confidentiality
agreements with third parties are breached, and the timetable for services set
by the customer. The other party must respond in writing to the purchasing
party as soon as practicable. If the other party does not respond promptly
enough to enable the purchasing party to meet the timetable for services set by
the customer, the purchasing party has fulfilled its obligations under this
agreement. If the other party responds in a timely fashion relative to the
customer’s timetable and with a better offer than from the third party, the
purchasing party will accept the other party’s offer.

8.6.4 Review

The parties will meet quarterly to review the Preferred Provider commitment and
the number and frequency of incidents where each party was not used as the
other’s Preferred Provider.

8.7 Performance Standards

Call-Net will provide and market Licensed Services under quality and
performance standards that Sprint and Call-Net establish in the Licensed
Services Framework for the Licensed Services. The standards must be based on
the standards that Sprint maintains in providing services in the United States,
subject to the exceptions provided for “Functionally equivalent and seamless”
Licensed Services provided in Section 8.1.

With respect to Previously Licensed Services, the standards are the standards
described in Section 2.3 of this agreement.

With respect to Products, the standards are the performance standards that
Sprint and Call-Net establish in the Licensed Services Framework for the
Product, if applicable. If there is no Licensed Services Framework regarding
the Product then the standards are the standards that

37

 

Sprint maintains for itself for the Product, subject to the exceptions provided
for “Functionally equivalent and seamless” Licensed Services provided in
Section 8.1(i), (ii) and (iv), except if Sprint does not offer the Product,
then the standard is what is customary in the North American telecommunications
industry, and failing that, what is reasonable under the circumstances, subject
to the exceptions provided for “Functionally equivalent and seamless” Licensed
Services provided in Section 8.1(i), (ii) and (iv).

With respect to any other Call-Net product, service or business activity in the
Territory that could be reasonably associated with Sprint, Call-Net must
provide the product, service or activity in accordance with performance
standards that are consistent with Sprint’s internal policies and procedures as
provided to Call-Net from time to time, subject to the exceptions provided for
“Functionally equivalent and seamless” Licensed Services provided in Section
8.1(i), (ii) and (iv). If Sprint does not have such a standard then the
standard is what is customary in the North American telecommunications
industry, and failing that, what is reasonable under the circumstances, subject
to the exceptions provided for “Functionally equivalent and seamless” Licensed
Services provided in Section 8.1(i), (ii) and (iv).

At all times as to all Licensed Services, Products, and any other product,
service or activity of Call-Net, they:

	 	(a)	 	will not adversely impact the value of the Authorized Marks;
	 
	 	(b)	 	with respect to the Authorized Marks, will not vary from the
Brand Identity Standards other than as provided in this agreement;
	 
	 	(c)	 	with respect to Technology and Technical Know-How, will not
materially vary from the guidelines set forth in Sprint’s
Documentation relating to the Technology and Technical Know-How
subject to the exceptions provided for “Functionally equivalent and
seamless” Licensed Services provided in Section 8.1; and
	 
	 	(d)	 	will not have a material adverse effect on Sprint or a
material service or material product offered for sale by Sprint.

In addition, Call-Net will not transmit any product, messages or other
materials, including 900 “pay-per-call” services, or engage, directly or
indirectly, in any other business practices that could reasonably be associated
with Sprint and that Sprint, under its internal policy guidelines (as provided
from time to time to Call-Net), would not carry on or engage in. Sprint may
refuse to carry into the United States any product, messages or other material
that is contrary to Sprint’s internal policy guidelines, and, on written notice
from Sprint, Call-Net must take all reasonable action to discontinue
immediately the transmission in any form that can reasonably be associated with
Sprint. The parties acknowledge that as a provider of ISP, hosting and related
services, Call-Net does not actively monitor content, and therefore will not be
in contravention of this provision unless it knowingly and actively engages in
the above business practices.

8.8 Purchasing Arrangements

 

[ * ]

38

 

 

	 	[ * ]	 	 
	 
	 
	 
	 	(a)	 	[ * ]
	 
	 	(b)	 	[ * ]
	 
	 	(c)	 	[ * ]

8.9 Compliance with Laws

8.9.1 General

Each party will comply with all federal, state, provincial or local laws and
regulations applicable to the performance of its obligations under this
agreement.

Call-Net must comply with all relevant regulations of the United States
Department of Commerce relating to the United States Export Administration Act.

39

 

8.9.2 United States FCPA

In accordance with the provisions of the United States Foreign Corrupt
Practices Act of 1977, 15 U.S.C. Section 78dd-1 et seq., as amended, each party
represents and warrants to the other that neither it, nor its Affiliates, or
its agents, has made any “Sensitive Payments” in connection with or in any way
relating to or affecting this agreement or the business to be carried on
pursuant hereto. Each party will not make (nor permit or cause its Affiliates
or agents to make) any “Sensitive Payments” in connection with or in any way
relating to or affecting this agreement or the business to be carried on
pursuant hereto without first having received the prior written consent of the
other. “Sensitive Payments” means, whether or not illegal:

	 	(a)	 	payments to any official or employee of any governmental
body, or to the person’s family;
	 
	 	(b)	 	commercial bribes or kickbacks;
	 
	 	(c)	 	amounts paid with an understanding that rebates or refunds
will be made in contravention of the laws of any jurisdiction,
either directly or through a third party;
	 
	 	(d)	 	political contributions; and
	 
	 	(e)	 	payments or commitments (whether made in the form of
commissions, payments or fees for goods or services received or
otherwise) made with the understanding or under circumstances that
would indicate that all or a part thereof is to be paid by the
recipient to government officials or employees as a commercial
bribe, influence payment, or kickback;

except that “Sensitive Payments” does not include “facilitation payments” or
contributions to political campaigns or organizations that are permissible
under applicable law.

8.9.3 Canadian CFPOA

In accordance with the provisions of the Canadian Corruption of Foreign Public
Officials Act, each party represents and warrants to the other that neither it
nor its Affiliates or its agents has, directly or indirectly, given, offered or
agreed to give or offer a loan, reward, advantage or benefit of any kind to a
foreign public official or to any person for the benefit of a foreign public
official:

	 	(a)	 	as consideration for an act or omission by the official in
connection with the performance of the official’s duties or
functions;
	 
	 	(b)	 	to induce the official to use his or her position to
influence any acts or decisions of the foreign state or public
international organization for which the official performs duties or
functions; except if the loan reward, advantage or benefit:

40

 

	 	(i)	 	is permitted or required under the laws of the
foreign state or public international organization for which
the foreign public official performs duties; or
	 
	 	(ii)	 	was made to pay the reasonable expenses incurred
in good faith by or on behalf of the foreign public official
that are directly related to: (A) the promotion,
demonstration or explanation of the party’s products or
services; or (B) the execution or performance of a contract
between the party and the foreign state for which the official
performs duties or functions.

8.9.4 Customer Information

All Personal Information related to Call-Net’s customers provided to or under
the control of Sprint under this agreement will remain Call-Net’s or the
customer’s sole property, as the case may be, and will be promptly returned to
Call-Net on written request. Call-Net authorizes Sprint to have access to and
to make use of the Personal Information as is appropriate for the performance
by Sprint of its obligations under this agreement. Except as is expressly
provided for in this agreement, Sprint will not withhold, sell, assign, lease
or otherwise dispose of, use or commercially exploit, any Personal Information
belonging or provided to Call-Net about its customers, employees or
contractors. Sprint will employ industry standard firewalls and other security
measures to protect against third party access to Sprint’s Services and
associated Personal Information provided to or under the control of Sprint.

If Call-Net must respond to a privacy investigation in order to comply with
applicable law, Call-Net may have access to records and information concerning
the collection, use, retention and disclosure of Personal Information, by
Sprint related to Call-Net or Call-Net’s customers.

“Personal Information” means information about an identifiable individual
associated with Call-Net or a Call-Net customer, but does not include the name,
title or business address or telephone number of an employee of an
organization.

8.10 Anti-Flow Up

 

[ * ]

	 	 	 	 
	 
	 	 	 	 

41

 

	 	 	 	 
	 
	 	[ * ]	 	 

 

8.11 Stock

In consideration of [ * ] previously paid by Sprint to Call-Net,
immediately following the Effective Time (as that term is defined in the
management proxy circular of Call-Net dated February 22, 2002 (the
“Circular”)), Call-Net agrees to issue to Sprint one New Preferred Share (as
that term is defined in the Plan of Arrangement appended to the Circular).

9.     CHARGES, PAYMENT

9.1 Annual Fee

Call-Net will pay to Sprint a recurring annual fee for each of Call-Net’s
fiscal years during the term commencing with the present fiscal year, equal to
2% (prorated daily for partial calendar years) of Call-Net’s gross revenues for
the fiscal year, except for the first 5 years the annual fee will be 2.5%
(prorated daily for partial calendar years). The annual fee starts effective
January 1, 2002.

Gross revenue does not include revenue derived from: (i) the sale of products
or services that are non-Sprint branded, non-telecommunications products or
non-Sprint branded, non-telecommunications services; and (ii) the sale of
products or services to Sprint or an Affiliate of Sprint. For greater
certainty, non-Sprint branded, telecommunications services are included in
gross revenue, and non-Sprint branded, non-telecommunications products or
services bundled with a telecommunications service are included in gross
revenue.

For purposes of the calculation, “affiliates” are entities under the ultimate
control of Sprint Corporation and do not include entities entitled to use the
Sprint brand under contractual arrangements such as Sprint PCS distributors and
Sprint PCS Network Partners also known as Sprint PCS Affiliates. Until
otherwise agreed by the parties, [ * ] of fee relates to Licensed Intellectual
Property and [ * ] relates to the Authorized Mark license. In addition, the
parties will agree to pricing for transaction-based and other services as
appropriate, except as otherwise provided for in this agreement.

42

 

The annual fee will be non-cancellable, non-refundable and payable by Call-Net
to Sprint on a quarterly basis with the payment due on the day Call-Net
publicly reports its quarterly earnings, or if no such day, then on the 45th
day after the end of Call-Net’s fiscal quarter. The annual fee is not subject
to any set-offs or reductions of any kind, except for adjustments based on
audited annual financial statements and taxes. Other payments required under a
Licensed Services Framework for a Licensed Service or agreed to by the parties
by some other agreement will be paid in accordance with the terms of the
Licensed Services Framework or other agreement.

On termination of this agreement, Call-Net will pay any fee remaining (prorated
daily for partial calendar years) on the 45th day after the end of Call-Net’s
fiscal quarter ending on or immediately after the date of termination of this
agreement, and the payment will be based on Call-Net’s gross revenues through
the end of the quarter.

9.2 Taxes

The fees and charges for Services rendered by Sprint under this agreement and
all other fees payable to Sprint are exclusive of taxes, except for any
applicable withholding taxes (except as otherwise provided in this agreement).
Call-Net must pay or reimburse Sprint for all Canadian gross receipt taxes,
sales or use taxes, excise taxes, personal property, value-added or other
applicable Canadian taxes of any federal, provincial, or local jurisdiction,
exclusive of income or withholding taxes based on the gross or net income of
Sprint, arising out of or related to the performance by Sprint of this
agreement (except as otherwise provided in this agreement).

Call-Net must withhold from all amounts paid to Sprint on account of fees,
charges or interest, Canadian withholding tax as prescribed by applicable
legislation, or a lesser amount as may be authorized in writing by the relevant
taxing authority. Call-Net must consult with Sprint before withholding tax on
any amount payable to Sprint with respect to any Functional Services.

Call-Net will remit any amount withheld to the relevant taxing authority in the
manner and time prescribed by applicable legislation. Call-Net will furnish to
Sprint the tax receipts or other official documentation with respect to the
payment of withheld taxes as may be issued by the taxing authority within 10
business days of receiving the receipts or documents.

9.3 Invoice and Payment Method

Sprint may invoice Call-Net on a monthly basis for all fees, charges and
reimbursable expenses and taxes payable by Call-Net for each of the Services
provided by Sprint under this agreement, except for the fee provided in Section
9.1. Sprint will submit with each invoice all relevant supporting
documentation. Call-Net must pay each invoiced amount within 30 days following
Call-Net’s receipt of the invoice.

9.4 Payment Disputes

9.4.1 General

The parties will provide each other with reasonably requested additional
information for invoice validation purposes and will cooperate to adjust or
dispose of any disagreements between themselves as expeditiously as practicable
regarding the determination of the monthly fees due

43

 

under this agreement. If Call-Net disputes Sprint’s computation of any fee,
Call-Net must pay the undisputed portion of the fee no later than the invoice
due date for the fee. Any disputed amounts not resolved by the parties will be
submitted to dispute resolution in accordance with Section 16.

9.4.2 Interest

All undisputed amounts payable that remain unpaid by either party for a period
of 30 days or more after receipt of the invoice from the other party or other
applicable due date specified in this agreement are subject to interest from
the applicable due date for the overdue amount at the lesser of: (i) 2% plus
the publicly announced prime rate for 90-day commercial loans in New York City
of Citibank, N.A. in effect when the interest begins to accrue; and (ii) the
maximum rate allowed by applicable law.

9.5 Responsibility for and Payment of Costs

Call-Net is obligated to pay any Incremental Costs incurred by Sprint for
requested enhancements or modifications to, and customization of, requested
Technology including, without limitation, the “Canadianization” of Technology.

A party requesting Technology or Know-How from the other party is obligated to
pay any and all incremental costs incurred by the providing party from third
parties.

10. TERM, TERMINATION

10.1 Term

This agreement as amended and restated is effective on April 1, 2002 and will
continue in effect until the Termination Date.

10.2 Transition Period

[ * ]

 

10.3 Procedure

[ * ]

 

44

 

 

 

[ * ]

 

10.4 Change of Control

[ * ]

	 	 	 	                                   :
	 
	 	(a)	 	Call-Net Change of Control and Call-Net Terminates:   [ * ] ;
	 
	 	(b)	 	Call-Net Change of Control and
Sprint Terminates:   [ * ] ;
	 
	 	(c)	 	Sprint Change of Control and Call-Net Terminates:   [ * ] ;
	 
	 	(d)	 	Sprint Change of Control and
Sprint Terminates:   [ * ] .

 

45

 

 

 

[ * ]

 

10.5 Services and Licenses

On the termination of this agreement under Section 10.1 or 10.4, except as
otherwise specified in this agreement, Sprint will cease to be obligated to
provide any Services to Call-Net or to license or provide upgrades or
enhancements to any Technology to Call-Net. Call-Net can continue to market,
sell and use products and services to the extent that they were based on Sprint
Know-How and Sprint Technology and Call-Net will have a continuous royalty-free
license of the then existing Sprint Know-How and Sprint Technology, to the
extent Sprint can grant the license.

On the termination of this agreement under Section 10.1 or 10.4, Sprint grants
to Call-Net and its Affiliates the irrevocable, non-exclusive, transferable,
perpetual license to use, sell, offer to sell, copy, reproduce, publish,
distribute, prepare derivative works, perform, display, sublicense and to
exercise all other rights whether now known or later created relating to any
Sprint Know-How.

11. NONDISCLOSURE

11.1 Confidentiality

This agreement and all Confidential Information received by either party from
the other from time to time in connection with this agreement and the Services
and Intellectual Property to be provided under this agreement is proprietary
and confidential information of the disclosing party and is used by the
receiving party only in accordance with this agreement. Each party is
responsible for the performance by its respective Affiliates and personnel of
the obligations under this Section 11 with respect to Confidential Information.

The parties intend that all discussions and exchange of information between the
parties during the term of this agreement are to be held confidential in
accordance with this section, and, unless required by a third party, or on the
advice of legal counsel to a party, the parties will not enter into any
additional non-disclosure agreements during the term of this agreement.

46

 

11.2 Treatment of Confidential Information

With respect to all Confidential Information, the receiving party must:

	 	(a)	 	receive and hold the Confidential Information in confidence
and in the same manner the receiving party treats its own
proprietary or confidential information of like nature and
sensitivity, but with at least a reasonable degree of care;
	 
	 	(b)	 	restrict disclosure of the Confidential Information solely to
those employees, advisers, consultants and agents with a need to
know in connection with the performance of this agreement or the
business of Call-Net and not make any further use or disclosure
without the prior written permission of the disclosing party;
	 
	 	(c)	 	advise those employees, advisers, consultants and agents
given access to the Confidential Information of their obligations
with respect to the information by way of agreement, instruction, or
other method;
	 
	 	(d)	 	not copy or reproduce any of the Confidential Information
except to the extent necessary to perform its obligations under this
agreement; and
	 
	 	(e)	 	with respect to Call-Net, not use the Confidential
Information for its own benefit outside the Territory or for the
benefit of any third party, except to the extent that rights of use
are expressly granted by Sprint under this agreement, including
rights granted with respect to Business Know-How, Technical
Know-How, Services and Technology; and
	 
	 	(f)	 	with respect to Sprint, not use for its own benefit within
the Territory or for the benefit of any third party, except to the
extent that rights of use are expressly granted by Call-Net under
this agreement, including rights granted with respect to Business
Know-How.

11.3 Mandatory Disclosure

If either party becomes subject to a mandatory requirement of any judicial,
governmental or regulatory authority having jurisdiction over the party to
disclose Confidential Information, the party must give the party that provided
the Confidential Information notice as soon as practicable in advance of any
disclosure obligation and must take all reasonable and lawful steps to limit
the amount of Confidential Information to be disclosed.

11.4 Termination of Agreement

Notwithstanding the termination of this agreement, all Confidential Information
disclosed by any party to the other must continue to be held in confidence in
accordance with this agreement.

47

 

11.5 No Rights in the Information

Except as specifically provided in this agreement, nothing contained in this
agreement will be construed as granting or conferring any rights by license or
otherwise in any information disclosed under this agreement.

11.6 Degree of Care

Neither party is liable to the other for damages caused by inadvertent,
accidental, unauthorized, or mistaken disclosure by its employees of
Confidential Information obtained under this agreement, if the receiving party
has used the same degree of care as it uses to protect its own proprietary or
confidential information of like nature and sensitivity, which degree of care
will not be less than a reasonable degree of care.

11.7 Survive Termination

The provisions of this Section 11 survive the termination or expiration of this
agreement.

12. INDEMNIFICATION

12.1 Indemnification of Sprint from Third Party Claims

Call-Net will indemnify and defend Sprint, the Sprint Affiliates, and their
respective directors, officers, agents and employees (each, a “Sprint
Indemnitee”) from and against all claims, damages, losses, liabilities, costs,
expenses and reasonable attorney’s fees (collectively “Damages”) arising out of
a claim by a third party against a Sprint Indemnitee for injury to persons
(including libel, slander or death) or, loss or damage to tangible or
intangible property to the extent resulting from any act or omission of
Call-Net under this agreement.

12.2 Tax Indemnity of Sprint

Call-Net will indemnify the Sprint Indemnitees, on an After-Tax Basis (as
defined below), from and against any and all Costs (as defined below) arising
out of or in connection with any inaccuracy or breach of, or any determination
by any taxing authority or other governmental body responsible for taxes that
is inconsistent with, any representation or warranty made by Call-Net in
Section 18.5 of this agreement.

“After-Tax Basis” means, in connection with any indemnity payment (the “initial
payment”) by Call-Net to a Sprint Indemnitee, that the initial payment is to be
increased by an additional amount (the “gross-up amount”) such that: (i) the
initial payment, plus (ii) the gross-up amount, less (iii) any Costs (as
defined below) attributable to its receipt of the initial payment and the
gross-up amount, must equal the initial payment.

“Costs” means taxes and expenses, including interest and penalties imposed by
any taxing authority or other governmental body responsible for taxes, and for
related professional fees and other reasonable out-of-pocket expenses, which
any one or more of the Sprint Indemnitees pays or is liable for (or would pay
or be liable for but for the utilization of any tax losses, credits or other
tax accounts unassociated with the Cost that is the subject matter of the
indemnity).

48

 

12.3 Indemnification of Call-Net for Third Party Claims

Sprint will indemnify and defend Call-Net, the Call-Net Affiliates, and their
respective directors, officers, agents and employees (each, a “Call-Net
Indemnitee”) from and against all claims, damages, losses, liabilities, costs,
expenses and reasonable attorney’s fees (collectively “Damages”) arising out of
a claim by a third party against a Call-Net Indemnitee for injury to persons
(including libel, slander or death) or, loss or damage to tangible or
intangible property to the extent resulting from any act or omission of Sprint
under this agreement. Sprint will also indemnify each of the Call-Net
Indemnitees for any liability they may incur in connection with Canadian
withholding tax.

12.4 Notice of Claim

Each party will give the other party prompt written notice of any claim for
Damages for which it seeks indemnification under Section 12.1, 12.2 or 12.3 and
afford the other party the opportunity of sole defense and the right to settle
or compromise the claim. Failure by an indemnified party to give timely notice
to the indemnifying party does not relieve the indemnifying party of its
obligation to defend and indemnify the indemnified party, except, and only to
the extent that, the failure to give notice materially harmed the indemnifying
party or increased the amount that the indemnified party was to be indemnified
for.

12.5 Procedure

Subject to this agreement, the indemnifying party will have control of the
defense and will pay any amount finally awarded either as damages or costs in
any action. On becoming aware of a claim or action, the indemnified party will
promptly notify the indemnifying party in writing of the claim or action, and
will give the indemnifying party the information and assistance it reasonably
requests in defending or settling the action, which will be provided at the
indemnifying party’s expense. If the indemnifying party does not undertake the
defense thereof within a reasonable time, the indemnified party will be
entitled to undertake the defense at the indemnifying party’s expense. The
indemnifying party will not be liable for any claim settled or compromised by
the indemnified party without the prior written consent of the indemnifying
party. The indemnifying party may, at its sole option and expense, negotiate a
settlement or compromise of the claim or action if the settlement does not
include any admission of liability or wrongdoing by the indemnified party.

If a settlement is reached or an injunction is obtained, or the indemnifying
party reasonably believes that a third party may be successful in enforcing its
proprietary rights, prohibiting use of any Licensed Service, any Technologies
or any indemnifying party trademark, the indemnifying party will at its expense
and option: (i) procure for the indemnified party the right to continue using
the Licensed Service, the Technologies or the trademark, as the case may be; or
(ii) replace or modify it so that it is non-infringing.

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12.6 Infringement

12.6.1 Sprint Indemnity

Sprint will defend at its expense any claim made or action brought against the
Call-Net Indemnitees to the extent based on an allegation that:

	 	(a)	 	any Functional Service or Consulting Service provided by
Sprint that is used by Call-Net in accordance with this agreement
infringes or violates a United States or Canadian patent, copyright,
trade secret, trademark or other proprietary right;
	 
	 	(b)	 	any aspect of a Licensed Service used by Call-Net in
accordance with this agreement infringes or violates a United States
or Canadian patent, copyright, trade secret, trademark or other
proprietary right;
	 
	 	(c)	 	Call-Net’s use of the Licensed Intellectual Property in
accordance with this agreement infringes or violates any United
States or Canadian patent, copyright, trade secret or other
proprietary right, if Sprint did not notify Call-Net of the claim
before either: (i) the time Call-Net entered into a written license
agreement for the Licensed Intellectual Property; or (ii) the
provision by Sprint or its Affiliate to Call-Net of a new release of
Licensed Software, if the infringement claim arises as a result of
changes to Licensed Software that are caused by the new software
release;
	 
	 	(d)	 	any Authorized Trademark licensed under this agreement
infringes a United States or Canadian copyright, trade secret,
trademark or other proprietary right if Call-Net uses the Sprint
Trademark and the associated Licensed Service in accordance with the
terms of this agreement; or
	 
	 	(e)	 	Call-Net’s or Call-Net’s Affiliates’ compliance with the
specifications, designs, or instructions of Sprint or its agents,
employees, or representatives infringes or violates a United States
or Canadian patent, copyright, trademark, trade secret or other
proprietary right.

Any claim under this Section will be handled under the procedures in Section
12.5.

Sprint will at its expense and with no interruption in service, procure for
Call-Net the right to continue using a Functional Service, Licensed
Intellectual Property or an Authorized Mark, as the case may be, or replace or
modify it so that it is non-infringing if a settlement is reached or an
injunction is obtained, or if Sprint reasonably believes that a third party may
be successful in enforcing its proprietary rights, prohibiting use of any
Functional Service, any Licensed Software or any Authorized Mark.

12.6.2 Limitations

Sprint has no obligation under this agreement with respect to any proceeding or
claim of infringement based on the following:

50

 

	 	(a)	 	modification of the Technology or Intellectual Property by
anyone other than Sprint or its Affiliates;
	 
	 	(b)	 	combination, operation, or use of the Technology or
Intellectual Property with software, hardware, or other matter not
furnished by Sprint or its Affiliates, except to the extent the
combination, use, or operation of the Technology or Intellectual
Property is made in accordance with Sprint specifications or
otherwise expressly approved by Sprint;
	 
	 	(c)	 	operation or use of the Licensed Software in a manner other
than that indicated in this agreement or the Documentation;
	 
	 	(d)	 	the failure of Call-Net or its Affiliates to comply with the
Brand Identity Standards (as the same may be modified under this
agreement or by agreement of the parties); and
	 
	 	(e)	 	if the infringement would have been avoided except for the
modification, combination, or operation, or the use with software,
hardware, or other matter not furnished, recommended or indicated by
Sprint or its Affiliates, or the operation or usage in a manner
other than that indicated by Sprint, or the use of software by
Call-Net despite being apprised of a reasonable infringement risk by
Sprint.

12.6.3 Call-Net Indemnity

Call-Net will defend at its expense the Sprint Indemnitees from and against any
claim made or action brought against any of them to the extent based on an
allegation that:

	 	(a)	 	the modification of the Licensed Software by Call-Net or its
combination, operation, or use by Call-Net with software not
furnished by Sprint or its Affiliates or the operation or use by
Call-Net of the Technology or Licensed Intellectual Property in a
manner other than that indicated in this agreement or the
Documentation supplied by Sprint, infringes a United States or
Canadian patent, copyright, trade secret, or other proprietary
right;
	 
	 	(b)	 	the use by Call-Net of an Authorized Mark in a manner that
does not comply with the Brand Identity Standards (as the same may
be modified under this agreement or by agreement of the parties)
infringes a United States or Canadian copyright, trademark or other
proprietary right; or
	 
	 	(c)	 	Sprint’s or Sprint’s Affiliates’ compliance with the
specifications, designs, or instructions of Call-Net or its agents,
employees, or representatives in connection with Call-Net’s
provision of Business Know-How to Sprint under this agreement,
infringes or violates a United States or Canadian patent, copyright
trademark, trade secret or other proprietary right.

Any claim under this Section will be handled under the procedures in Section
12.5.

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12.7 Nortel

[ * ]

12.8 Seamlessness

If any infringement claim relates to a feature or system required to maintain
seamlessness in accordance with Section 8.1, then Call-Net is excused from the
seamlessness requirement to the extent necessary to avoid the infringement
claim, if Call-Net provides prompt notification to Sprint of its intention not
to maintain seamlessness and Sprint consents. If Sprint requires Call-Net to
maintain seamlessness Sprint will indemnify Call-Net for the resultant damages
and costs that arise in the infringement suit.

13. LIMITATION ON LIABILITY

13.1 No Consequential Damages

Neither party will be liable to the other for consequential, indirect, special
incidental, exemplary or punitive damages for any cause of action, whether in
contract, tort, indemnity, warranty, strict liability or otherwise, except for:

	 	(a)	 	Damages and Costs (as each is defined above in Section 12)
for which a party has an obligation of indemnity under this
agreement;
	 
	 	(b)	 	any grossly negligent or fraudulent act or omission or wilful
misconduct; or

52

 

	 	(c)	 	any breach of Section 11 or 12.

Consequential damages include, but are not limited to, lost profits, lost
revenue, and lost business opportunities, whether or not the other party was or
should have been aware of the possibility of these damages. Actual damages
that are not subject to the limitations of this section can include the profits
lost if a party usurps the other party’s business opportunity in contravention
of this agreement.

13.2 No Liability

Other than as provided in this agreement, Sprint has no liability to Call-Net
or any third party for any third party claim, liability, damage or expense for
any cause, including without limitation those suffered by any third party
arising out of or caused by:

	 	(a)	 	any claim to the extent arising out of any acts or omissions
of Call-Net, its users or any other entity that is not an agent or
subcontractor of Sprint in furnishing Licensed Services or
facilities to its customers; or
	 
	 	(b)	 	subject to Section 8.9.4, any claim arising out of a breach
in the privacy or security of communications transmitted over Sprint
facilities, unless the breach in the privacy or security of the
communications is a result of the gross negligence of Sprint.

13.3 Direct Damages

In accordance with the terms of this agreement, each party will be liable to
the other for any direct damages arising out of or relating to its or any of
its Affiliates’ performance or failure to perform under this agreement, except
that the aggregate liability of each party to the other, whether based on an
action or claim in contract, equity, negligence, tort or otherwise, for all
events, acts or omissions under this agreement, will not exceed [ * ]
million per occurrence and over the term of the agreements [ * ] in
the aggregate. The limitations of liability contained in this Section 13.3
will not apply to obligations and liabilities arising out of the last sentence
of Section 13.1 (No Consequential Damages), Section 12 (Indemnification);
Section 11 (Non-disclosure); or out of the wilful misconduct or gross
negligence of either party.

14. BREACH AND REMEDIES

14.1 Default

A “Default” occurs under this agreement if a party breaches or is in default of
any material obligation or covenant of this agreement, a Licensed Services
Framework the license for a Licensed Service, the license for an item of
Licensed Intellectual Property or the license for a Licensed Services
Trademark, or if any material warranty or representation in this agreement, a
Licensed Services Framework, the license for a Licensed Service or the license
for an item of Licensed Intellectual Property proves to be untrue.

53

 

The materiality determination with respect to material obligations, covenants,
warranties and representations in a Licensed Services Framework, the license
for a Licensed Service, the license for a Sprint Trademark or the license for
an item of Licensed Intellectual Property will be made as to the materiality to
the products and services that are the subject of the Licensed Services
Framework, the Licensed Service, the Authorized Mark or the Licensed
Intellectual Property, and not with respect to the entire agreement.

On the occurrence of a Default, the non-defaulting party may serve on the
defaulting party written notice of the default (that notice will include a
reasonably detailed statement of the nature of the default). The defaulting
party will, in consultation with the other party, determine the steps necessary
to cure the default and the time period within which the steps must be taken.
The cure period is 10 days in the case of a failure to pay money due and 60
days in all other cases from the date of receipt of the notice, unless the
non-defaulting party reasonably agrees to a longer period in writing. Any
determination of the actions necessary to cure any default under this agreement
will be made based on the particular circumstances.

Where any provision in this agreement provides for a cure period, the cure
period will run concurrently with the cure period described above. The rights
under this Section 14 are in addition to and not in substitution for the rights
provided for in any other provision of this agreement, except if the provisions
of Section 14.4 apply, those provisions are the exclusive remedy.

14.2 Sprint Default

Call-Net has the right to terminate a Functional Service, the license for a
Licensed Service, the license for an item of Licensed Intellectual Property,
the license for a Sprint Trademark or any other rights and obligations under
this agreement, to which a Sprint Default relates if Sprint makes a Default and
the Default is incapable of cure or has not been cured in the time period
determined under Section 14.1; and the Default results in it being commercially
unreasonable for Call-Net to provide one or more Licensed Services to customers
in the Territory. The termination of the applicable Functional Service,
license for a Licensed Service, license for an item of Licensed Intellectual
Property or the license for a Licensed Services Trademark or any other rights
and obligations under this agreement will be effective on the date that is the
later of: (i) 180 days following the date that Call-Net delivered the default
notice to Sprint under Section 14.1; and (ii) if Sprint initiates the dispute
resolution process described in Section 16 within the cure period described in
Section 14.1, the date, if any, determined by the parties or the arbitrator
under Section 16. In such case, Call-Net may obtain the Licensed Service in
any other way, and depending on the materiality of the lost Licensed Services,
the parties will negotiate in good faith an adjustment of the royalty to
reflect the loss of rights.

14.3 Call-Net Default

Sprint has the right to terminate, subject to Section 16, a Functional Service,
the license for a Licensed Service, the license for an item of Licensed
Intellectual Property, the license for a Sprint Trademark, or any other rights
and obligations under this agreement, to which a Call-Net Default relates if
Call-Net makes a Default, and the Default is incapable of cure or has not been
cured in the time period determined under Section 14.1 and the Default:

54

 

	 	(a)	 	has or will have a materially adverse effect on Sprint’s
goodwill, reputation, rights to its tangible or intangible assets,
or ability to offer services to its customers, or
	 
	 	(b)	 	makes it commercially unreasonable for Sprint to perform a
Functional Service, license a Technology, or license a Sprint
Trademark.

The termination of the applicable Functional Service, license for a Licensed
Service, license for an item of Licensed Intellectual Property, the License for
a Sprint Trademark or any other rights and obligations under this agreement
will be effective on the date that is the later of: (i) 180 days following the
date that Sprint delivered the default notice to Call-Net under Section 14.1;
and (ii) if Call-Net initiates the dispute resolution process described in
Section 16 within the cure period described in Section 14.1, the date, if any,
determined by the parties or the arbitrator under Section 16 hereof. Sprint is
not obligated to provide the Functional Service to Call-Net or license the
Technology to Call-Net that provides the functionality provided by the
terminated Functional Service or Technology or license to Call-Net the
particular Sprint Trademark during the remainder of the term, except as
provided in Section 14.5; and Sprint is entitled to offer the terminated
Licensed Service or enter into an agreement with a third party to offer the
terminated Licensed Service in the Territory without restriction or obligation
under this agreement.

14.4 Major Default

Either party may invoke Section 16 of this agreement in order to obtain an
arbitral decision that the agreement should be terminated if:

	 	(a)	 	one or more Defaults occur under the agreement or other
events occur that are incapable of cure or have not been cured
within the time periods determined under Section 14.1 of this
agreement;
	 
	 	(b)	 	the cumulative effect of the Defaults or other events is to
frustrate the purpose of the transactions contemplated in the
agreement taken as a whole;
	 
	 	(c)	 	either party has given written notice to the other party of
the party’s intention to invoke the provisions of this section; and
	 
	 	(d)	 	the parties do not agree within 30 days to satisfactory
resolution of the Defaults or other circumstances.

14.5 Effect of a Termination

If either party terminates a Functional Service or license for Intellectual
Property or Sprint Trademarks or any rights and obligations under this
agreement under this Section 14 and there are no other actions under Section 16
to take with respect to the matter, or if an arbitrator under Section 16
terminates any license, service or agreement, Call-Net will have a reasonable
time period (as agreed by the parties or as is determined by the arbitrator) to
obtain the terminated capability from a third party, without regard to Section
8.5, to replace the functionality being provided by the Functional Service,
Intellectual Property or Sprint Trademarks that will be terminated or otherwise
replace benefits under this agreement that will be terminated. During

55

 

that period, the functionality will continue to be provided by Sprint in
accordance with the terms of this agreement.

Each party remains responsible for all charges and payments payable by it under
this agreement until the date of the termination. During that period, Sprint
has the right to license the terminated trademark and to provide the
functionality provided by a terminated Functional Service, Intellectual
Property or Sprint Trademarks, to its Affiliates or third parties for use in
Canada.

If a Default occurs due to the failure of Call-Net to comply with Brand
Identity Standards established by Sprint, then Sprint is only obligated under
this Section to continue to provide the applicable Functional Services,
Intellectual Property or Sprint Trademarks for a period commencing on the date
that Sprint delivered written notice to Call-Net of Sprint’s intent to
terminate under Section 14.3 of this agreement and ending on the date that is
the later of: (i) 180 days following the date that Sprint delivered written
notice to Call-Net of Sprint’s intent to terminate under Section 14.3 of this
agreement; and (ii) if Call-Net initiates the dispute resolution process
described in Section 16 within the cure period described in Section 14.1, the
date, if any, determined by the parties or the arbitrator under Section 16
hereof.

On termination of this agreement under Section 14, any traffic service
arrangements then in effect between the parties must also terminate unless the
parties otherwise agree in writing.

14.6 Dispute Resolution

On the occurrence of a Default, either party may proceed to protect and enforce
its rights and remedies relating to this agreement or the Default, whether for
damages or specific performance of the defaulting party’s obligations, in
accordance with Section 16 of this agreement, subject to Section 14.4. This
section survives termination of this agreement.

15. FORCE MAJEURE

Neither party is liable for failure to perform its obligations under this
agreement due to causes beyond its control, including but not limited to, acts
of God, fire, flood, or other catastrophes or calamities; any law, order,
regulation or request of governmental authority of competent jurisdiction;
national emergencies; insurrections, riots, wars, or acts of terrorism;
strikes, lock-outs, work stoppages or other labour difficulties; power
failures; severe weather conditions or acts or omissions of transportation
common carriers, but specifically excluding any order enjoining infringement of
intellectual property of any third party.

If either party is unable to perform any of its obligations under this
agreement for reasons described in this Section, the non-performing party will
immediately give notice to the other party and will use commercially reasonable
efforts to remedy the condition and resume performance as soon as possible. On
receipt of the notice, the obligations under this agreement that the affected
party is unable to perform because of the condition and the corresponding
obligations of the non-affected party is suspended for so long as the condition
exists, and the relevant cure periods under this agreement are extended for the
period of time that the condition exists.

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16. DISPUTE RESOLUTION

16.1 Option to Negotiate Disputes

The parties may seek to, but are not obligated to, resolve any issue, dispute,
or controversy arising out of or relating to this agreement using the
procedures in this Section 16.1. Any party may give the other party notice of
any dispute not resolved in the normal course of business. Within 10 days
after delivery of the notice, representatives of both parties may meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
dispute by the respective representatives of both parties within the time
frames and escalation process set forth below:

	 	 	 	 	 
	 	 	Sprint (Title)	 	Call-Net (Title)
	 	 	
	 	

	Within 10 days	 	
Vice President of Business

Operations and Development
 for
Sprint International
	 	Senior
Vice-President
 of
Corporate

Development
	 	 	 	 	 
	Within 20 days	 	
President — Sprint International
	 	President and CEO

If a party intends to be accompanied at a meeting by an attorney, the
other party will be given at least 2 business days’ notice of the intention and
may also be accompanied by an attorney. All negotiations under this section
are confidential and will be treated as compromise and settlement negotiations
for purposes of the United States Federal Rules of Evidence and any applicable
state rules of evidence.

16.2 Notice of Dispute

If a dispute between the parties arising under this agreement is not resolved
solely between the parties themselves as provided in Section 16.1 or a party
chooses not to follow the procedure set out in Section 16.1, a party may give
the other party at least 15 days’ prior written notice of its intention to
demand arbitration under this agreement. The notice will state the subject
matter of the dispute. Promptly following delivery of the notice the parties
will meet to attempt to amicably resolve the dispute. Any notice to Sprint is
to be copied to the Vice President of Business Operations and Development for
Sprint International and any notice to Call-Net is to be copied to its
President. All claims must be submitted to arbitration by a party under this
section within 6 months after the party gives a notice of the intent to demand
arbitration relating to the dispute. If the dispute is not brought to
arbitration in that 6 month period, the party is deemed to have waived any
rights to arbitration under this section with respect to the dispute.

16.3 Independent Arbitrator

Any dispute referred to in Section 16.2 that remains unresolved following the
15-day notice period will, on written notice by either party to the other, be
resolved by binding arbitration in Toronto, Ontario, Canada by a mutually
acceptable independent arbitrator knowledgeable and experienced in the
telecommunications industry in accordance with the Rules of the American
Arbitration Association. The arbitrator must not represent either party as an
advocate, but rather must render an objective decision based on the facts
properly received and reviewed in

57

 

accordance with applicable laws of evidence and applied to applicable laws.
The arbitrator does not have the power to compel Sprint to forfeit its
ownership interest in Call-Net, and no award made by the arbitrator may provide
for such forfeiture. The arbitration will be conducted in English.

The making of a final arbitration award is a condition precedent to any right
of action by either party against the other. Judgment on the award rendered by
the arbitrator is binding on both parties and may be entered in any court
having jurisdiction. Although the parties consider it appropriate that the
costs of any arbitration will be paid by the party against whom any award is
made, the arbitrator may make any award that appears appropriate, in its
discretion, with respect to the costs of arbitration. Any discussions,
procedures and judgment under this section will be treated as Confidential
Information under this agreement.

16.4 Continuing Performance

Both parties will continue performance during the pendency of any dispute,
unless an arbitrator has determined that the agreement is terminated in
accordance with Sections 14.4 and 16, or if there is no arbitration, a party
has given notice of termination as provided in this agreement and the agreement
in fact terminates.

16.5 Waiver of Jury Trial

If a dispute is not resolved under sections 16.1 through 16.3, inclusive, each
party waives its right to a jury trial in any court action arising among the
parties, whether under this agreement or otherwise, and whether made by claim,
counterclaim, third party claim or otherwise.

The agreement of each party to waive its right to a jury trial will be binding
on its successors and assigns.

16.6 Attorneys Fees

If a dispute is not resolved under Sections 16.1 through 16.3 inclusive, the
prevailing party in any formal dispute will be entitled to its reasonable
attorney and expert fees and costs (including fees and costs for in-house
counsel, with the hourly fees for the in-house lawyer being the sum of the
lawyer’s salary, benefits and bonus divided by 2,000). If the prevailing party
rejects a written settlement offer that exceeds the prevailing party’s
recovery, the offering party will be entitled to its reasonable attorney and
expert fees and costs.

17. MUTUAL RELEASES

17.1 Release by Sprint

Subject to the exceptions provided in this agreement, Sprint, for itself and
for its predecessors, successors, and assigns, fully and forever releases,
discharges and acquits Call-Net, and its respective officers, directors,
employees, agents, representatives, shareholders, partners, Affiliates,
subsidiaries, consultants, attorneys, creditors, predecessors, successors,
assigns or
transferees (collectively the “Call-Net Parties”) from any and all Claims of
any nature

58

 

whatsoever arising out of, under, or in any way related to, directly
or indirectly, in whole or in part, this agreement before the date of this
amendment and restatement of this agreement (each a “Sprint Claim”), whether
known or unknown, suspected or unsuspected, presently existing or that may
arise after the date of this amended and restated agreement, which Sprint ever
had, now has, or later has, must or may have as a result of acts or omissions
occurring by the date of this agreement (including, without limitation, any
outstanding royalties, fees, overhead, salaries, and any reimbursable labour
and other costs due under this agreement or the Principal Agreements), other
than amounts invoiced in the 6 months immediately before the date of this
agreement.

Notwithstanding anything in this agreement to the contrary, Sprint reserves the
right to assert a Sprint Claim against one or more of the Call-Net Parties, as
appropriate, if a claim is made against Sprint by a third party.

Sprint expressly waives any and all rights under any statute or provision or
principle of common law in any state or territory of the United States, Canada
or any foreign jurisdiction that limits the extent to which the foregoing
release would otherwise extend to a Sprint Claim that Sprint does not know or
suspect to exist in its favor at the time of executing this agreement. Thus,
for the purpose of implementing a full and complete release of Call-Net and the
others released in this agreement, Sprint expressly acknowledges that this
release is intended to include in its effect, without limitation, Sprint Claims
that Sprint does not know of or suspect to exist in its favor at the time of
execution hereof, and that the release contemplates an extinguishment of all
the Sprint Claims.

Sprint acknowledges that it may hereafter discover facts different from, or in
addition to, those that it knows or believes to be true with respect to the
Sprint Claims, and agrees that this agreement is and remains effective in all
respects notwithstanding the different or additional facts or the discovery
thereof.

17.2 Release by Call-Net

Subject to the exceptions provided in this agreement, Call-Net, for itself and
for its predecessors, successors and assigns, fully and forever releases,
discharges and acquits Sprint, and its respective officers, directors,
employees, agents, representatives, shareholders, partners, Affiliates,
subsidiaries, consultants, attorneys, creditors, predecessors, successors,
assigns or transferees from any and all Claims of any nature whatsoever arising
out of, under, or in any way related to, directly or indirectly, in whole or in
part, this agreement before the date of this amendment and restatement of this
agreement (each a “Call-Net Claim”), whether known or unknown, suspected or
unsuspected, presently existing or that may arise after the date of this
amended and restated agreement, which Call-Net ever had, now has, or later has,
must or may have as a result of acts or omissions occurring by the date of this
agreement (including, without limitation, any outstanding royalties, fees,
overhead, salaries, and any reimbursable labour and other costs due under this
agreement or the Principal Agreements), other than amounts invoiced in the 6
months immediately before the date of this agreement.

Notwithstanding anything in this agreement to the contrary, Call-Net reserves
the right to assert a Call-Net Claim against one or more of the Sprint Parties,
as appropriate, if a claim is made against Sprint by a third party.

59

 

Call-Net expressly waives any and all rights under any statute or provision or
principle of common law in any state or territory of the United States, Canada
or any foreign jurisdiction that limits the extent to which the foregoing
release would otherwise extend to a Call-Net Claim that Call-Net does not know
or suspect to exist in its favor at the time of executing this agreement.
Thus, for the purpose of implementing a full and complete release of Call-Net
and the others released in this agreement, Call-Net expressly acknowledges that
this release is intended to include in its effect, without limitation, Call-Net
Claims that Call-Net does not know of or suspect to exist in its favor at the
time of execution hereof, and that the release contemplates an extinguishment
of all the Call-Net Claims.

Call-Net acknowledges that it may hereafter discover facts different from, or
in addition to, those that any of them now know or believe to be true with
respect to the Call-Net Claims, and each agrees that this agreement is and
remain effective in all respects notwithstanding the different or additional
facts or the discovery thereof.

17.3 Claims

As used in this 17, the term “Claims” means all actions, causes of action,
suits, proceedings, debts (including, without limitation, indebtedness for
borrowed money), dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, liabilities
(statutory or otherwise), obligations, claims (including, without limitation,
claims brought by third parties claiming subrogation), damages, penalties,
losses, costs, expenses (including, without limitation, attorneys’ fees and
disbursements) and demands whatsoever, at law, in equity or otherwise.

17.4 Indemnity Regarding Assignment of Released Claims

Sprint represents to Call-Net, and Call-Net represents to Sprint, as of the
date of this agreement, that neither of them has, before the date of this
agreement, assigned, transferred, pledged or hypothecated, or purported to
assign, transfer, pledge or hypothecate, to any entity or individual, any of
the Sprint Claims or the Call-Net Claims. Sprint and Call-Net must indemnify
and hold harmless each other against any and all Claims of any nature
whatsoever arising out of, under, under or in any way related to any the
transfer, assignment, pledge or hypothecation, or purported transfer,
assignment, pledge or hypothecation. Any indemnity claims under this section
will be enforced under the provisions of Section 12 .

17.5 Effect

This agreement and the releases given under this agreement are freely and
voluntarily given and the parties acknowledge and represent that they: (i)
have fully reviewed the terms contained in this agreement; (ii) have consulted
with counsel regarding the terms contained in this agreement; (iii) are fully
informed with respect to the legal effect of this agreement; and (iv) have
voluntarily chosen to accept the terms and conditions of this agreement.

18. REPRESENTATIONS AND WARRANTIES

Sprint represents and warrants to Call-Net, and Call-Net represents and
warrants to Sprint, as of the date of this agreement, as follows:

60

 

18.1 Due Incorporation

The party is duly incorporated or otherwise duly organized and validly existing
under the laws of the jurisdiction of its incorporation or organization and has
the power and lawful authority to own its assets and properties and to carry on
its business as now conducted.

18.2 Power; Authority; Execution; Delivery; Enforceability

The party has the full right, power, authority and approval required to enter
into, execute and deliver this agreement and to perform fully the party’s
obligations under this agreement. This agreement has been duly executed and
delivered by the party and, assuming the due execution and delivery by the
other parties hereto, constitutes the valid and binding obligation of the
party, enforceable in accordance with its terms, except as: (i) the
enforceability may be limited by bankruptcy, insolvency, reorganization or
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally; and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.

18.3 Consents

No approval, consent or license of any foreign, federal, provincial, state,
county, local or other governmental or regulatory body or of any other Person
is required in connection with the execution and delivery by the party of this
agreement and the consummation and performance by the party of the transactions
contemplated, except the consents and approvals that if not obtained would not
materially impair the party’s ability to perform its obligations under this
agreement or have a material adverse effect on the financial positions of the
party.

18.4 No Conflicts

The execution and delivery of this agreement, the consummation of the
transactions contemplated under this agreement and the performance by the party
of this agreement in accordance with its terms and conditions will not conflict
with or result in the breach or violation of any of the terms or conditions of,
or constitute (or with notice or lapse of time or both would constitute) a
default under: (i) the certificate of incorporation, by-laws or documents
analogous to the foregoing documents of the party; (ii) any instrument,
contract or other agreement to which the party is a party or by or to which it
or its assets or properties are bound or subject; or (iii) any Canadian or
United States (including federal, state or provincial) statute or regulation,
or any order, judgment or decree of any court or governmental or regulatory
body in Canada or the United States (including federal, state or provincial
courts or governmental or regulatory bodies), except conflicts, breaches or
violations as to which requisite waivers or consents have been obtained or that
would not, individually or in the aggregate, materially impair the party’s
ability to perform its obligations under this agreement or have a material
adverse effect on the financial positions of the party.

18.5 Representations and Warranties of Call-Net

Call-Net represents and warrants to Sprint that:

61

 

	 	(a)	 	all necessary corporate action on the part of Call-Net has
been taken to authorize, allot and issue to Sprint the New Preferred
Share referred to in Section 8.11 and, on issuance, the New
Preferred Share will be a fully-paid and non-assessable Preferred
Share in the capital stock of Call-Net, validly issued in the name
of Sprint; and
	 
	 	(b)	 	the fair market value of the New Preferred Share will be, at
the time of issuance, no greater than Cdn.$1.00.

19. ASSIGNMENT

Neither this agreement, nor the rights, obligations or duties of either party
under this agreement may be assigned or delegated to any other party, person,
or entity without the prior written consent of the other party, and any
attempted assignment or delegation without that consent is void, but either
party may, without the other party’s consent, assign or delegate all or part of
its rights and obligations under this agreement to an Affiliate of the party,
i.e., the assigning party continues to be liable for the performance of its
obligations under this agreement.

20. NOTICES AND REQUESTS

20.1 Notice

Except as otherwise provided under this agreement or in the Exhibits to this
agreement, all notices, demands, or requests that may be given by any party to
the other party are in writing and are deemed to have been duly given: (i) on
the date of dispatch when delivered in person; (ii) one day after dispatch when
sent by overnight courier, maintaining records of receipt; and (iii) on the
date of dispatch when sent by telex, cable or Sprint Mail or facsimile during
normal business hours with telephone confirmation of receipt and addressed as
follows:

	 	Sprint:	 

	 	Sprint Communications Company L.P.

12120 Sunset Hills Road

Reston, Virginia 20190-3207

Attention:     Vice-President, Business Development & Marketing

Facsimile:     703-796-2916	 

	 	with a copy to:	 
	 
	 	Sprint Communications Company L.P.

6450 Sprint Parkway

Overland Park, Kansas 66251

Attention:     Senior Vice President and Associate General Counsel

Facsimile:     913-523-9941	 

62

 

	 	Call-Net:	 
	 
	 	Call-Net Enterprises Inc.

2235 Sheppard Avenue East

Atria II, Suite 1800

Toronto, Ontario

M2J 5G1

Attention:     President and CEO

Facsimile:     416-718-6443	 

	 	with a copy to:	 

	 	Call-Net Enterprises Inc.

2235 Sheppard Avenue East

Atria II, Suite 1800

Toronto, Ontario

M2J 5G1

Attention:     Senior Vice-President, Chief Legal Counsel

                      and Corporate Secretary

Facsimile:     416-718-6410	 

20.2 Change of Address

The address to which the notices, demands, requests, elections, or other
communications given by either party may be changed by written notice given by
that party to the other party under Section 20.1.

20.3 Requests

If a party may make a request to the other party under this agreement, unless
expressly provided otherwise, the request must be in writing and to the
appropriate designated person. If no designated person is indicated the
request will go to the program office of the party. Any purported “request”
that does not follow the procedures in this section, will not be a “request”
under this agreement. For example a phone call to a vice president is not a
request unless the agreement expressly provides otherwise.

21. TERMINATION OF PRIOR AGREEMENTS

As of the date of this agreement, the parties terminate the marketing
agreement, the subscription agreement, the software license agreement and the
trademark license agreement each of which was entered into by and between the
parties as of August 4, 1993.

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22. GENERAL PROVISIONS

22.1 Independent Contractor

Each party is engaged in a business that is independent from that of the other
party and each party performs its obligations under this agreement as an
independent contractor and not as the agent, employee or servant of the other
party.

22.2 Successors and Assigns

This agreement is binding on the parties and their respective successors and
assigns permitted under this agreement.

22.3 Amendments

This agreement may be amended only by written agreement signed by authorized
representatives of the parties. No waiver of any provisions of this agreement
and no consent to any default under this agreement is effective unless it is in
writing and signed by or on behalf of the party against whom the waiver or
consent is claimed.

22.4 Waiver

No failure of any party to strictly enforce any term, right, or condition of
this agreement is construed as a waiver of the term, right or condition.

22.5 No License

Except as expressly set forth in this agreement, no licenses or other rights of
use of any patents, copyrights, trade secrets, trade names, trademarks, service
marks or other proprietary rights are granted by this agreement.

22.6 Announcements

The parties will co-ordinate any announcement of this agreement, its terms or
any previous discussions or understandings between the parties regarding the
subject matter of this agreement, except that a party may not object to an
announcement made by the other party that is necessary in order for the party
to meet its legal obligation in respect of timely disclosure.

22.7 Severability

If a court or other lawful authority of competent jurisdiction declares that
any one or more of the provisions contained in this agreement is invalid,
illegal or unenforceable in any respect, the declaration will not affect the
validity or enforceability of any other provision of this agreement, but this
agreement is construed as if the invalid, illegal or unenforceable provision or
provisions had never been contained in this agreement.

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22.8 Construction

This agreement is construed without regard to the identity of the person who
drafted the various provisions hereof. Each provision of this agreement is
construed as though all the parties participated equally in its drafting.
Consequently, the parties acknowledge and agree that any rule of construction
that a document is to be construed against the drafting party must not be
applicable to this agreement.

22.9 Further Assurances

Each party to this agreement agrees to execute, acknowledge, deliver, file and
record the further certificates, amendments, instruments, agreements and
documents, and to do all the other acts and things, as may be required by law
or as may be necessary or advisable to carry out the intent and purposes of
this agreement.

22.10 Governing Law

This agreement is governed by and construed in accordance with the laws of the
State of Delaware, without regard to its principles of conflicts of law.
Subject to the provisions of Section 14, the parties submit to the
non-exclusive jurisdiction of the federal and state courts of the State of
Delaware with respect to any action or proceeding that may be instituted in
connection with this agreement. Either party has the right to apply to a court
of competent jurisdiction for injunctive relief of any breach or threatened
breach of Section 11 of this agreement.

22.11 Headings

The headings and numbering of articles, sections and paragraphs in this
agreement are for convenience only and are not to be construed to define or
limit any of the terms or conditions in this agreement or affect the meaning or
interpretation of this agreement.

22.12 Exhibits

The following Exhibits are incorporated in this agreement as though fully set
forth and are a part of this agreement:

	 	 	 
	Definition Exhibit	 	Definitions
	
	 	

	Exhibit A	 	
License Schedule
	 	 	 
	Exhibit B	 	
Previously Licensed Services
	 	 	 
	Exhibit C	 	
Functional Services
	 	 	 
	Exhibit D	 	
List of Authorized Marks
	 	 	 
	Exhibit E	 	
Cross Border Sales Memorandum
	 	 	 
	Exhibit F	 	
Licensed Software

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22.13 Inconsistency among Various Agreements

If there is an inconsistency among the terms of this agreement and any other
agreement between Sprint and Call-Net, other than the Hosting Services
Wholesale Distribution Agreement dated July 11, 2001 between Sprint and
Call-Net, the terms of this agreement control.

22.14 Counterparts

For the convenience of the parties, this agreement may be executed in several
counterparts, each of which when so executed is an original instrument and the
counterparts together constitute one and the same instrument (and
notwithstanding their date of execution will be treated as bearing a date as of
the date of this agreement).

IN WITNESS WHEREOF, each of the parties has caused this agreement to be duly
executed for it and on its behalf as of the day and year first above written.

	 	 	 
	SPRINT COMMUNICATIONS COMPANY L.P.	 	
CALL-NET ENTERPRISES INC
	 	 	 
	 	 	 
	/s/ Les Meredith	 	
/s/ Randall Benson
	
	 	

	Signature	 	
Signature
	 	 	 
	Les Meredith	 	
Randall Benson
	
	 	

	Printed Name	 	
Printed Name
	 	 	 
	Vice President, Mergers and Acquisitions	 	
Senior Vice President and CFO
	
	 	

	Title	 	
Title

66

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Definitions Exhibit

DEFINITIONS

As used in this agreement, the following terms have the meanings specified:

Affiliate

“Affiliate” means an “affiliated company” within the meaning of the Ontario
Securities Act, except that for purposes of applying that definition

	 	(a)	 	any partnership will be considered to be a body corporate the
shareholders of which are the shareholders or partners of its
general partner or managing partner, and
	 
	 	(b)	 	any limited liability company will be considered to be a body
corporate the shareholders of which are the members of the limited
liability company.

Authorized Marks

“Authorized Marks” means the Sprint Primary Marks, the Licensed Services
Trademarks, the Possible Future Services Trademarks and the Products
Trademarks, except Authorized Marks does not include any trademark that if used
in the Territory (x) would infringe on a trademark held in Canada by a third
party or (y) violates a statute, rule, regulation or law of Canada, or (z) is
known by Call-Net or its Affiliates to not be available for use in Canada for
any reason.

Brand Identity Standards

“Brand Identity Standards” means the standards of use for each Authorized Mark
as set forth in Sprint’s standard Brand Identity Standards updated and
delivered to Call-Net from time to time. Sprint has the right to modify the
standards for any Authorized Mark from time to time by delivering an updated
version of the Brand Identity Standards to Call-Net. The amended Brand
Identity Standards for an Authorized Mark are effective 30 days after the date
of delivery of the notice. Brand Identity Standards also means the terms and
conditions in a Licensed Services Framework regarding the use of Call-Net
Product Marks.

Business Know-How

“Business Know-How” means the know-how to use and deploy the Licensed Services
or Licensable Services in the same manner as used and deployed by Sprint or
Call-Net, as applicable, including, without limitation, marketing and business
know-how, results of relevant research studies, forecasts of future market
trends, operating procedures and results, industry intelligence relating to
competitors and suppliers, vendor and equipment evaluations, relevant business
plans, technical and operational data, trade secrets, and all improvements,
modifications, and advances thereto made by a party or its agents or
contractors, in whatever

1

 

form or medium embodied, but excluding Technical Know-How. For greater
clarity, trade secrets include, without limitation, items (a) and (c) in the
definition of Confidential Information.

Call-Net

“Call-Net” means Call-Net Enterprises Inc. and, in the appropriate context, any
of its Affiliates.

Call-Net Product Marks

“Call-Net Product Marks” means those trademarks or product level names created
and used by Call-Net or its Affiliates in association with certain Licensed
Services and in accordance with this agreement. For greater certainty,
Call-Net retains all proprietary rights and ownership in respect of the marks,
may register them in its or one of its Affiliate’s names and is entitled to
continue to use the marks following termination of all or part of this
agreement, if the use is severable from the use of any Authorized Mark.

Canadian Requirements

“Canadian Requirements” means, with respect to any Licensed Service, any
modifications or enhancements to the service reasonably required from time to
time in order to meet Canadian regulatory requirements, or technical or
operating standards in order to enable the Licensed Service to be offered to
end user customers in Canada, including without limitation, provision for
language requirements, Canadian taxes, local access methodology including
authorization codes, but will not include modifications or enhancements based
solely on marketing considerations.

Change of Control

“Change of Control” means

	 	(a)	 	the closing of a transaction or a series of related
transactions with a third party, or third parties who are acting as
a group, undertaken in any form whatsoever involving a merger,
consolidation, combination, share exchange, reorganization of the
party or other extraordinary transaction with respect to a party in
which, on consummation thereof, the holders of Voting Equity
Securities of that party immediately before the transaction or
series of related transactions would not own (immediately following
the consummation of the transaction or series of related
transactions) at least 50% of the total voting power represented by
the outstanding Voting Equity Securities, regardless of whether
calculated on a fully diluted basis or on an outstanding Voting
Equity Securities basis (provided that the same measure is used in
both the numerator and denominator) or, if the outstanding Voting
Equity Securities are converted or exchanged in the transaction or
series of related transactions into securities of a third party, at
least 50% of the total voting power represented by the outstanding
voting equity securities of the third party; or
	 
	 	(b)	 	a transaction in which a third party acquires substantially
all of the party’s assets or substantially all of the assets of the
primary operating Affiliates of a party; or

2

 

	 	(c)	 	a change in the composition of the board of directors of a
party occurring at a single meeting of shareholders of the party or
on execution of a shareholders’ resolution such that a third party,
or group of third parties acting as a group (collectively the
“dissidents”), succeed in having enough of its nominees elected to
the board of directors of the party such that the nominees, when
added to any incumbent directors remaining on the board of directors
of the party after the election who have been appointed by or who
are acting jointly or in concert (within the meaning of the
Securities Act (Ontario) with the group, constitutes a majority of
the board of directors of the party, without the board of directors
in place immediately before the change having approved the change.

For purposes of this provision a third party does not include Affiliates of the
party. The date of occurrence of (a), (b) or (c) is the effective date of the
Change of Control.

Call-Net’s currently proposed debt restructuring transaction to be completed
concurrently with the execution of the amendment and restatement of this
agreement, and any related changes in shareholders, will not constitute a
Change of Control of Call-Net.

Confidential Information

“Confidential Information” means any information or data that is of value to
the party disclosing the information by virtue of its not being generally
available to the public, including but not limited to:

	 	(a)	 	scientific or technical information;
	 
	 	(b)	 	information related to the current or proposed business,
sales, and marketing plans, and the customers and accounts of the
party disclosing the information, including financial information
related thereto;
	 
	 	(c)	 	drawings, designs, software and hardware, including the
Technology, Technical Know-How and all documentation related thereto
to be licensed to or shared with the other party or its Affiliates;
	 
	 	(d)	 	costs and pricing information;
	 
	 	(e)	 	identification of personnel or other resources used in the
business of the party disclosing the information; and
	 
	 	(f)	 	Business Know-How.

The term “Confidential Information” does not include any information that:

	 	(i)	 	is now in or subsequently enters the public
domain through means other than direct or indirect disclosure
by either party in violation of the terms of this agreement;

3

 

	 	(ii)	 	is already in the possession of the party
receiving the information free of any known confidential
obligation to any other party;
	 
	 	(iii)	 	was developed by the party receiving the
information independently of and without use of any of the
Confidential Information; or
	 
	 	(iv)	 	is lawfully communicated to the party receiving
the information by a third party, free of any known
confidentiality obligation.

Consulting Services

“Consulting Services” has the meaning set forth in Section 7.

Damages

“Damages” has the meaning set forth in Section 12.

Default

“Default” has the meaning set forth in Section 14.1.

Documentation

“Documentation” means all written information, diagrams, flow charts and
related know-how that are necessary for the use, installation, and operation of
the Licensed Intellectual Property or that describe the functions they are
intended to perform in supporting Licensed Services, including functional
specifications and quality standards, and other consumer information, if
applicable, which is furnished by one party to the other under this agreement.

Equity Security

“Equity Security” means: (i) any common stock; (ii) any debt or equity
securities of a party convertible into or exchangeable for common stock or
other Voting Equity Securities; (iii) any options, rights or warrants (or any
other similar securities) issued by a party to acquire common stock or other
Voting Equity Securities; or (iv) any security issuable in connection with any
stock split, stock dividend, recapitalization or other similar transaction in
which securities are issued on a proportionate basis to all holders of a class
of Equity Securities.

Functional Services

“Functional Services” means:

	 	(a)	 	those specific services that Call-Net may request that Sprint
or Sprint’s Affiliates perform based on or utilizing the
Intellectual Property, in order that Call-Net may provide and market
Licensed Services; and
	 
	 	(b)	 	modifications to those specific services.

4

 

“Functional Services” include, but are not limited to, network management,
customer service, fraud control, operator services, billing services and
telemarketing services. Functional Services do not include the licensing of
software, the provision of Consulting Services, nor headquarters staff
functions such as human resources, accounting, finance, legal, tax and risk
management.

Incremental Costs

“Incremental Costs” means, with respect to the performance of any Functional
Service, the sum of:

	 	(a)	 	all new costs incurred by Sprint or its Affiliates for the
purpose of providing, supporting, tracking and billing the
Functional Service, including additional overhead expenses directly
related to providing the Functional Service (e.g., the required
acquisition of additional space or equipment); plus
	 
	 	(b)	 	with respect to modifications requested by Call-Net or its
Affiliates, the costs of the new development, including:

	 	(i)	 	employee salaries, benefits and travel expenses
to the extent that the costs are incremental due to a request
for Functional Services under this agreement. For greater
certainty (x) the rate charged by Sprint for salaried
employees will be the rate charged by the Sprint development
group to its marketing business units for similar development,
to the extent the rates are not marked up to those business
units; and (y) any hours expended by a Sprint employee on a
requested modification are incremental to Sprint;
	 
	 	(ii)	 	the cost of additional equipment, facilities or
network interfacing used to provide the function to the extent
so used and not previously reimbursed to Sprint (amortized
from the date of acquisition over their expected lives);
	 
	 	(iii)	 	information system processing and other
processing costs charged in the same manner as Sprint charges
its marketing business units to the extent those costs have
not already been included elsewhere in this definition and to
the extent the charges are not marked up to those business
units; and
	 
	 	(iv)	 	Canadian taxes incurred by Sprint, if applicable;
plus

	 	(c)	 	charges and expenses billed to Sprint by third parties only
to the extent they relate to the incremental provision of the
Functional Services or request function; plus
	 
	 	(d)	 	an amount equal to [ * ] of the costs included in clause (a)
and (b) above;

except that “Incremental Costs” does not include any Sprint product
development, marketing or other overhead expense not specified in clause (a) or
(b). The parties will share relevant volume forecasts and other information to
arrive at a mutually agreed on Incremental Cost. At three year intervals
following the date of this agreement, the parties will review the continued
suitability of the definition of “Incremental Costs” and may modify the
definition in any manner that is mutually agreed in writing.

5

 

Information Service

“Information Service” means services involved in creating and managing
information, including those matters commonly referred to in the
telecommunications industry as “content”. For example, Information Service
includes, among other things, consulting on telecommunication system
integration, managing databases of video or audio information, and internet
content. Information Service does not include, among other things, the
transmission of information through networks operated by common carriers like
Sprint and Call-Net.

For greater certainty, however, to the extent Call-Net intends to provide
Information Services, including but not limited to any consulting, advice or
sale of expertise of individuals, related to the launch or ongoing provision of
a Licensable Service, Call-Net may obtain from Sprint, in accordance with the
terms of this agreement, the Intellectual Property and Sprint Trademarks used
by Sprint in developing and provisioning the Information Services outside of
the Territory. However, Call-Net cannot rely on Sprint personnel, hardware or
network infrastructure to actually perform the Information Services on behalf
of Call-Net’s customers unless otherwise agreed to in a Consulting Services
arrangement.

Intellectual Property

“Intellectual Property” means for Sprint, Know-How and Technology.
“Intellectual Property” for Call-Net, means Call-Net Business Know-How.

Know-How

“Know-How” means Business Know-How and Technical Know-How, collectively.

License Schedule

“License Schedule” has the meaning set forth in Section 2.2.3.

Licensable Services

“Licensable Services” means all wireline telecommunication products and
services provided by Sprint or its Affiliates from time to time in the United
States: (i) to customers; or (ii) using the Sprint brand and associated
trademarks. Licensable Services include, without limitation, long distance,
internet access, internet transport, internet value added services, data
transport, network management, hosting services, local exchange, and any
similar future products and services, together with enhancements, additions and
related features adopted by Sprint from time to time. Except as provided
otherwise in this agreement, the term “Licensable Services” does not include
any Information Services nor any other non-wireline telecommunications
services, including without limitation, wireless services and satellite
services.

For purposes of this definition, wireline telecommunication services remain
wireline telecommunication services even if the service is terminated in the
“last mile” using a fixed point wireless product such as MMDS. For example,
voice long distance for home residential use remains a wireline
telecommunication service even if the connection from the central office to the
home is over a fixed point wireless system.

6

 

Licensable Services does not include any service or features of a service if
Sprint, acting reasonably and following consultation with Call-Net, concludes
that providing the service or features of the service would:

	 	(a)	 	compromise the security or integrity of any Sprint network or
system other than the ordinary compromise experienced in the
interconnection of telecommunications networks; or
	 
	 	(b)	 	unreasonably adversely affect a material Sprint development
program (e.g., the Sprint PCS 3G Development (Wireless) Program).

Licensed Intellectual Property

“Licensed Intellectual Property” means with respect to Sprint, the licenses or
rights of use granted by Sprint to Call-Net under Section 5.1 . “Licensed
Intellectual Property” means with respect to Call-Net, the licenses or rights
of use granted by Call-Net to Sprint under Section 5.5.

Licensed Services

“Licensed Services” means those specific Previously Licensed Services,
Licensable Services and Possible Future Services that are licensed to Call-Net
under the terms of this agreement.

Licensed Services Framework

“Licensed Services Framework” means the reasonably detailed written description
of the plans of Call-Net to offer a particular Licensed Service agreed to by
Call-Net and Sprint. The description will consist of a description of the
product or service, the target geographic and demographic markets, Sprint
Trademarks and Call-Net Product Marks (if applicable) to be used with the
produce or service, brand strategy, product positioning, message consistency,
and, to the extent applicable, a general description of the end-user
functionality to be provided, technical and functional specifications of
Technology and Technical Know-How to be provided by Sprint, acceptance criteria
for Licensed Software and requested Licensed Software warranties and
maintenance services.

Licensed Services Trademarks

“Licensed Services Trademarks” means individually and collectively the Sprint
Trademarks identified in a Licensed Services Framework or on Exhibit D related
to a service or to a product that is not a Product. For greater clarity, the
“Licensed Services Trademarks” include all trademarks and other marks used by
Sprint in the United States in connection with the marketing or sale of a
Licensed Service licensed to Call-Net by Sprint under this agreement, except
for trademarks used in connection with Products.

Licensed Software

“Licensed Software” is as described in Section 5.3.

7

 

North Supply

“North Supply” means North Supply Company, which is an Affiliate of Sprint.

Object Code

“Object Code” means the version of Licensed Software, either written directly
or translated from Source Code, which, when presented on a suitable storage
medium, may be directly executed by and through computer hardware, but that
code may be stored in an encoded and non-executable format, on any medium
whatsoever.

Person

“Person” means any individual, corporation, partnership, unincorporated
organization, trust, trustee, executor, administrator or other legal
representative, or any combination of one or more of the foregoing acting
together.

Possible Future Services

“Possible Future Services” has the meaning set forth in Section 2.5 of this
agreement.

Possible Future Services Trademarks

“Possible Future Services Trademarks” means the Sprint Trademarks identified in
a Licensed Services Framework approved under Section 2.5.

Previously Licensed Services

“Previously Licensed Services” means those specific Licensable Services that
have been provided by Call-Net to its customers before the date of this
agreement.

Principal Agreements

“Principal Agreements” means, collectively,:

	 	(a)	 	this agreement;
	 
	 	(b)	 	the International Telecommunications Services Agreement dated
as of August 4, 1993, by and between Sprint and Call-Net;
	 
	 	(c)	 	the Marketing agreement dated as of August 4, 1993, by and
between Sprint and Call-Net;
	 
	 	(d)	 	the Subscription agreement dated August 4, 1993, as amended
on September 29, 1993 by and between Sprint Corporation and
Call-Net;
	 
	 	(e)	 	the Traffic Service agreement dated as of August 4, 1993, by
and between Sprint and Call-Net;

8

 

	 	(f)	 	the Software License Agreement dated August 4, 1993, by and
between Sprint and Call-Net; and
	 
	 	(g)	 	the Trademark License Agreement dated August 4, 1993, by and
between Sprint and Call-Net.

Products Trademarks

“Products Trademarks” means individually and collectively the Sprint Trademarks
identified in a Licensed Services Framework or on Exhibit D as associated with
a Product. The “Products Trademarks” include all trademarks and other marks
associated with the Products licensed to Call-Net by Sprint under this
agreement.

Products

“Products” means equipment and other tangible personal property that carry a
Sprint Primary Mark by reason of an agreement between Sprint and a third party
manufacturer or distributor (e.g., telephone sets). Call-Net and its
Affiliates are not third parties for purposes of this definition. For the
avoidance of doubt, “Products” does not include tangible items that are merely
a means to the provision of a Licensed Service (e.g., calling cards or prepaid
telephone cards).

Program Defects

“Program Defects” means a software program’s failure to operate in accordance
with the mutually agreed specifications relating to the program.

Services

“Services” means, collectively, Consulting Services and Functional Services.

Software

“Software” means the Object Code of Sprint’s computer software programs that
are included in the Technology.

Source Code

“Source Code” means available appropriate documentation and Licensed Software
in assembly, microcode language or any higher level language, with all
available comments or notes of the computer programmer(s) who created the
Licensed Software, in any storage format whatsoever.

Sprint

“Sprint” means Sprint Communications Company L.P. and any of its Affiliates.

Sprint Corporation

“Sprint Corporation” means Sprint Corporation, a Kansas corporation.

9

 

Sprint Management

“Sprint Management” means the Vice President of Business Operations and
Development for Sprint International and the President of Sprint International.

Sprint Primary Marks

“Sprint Primary Marks” means

	 	(a)	 	the Sprint name standing alone, and
	 
	 	(b)	 	the Sprint diamond logo plus the Sprint name.

Sprint Trademarks

“Sprint Trademarks” means those trademarks, including the Sprint Primary Marks,
that Sprint uses in the United States to market and sell the Licensable
Services, the Possible Future Services, and the Products, as the case may be.

Statement of Work

“Statement of Work” means a detailed written description of the work to be
performed by Sprint to deliver to Call-Net a Service that includes, at a
minimum but without limitation, detailed description and identification of:

	 	(a)	 	the nature and scope of the work to be performed;
	 
	 	(b)	 	the tangible deliverable items;
	 
	 	(c)	 	the hourly, monthly, or other periodic rates to be paid by
Call-Net to Sprint for the services;
	 
	 	(d)	 	the applicable payment terms; and
	 
	 	(e)	 	the work schedule.

Technical Know-How

“Technical Know-How” means Documentation related to proprietary application
software, including, without limitation, the related object code, related
high-level specifications and requirements and detailed design specifications
and requirements.

Technology

“Technology” means, at the relevant time, all software, hardware, systems
functionality and Documentation used in the design, configuration,
implementation and provisioning of Licensable Services and Possible Future
Services if the parties enter into a Licensed Schedule for Possible Future
Services, together with related features/functionality including but not
limited to Software and Technical Know-How used in providing customer service,
call rating, billing, network

10

 

management and intelligent network capabilities. “Technology” also includes
all enhancements, upgrades or additions to any software, hardware, systems
functionality or Documentation occurring during the term, including any
enhancements or modifications requested by Call-Net and furnished by Sprint to
Call-Net, regardless of the form or medium in which it is embodied and
regardless of the party creating them.

Termination Date

“Termination Date” means March 31, 2012.

Territory

“Territory” means the geographical boundaries of the country of Canada as
constituted on the date of this agreement.

Transition Period

“Transition Period” has the meaning set forth in Section 10.2.

Voting Equity Securities

“Voting Equity Securities” means:

	 	(a)	 	when referring to outstanding shares, the outstanding Equity
Securities that, at the date of the determination, entitle the
holders thereof to vote generally (not separately as a class) in any
election of directors or generally (not separately as a class) with
respect to any merger, consolidation, combination, share exchange,
reorganization or other extraordinary transaction; and
	 
	 	(b)	 	when referring to fully diluted shares, the Equity Securities
that would be outstanding, at the date of the determination, and
would entitle the holders to vote on the matter under consideration,
if the Equity Securities were fully converted, to the greatest
extent possible into Equity Securities that could vote on the matter
under consideration.

11

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit A

Sample License Schedule

Name of Licensed Service:

Sprint Trademarks (including the principal Sprint brand) to be used in
connection with the Licensed Service:

Nature and identity, in general, of the Intellectual Property to be used in
connection with delivery of the Licensed Service:

Licensed Software warranties and maintenance services, if any, agreed to by the
parties:

IN WITNESS WHEREOF, Sprint and Call-Net have executed this License Schedule
under the terms and conditions of the Amended and Restated Technology and
Services Provisioning Agreement between the parties, dated April 1, 2002.

AGREED AND ACCEPTED:

	 	 	 
	SPRINT COMMUNICATIONS COMPANY L.P.	 	
CALL-NET ENTERPRISES INC
	 	 	 
	 	 	 
	
	 	

	Signature	 	
Signature
	 	 	 
	
	 	

	Printed Name	 	
Printed Name
	 	 	 
	
	 	

	Title	 	
Title

 

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit B

Previously Licensed Services

	 	 	 
	SERVICES	 	DESCRIPTION
	
	 	

	ADSL Internet Access	 	
Business Internet DSL; Residential Internet DSL; Access to the
Internet using ADSL technology
	 	 	 
	ATM (Asynchronous Transfer

Mode)	 	
Switched data service using ATM protocol
	 	 	 
	Billing Analysis Software	 	
Customer Reporting Tools; Bill Analysis Software; Web-based
Billing, Reporting & Analysis Software — (available on-line)
	 	 	 
	Call Detail Reporting	 	
Customer Reporting Tools; Hardcopy Management Reports
	 	 	 
	Calling Card	 	
Foncard Calling Card; Foncard Plus Calling Card; 0+ Calling Card
	 	 	 
	Dedicated Internet Access	 	
Business Internet Service; Access to the internet (fractional 56
kbps service up to 155 Mbps)
	 	 	 
	Dial-Up Internet Access	 	
Business Internet Dial; Residential Internet Dial; 56 kbps dial up
access to the Internet
	 	 	 
	Frame Relay	 	
Switched data service using Frame Relay protocol
	 	 	 
	Frame Relay Managed Services	 	
Advanced Frame Relay Managed Services; More advanced performance
reporting and performance management options
	 	 	 
	ISDN BRI	 	
Digital Access BRI; Local access services using ISDN BRI access
	 	 	 
	ISDN PRI	 	
Digital Access PRI; Local access services using ISDN PRI access
	 	 	 
	ISDN PRI Traffic Reports	 	
Soft and hard copy traffic reports
	 	 	 
	Local Service	 	
Individual Business Lines (IBL); Individual Consumer & SOHO Lines;
Local access services using traditional copper pair
	 	 	 
	Long Distance	 	
Outbound long distance voice service — switched or dedicated
access; Authorization Codes
	 	 	 
	Managed Network Services	 	
Performance Plus; Pro-Monitor; Pro-Monitor Plus; Full Management
Standard; Full Management Plus; Outsource Network Management &
Performance Reporting for Data Services — Frame Relay, Remote
Access IP VPN, Private Line, Internet, ATM, TLS
	 	 	 
	Online Near Real Time Usage Reporting & Analysis	 	
Customer Reporting Tools; Near Real Time Reporting Tool (NRT); Access to usage/traffic information near real time (minutes after call completion)
	 	 	 
	Operator Services	 	
0+ Calling
	 	 	 
	Private Line	 	
Private circuits from DS-0 to OC-3
	 	 	 
	Professional Services e.g.
Consulting	 	
Sprint E/Solutions Professional Services; Consulting etc
	 	 	 
	Remote Access IP VPN	 	
Dial up access over private SCI IP Network
	 	 	 
	SDSL Internet Access	 	
Business Internet DSL; Access to the Internet using SDSL technology
	 	 	 
	Site-to-Site IP VPN	 	
Dedicated access VPN over SCI IP Network
	 	 	 
	Sprint E/Solutions Business Solutions	 	
Those items covered pursuant to the Hosting Services Wholesale Distribution Agreement dated July 11, 2001.
	 	 	 
	Teleconferencing Service	 	
Audio Conferencing
	 	 	 
	TLS (Transparent LAN Service)	 	
Bridged Ethernet connectivity for multiple locations
	 	 	 
	Toll Free Service	 	
Toll Free Service; Enhanced TF features — IVR etc; Toll Free
Service — International origination
	 	 	 
	Unified Messaging	 	
Message Management — E-mail, Fax & Voicemail

 

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit C

Functional Services

	 	 	 	 	 
	FUNCTIONAL SERVICE	 	DESCRIPTION	 	APPENDIX
	
	 	
	 	

	National Technical

Assistance Control	 	
Network technical
support for Nortel
switches.
Establishing a
single
point-of-contact for
Sprint and Sprint
Canada when
requesting
assistance from
Nortel
	 	IV
	 	 	 	 	 
	Foncard/Operator Services	 	
Support for
Residential Foncard
and operator
services for
Call-Net’s
customers. This
service includes not
only the related
operator service
support, but it
includes a Network
Data Mover (NDM)
circuit and ISDN
circuits to Sprint’s
operator service
centers.
	 	IX
	 	 	 	 	 
	ES2 Fraud	 	
Monitoring and near
real time detection
of abused calling
cards on the Sprint
Network.
	 	XIV
	 	 	 	 	 
	Toll Free Call Detail
Record
 (CDR) Migration —
Phase IV
 (Toll Free North
bound)
	 	
Enables Sprint to
set up switched Toll
Free numbers on the
WL service type in
CIS because CDR
exchange sends US
originated CDRs to
Sprint Canada
allowing them to
bill calls. Using
the WL service type
allows Sprint US to
set up toll Free
numbers in the
network, relieving
DIGMAN resource
constraints.

 

[ * ]

 

 

 

 

	 	XX   [ * ]
	 	 	 	 	 
	Service Control Point	 	
Access to SCP for
account code
screening, storage
of 800 number
routing information,
Foncard validation
and VPN translation
and routing
information.
Supersedes the SCP
query pricing
section of Appendix
X and Appendix III.
	 	XXV

 

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit D

List of Authorized Marks, Product or Service Names and Brand Usage

	1)	 	Authorized Marks

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Registration or
	 	 	 	 	 	 	Registration or	 	Application
	Sprint Authorized Mark	 	Product Associated with Authorized Mark	 	Application #	 	Date
	
	 	
	 	
	 	

	CARTE INSTATEL
	 	Pre-paid telecommunications calling card services	 	TMA499,984	 	 	09/03/98	 
	CARTESPRINT
	 	Telecommunications calling card services	 	TMA477,461	 	 	06/10/97	 
	CLEARLINE
	 	Telecommunications services	 	TMA477,416	 	 	06/10/97	 
	CONFERENCE SPRINT
	 	Telecommunications calling card services	 	TMA481,294	 	 	08/22/97	 
	ENTREPRISE SPRINT
	 	Enterprises telecommunications services	 	TMA499,983	 	 	09/03/98	 
	E/SOLUTIONS
	 	E-commerce and web hosting services	 	Pending	 	 	Pending
	FONCARD
	 	Telecommunications calling card services	 	 	 	 	 	 	 	 
	FONVIEW
	 	Software for telecommunications management and	 	TMA471,986	 	 	03/04/97	 
	 
	 	monitoring	 	 	 	 	 	 	 	 
	GLOBAL FON DESIGN
	 	Telecommunications services	 	TMA429,873	 	 	06/24/94	 
	GLOBAL SPRINTFAX
	 	Telecommunications fax services	 	TMA422,873	 	 	02/04/94	 
	INSTANT FONCARD
	 	Telecommunications calling card services	 	TMA760,926	 	 	05/24/96	 
	REAL SOLUTIONS
	 	Telecommunications business consulting	 	 	767724	 	 	 	11/03/94	 
	SIMPLE TO SWITCH. SIMPLE
	 	 	 	 	 	 	 	 	 	 	 	 
	TO SAVE. SIMPLY SPRINT
	 	 	 	 	 	 	 	 	 	 	 	 
	CANADA
	 	Telecommunications services	 	 	1130470	 	 	 	02/08/02	 
	SPRINT
	 	Telecommunications services	 	TMA300,027	 	 	02/15/85	 
	SPRINT CANADA
	 	Telecommunications services	 	TMA468,519	 	 	01/10/97	 
	SPRINT CANADA & DESIGN
	 	Telecommunications services	 	TMA468,521	 	 	01/10/97	 
	SPRINT CLARITY
	 	Telecommunications services	 	TMA443,477	 	 	06/02/95	 
	SPRINT ENTERPRISE
	 	Business telecommunications services	 	TMA499,982	 	 	09/03/98	 
	SPRINT EXPRESS
	 	Telecommunications services	 	TMA418,135	 	 	10/15/93	 
	SPRINT LOGO
	 	Telecommunications services	 	TMA399,712	 	 	07/03/92	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Registration or
	 	 	 	 	 	 	Registration or	 	Application
	Sprint Authorized Mark	 	Product Associated with Authorized Mark	 	Application #	 	Date
	
	 	
	 	
	 	

	SPRINT QUICKCONFERENCE
	 	Telecommunications calling card services	 	TMA473,323	 	 	05/12/95	 
	SPRINTNET
	 	Telecommunications services	 	TMA398,590	 	 	05/22/92	 
	THE MOST
	 	Long distance telecommunications services	 	TMA450,058	 	 	11/17/95	 
	THE MOST FOR BUSINESS
	 	Business long distance telecommunications services	 	TMA480,017	 	 	08/08/97	 
	THE MOST FOR THE LEAST
	 	Long distance telecommunications services	 	TMA450,771	 	 	11/24/95	 
	THE MOST FOR THE LEAST
(Chinese characters)
	 	Long distance telecommunications services	 	TMA492,474	 	 	04/06/98	 
	THE MOST ONLINE
	 	Internet access and dial-up services	 	Pending	 	 	Pending
	THE MOST ONLINE & DESIGN
	 	Internet access and dial-up services	 	Pending	 	 	Pending
	THE MOST SAVINGS PLAN
(Chinese characters)
	 	Long distance telecommunications services	 	TMA485,542	 	 	11/17/97	 
	THE MOST WORLDWIDE
	 	Long distance telecommunications services	 	TMA456,586	 	 	04/19/96	 
	THE MOST WORLDWIDE & DESIGN
	 	Long distance telecommunications services	 	TMA468,119	 	 	01/02/97	 
	THE MOST WORLDWIDE &
DESIGN (Chinese
characters)
	 	Long distance telecommunications services	 	TMA492,473	 	 	04/06/98	 
	US SPRINT
	 	Telecommunications services	 	TMA423,517	 	 	02/25/94	 

All other Authorized Marks have not been registered or applied for as
trademarks under the Trademarks Act of Canada.

2

 

Product or Service Mark

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	ADSL Internet Access	 	
Generic service name for services offering internet

access using ADSL technology
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed
using Business
Internet DSL, Home
Connections with
High Speed Internet
or Business
Connections with
High Speed Internet
names.
	 	 	 	 	 
	Advanced Frame Relay Managed Services	 	
Outsourced WAN management services with web-based
performance reporting for medium to large business
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Advanced Integrated Data Network Solutions	 	
ATM product combining voice, data and video
transmission capability for medium to large business
customers
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Anytime 500 / Anytime 1000	 	
Fixed number of long distance minutes usable anytime
for a monthly flat rate
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names (ex. Long
Distance Services,
other plan names)
	 	 	 	 	 
	Application Infrastructure Management and
Business Continuity Planning
	 	
Outsourced application infrastructure management
services and business continuity planning
	 	Always marketed as
Sprint E/Solutions, brought to you by
Sprint Canada.

	 	 	 	 	 
	Asynchronous Transfer Mode (ATM)	 	
Switched data service using ATM protocol
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.

3

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Audio Conferencing	 	
Outsourced conference calling product
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Billing Analysis Software (BAS)	 	
Customer billing reporting tools, web-based billing,
reporting and analysis software
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Business Connections TM	 	
Local medium and large business telecommunications
services, with associated features
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Business Connections TM with High Speed Internet	 	
Business bundled product with local and ADSL
offerings, along with long distance plan option
	 	Used together with
Sprint Canada brand, Business Connections name, and may be marketed
with other Sprint
Canada product
names (ex. Long Distance Services, other plan names)
	 	 	 	 	 
	Business Internet DSL	 	
SDSL internet access for business customers
	 	
Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Business IP Virtual Private Network (VPN)	 	
Dedicated access VPN over IP network for medium to
large customers
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.
	 	 	 	 	 
	Call Detail Reporting	 	
Customer reporting tools and management reports
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names

4

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Calling Card Services	 	
Generic name for a suite of calling card services

	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed
using the FONCard
name.
	 	 	 	 	 
	Contact Centre Solutions	 	
Call centre management and enabling services for
business customers
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Data Services	 	
Generic name for a suite of data services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	E/Solutions	 	
Suite of outsourced e-commerce services
	 	Always marketed as
Sprint E/Solutions,
brought to you by
Sprint Canada.
	 	 	 	 	 
	e-Commerce Professional Solutions	 	
e-Commerce enabling applications and web hosting for
medium to large business
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	E-defined TM	 	
Tagline used for business e-commerce services
	 	Used together with
Sprint Canada brand
and may be marketed

with other Sprint
Canada product
names
	 	 	 	 	 
	FONCard	 	
Calling card services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Frame Relay	 	
Switched data service using Frame Relay protocol
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.

5

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Frame Relay Managed Services	 	
Outsourced advanced performance reporting and
performance management options for frame relay
services.
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.
	 	 	 	 	 
	Home Connections TM	 	
Local residential telecommunications services, with

associated features
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names

	 	 	 	 	 
	Home Connections TM with High Speed Internet	 	
Residential bundled product with local and ADSL
offerings, along with long distance plan option
	 	Used together with
Sprint Canada
brand, Home
Connections name,
and may be marketed
with other Sprint
Canada product
names (ex. Long Distance Services,
other plan names)

	 	 	 	 	 
	Hosting	 	
Outsourced web-hosting services
	 	Marketed as Sprint
E/Solutions,
brought to you by
Sprint Canada.
	 	 	 	 	 
	Internet Services	 	
Generic name for a suite of internet access services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	ISDN BRI/PRI	 	
Digital access BRI/PRI, local access using BRI/PRI

access technology
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed
using the Smart
Design name
	 	 	 	 	 
	Local Services	 	
Generic name for a suite of local telecommunications
services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names

6

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Long Distance	 	
Generic product name for group of long distance
telecommunications services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Managed Network Services (MNS)	 	
Outsourced network management and performance
reporting for suite of data services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed
using service
option descriptors
including
Performance Plus,
Pro-Monitor,
Pro-Monitor Plus,
Full Management
Standard and Full
Management Plus.
	 	 	 	 	 
	Network Security	 	
Outsourced network security services
	 	Always marketed as
Sprint E/Solutions,
brought to you by
Sprint Canada.
	 	 	 	 	 
	OC3 Burstable	 	
Enhancement to Dedicated Business Internet product
	 	Used together with
Sprint Canada brand
and Dedicated
Business Internet
name
	 	 	 	 	 
	Online Advanced Business Services	 	
Online customer care support for business customers
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Online Customer Care Centre	 	
Online customer care support for residential customers
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Operator Services	 	
Suite of operator assisted calling features
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names

7

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Private Line	 	
Private circuits from DS-0 to OC-3
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.
	 	 	 	 	 
	Professional Services	 	
Outsourced telecommunications consulting
	 	Always marketed as
Sprint E/Solutions,
brought to you by
Sprint Canada.
	 	 	 	 	 
	Province and Country	 	
Long distance calling plan with flat rates for
in-province and out-of-province calls
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names (ex. Long
Distance Services,
other plan names)

	 	 	 	 	 
	Remote Access IP Virtual Private Network (VPN)	 	
Dial-up access over private IP network.
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed using Business IP
VPN name.

	 	 	 	 	 
	Site-to-Site IP Virtual Private Network (VPN)	 	
Dedicated access VPN over IP network
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Marketed using Business IP
VPN name.
	 	 	 	 	 
	Small Business Connections TM	 	
Local small business telecommunications services,

with associated features
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Smart Design	 	
A descriptive name used in marketing of ISDN BRI/PRI
access
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names

8

 

	 	 	 	 	 
	Call-Net Product or Service Mark	 	Description of Use of Product or Service Mark	 	Brand Usage
	
	 	
	 	

	Toll-Free	 	
Generic name for suite of toll-free
telecommunications services
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names
	 	 	 	 	 
	Transparent LAN Service (TLS)	 	
Bridged ethernet connectivity for multiple business

locations
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.
	 	 	 	 	 
	Unified Messaging	 	
Outsourced message management system combining email,
fax and voicemail messaging
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names. Position
as “Powered by
First Class TM”, a
trademark of
Centrinity Inc.,
the outsource
provider.
	 	 	 	 	 
	Voice Services	 	
Generic name for suite of voice services.
	 	Used together with
Sprint Canada brand
and may be marketed
with other Sprint
Canada product
names.
	 	 	 	 	 
	Worldwide Savings Plan	 	
Long distance calling plan with low rates to popular
international calling areas
	 	Used together with
Sprint Canada
brand, Long
Distance Services
name, and may be
bundled with other
Sprint Canada
product names (ex.
Home Connections)

All product or service marks in this table bearing the TM designation are
trademarks of Sprint Canada Inc.

9

 

Brand Usage

	 	 	 	 	 
	Program or Partner	 	Description of Use of Brand	 	Brand Usage
	
	 	
	 	

	Affinity Program	 	
Affinity partners distribute Sprint Canada product
and service information to their members.
	 	Affinity partner
materials may
involve
co-branding, which
is dealt with on a
case-by-case basis.
All products and
services are
positioned as
Sprint Canada
products and
services.
	 	 	 	 	 
	Agency Program	 	
Authorized Sprint Canada agents sell Sprint Canada
products and services through an indirect
distribution model.
	 	Authorized agents
are permitted to
co-brand their
sales materials
following the terms
of the Sprint Sales
Agents Branding
Guide. All
products and
services are
positioned as
Sprint Canada
products and
services.
	 	 	 	 	 
	[ * ]	 	
Customized data applications and enhanced voice
applications.
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Call centre equipment is sold to Sprint Canada
customers that require the technology to enable
their telecommunications services.
	 	No co-branding.
[ * ] equipment
sold separately.
	 	 	 	 	 
	[ * ]	 	
Video conferencing services with application sharing.
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Operator services
	 	White label program
and co-branded
(depending on
customer).
	 	 	 	 	 
	[ * ]	 	
Unified messaging services
	 	Services are
branded Sprint
Canada, but
described as

[ * ]

 

	 	 	 	 	 
	[ * ]	 	
Firewall software
	 	No co-branding.
[ * ] software sold
separately.

10

 

	 	 	 	 	 
	Program or Partner	 	Description of Use of Brand	 	Brand Usage
	
	 	
	 	

	[ * ]	 	
Routers for data services are sold to Sprint Canada
customers that require the technology to enable
their telecommunications services
	 	No co-branding.
[ * ] routers are
sold separately.
	 	 	 	 	 
	[ * ]	 	
e-Commerce and web hosting services
	 	[ * ] and Sprint Canada
services are
co-branded.
	 	 	 	 	 
	[ * ]

 	 	
Audio conferencing services
	 	White label program
	[ * ]

 	 	
Modems for SDSL	 	[ * ] and
Sprint Canada
services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Business internet dial web services
	 	[ * ] and
Sprint Canada
services are
co-branded.
	 	 	 	 	 
	Hotel Vertical Industry Program	 	
Package of services for hotel industry including
core transport along with advanced applications
	 	White label program
or co-branded
(depending on
customer).
	 	 	 	 	 
	[ * ]	 	
Web-enabled call centre applications
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	Internet Portal Partners	 	
Click through partners for internet portal website
	 	Sprint Canada
residential
internet customers
can link to portal
partner websites
from the Sprint
Canada portal.
	 	 	 	 	 
	[ * ]	 	
Call centre equipment is sold to Sprint Canada
customers that require the technology to enable
their telecommunications services
	 	No co-branding.
[ * ] equipment sold
separately.
	 	 	 	 	 
	[ * ]	 	
LAN / WAN integration consulting services are
provided to Sprint Canada customers.
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Modems for SDSL
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Routers, PBX and ACD equipment for data and voice
services are sold to Sprint Canada customers that
require the technology to enable their
telecommunications services
	 	No co-branding.
[ * ] equipment
sold separately.
	 	 	 	 	 
	[ * ]	 	
Network security audit services
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
Managed network services and network management tools
	 	White label program

11

 

	 	 	 	 	 
	Program or Partner	 	Description of Use of Brand	 	Brand Usage
	
	 	
	 	

	[ * ]	 	
Web design, network security solutions
	 	[ * ] and Sprint
Canada services are
co-branded.
	 	 	 	 	 
	[ * ]	 	
LAN / WAN integration consulting services are
provided to Sprint Canada customers.
	 	[ * ] and Sprint
Canada services are
co-branded.

12

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit E

 

Cross-Border Sales Memorandum of Understanding

between Sprint Communications Company L.P. and Sprint Canada Inc.

1.     Purpose

[ * ]

 

 

 

[ * ]

 

 

 

 

 

 

 

 

 

 

 

 

 

Signed:

	 	 	 
	SPRINT COMMUNICATIONS COMPANY L.P.	 	
SPRINT CANADA INC.
	 	 	 
	 	 	 
	
	 	

	Signature	 	
Signature
	 	 	 
	
	 	

	Name	 	
Name
	 	 	 
	
	 	

	Title	 	
Title
	 	 	 
	
	 	

	Date	 	
Date
	 	 	 
	
	 	

 

 

Attachment #1

MNC LIST

	 	 	 
	Customer Name	 	Corp. HQ City, State/Prov.
	
	 	

	[ * ]

 

 	 	[ * ]

 

 

Attachment #2

MOR PROCESS

MULTINATIONAL OPPORTUNITY REGISTRATION (MOR)

Processing Procedures

 

[ * ]

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

WELCOME TO THE MOR OPTION 2 COMPENSATION

SCRIPT / FORM

FOR SPRINT / SPRINT CANADA TEAMED SALES

 

[ * ]

 

EXHIBIT 4.1

CONFIDENTIAL TREATMENT REQUESTED

Exhibit F

Licensed Software

	 	 	 
	SOFTWARE NAME	 	DESCRIPTION
	 	 	 
	[ * ]	 	[ * ]exv4w8

Table of Contents

EXHIBIT 4.8

CONFIDENTIAL TREATMENT REQUESTED

Asterisks [ * ] denote omissions.

 

 

 

 

 

 

EXHIBIT 4.8

 

Supplemental and Amending Agreement

 

TABLE OF CONTENTS

									
	1.  INTERPRETATION
		1.1  Definitions
		1.2  Construction
		1.3  Amendment
		1.4  Schedules
		1.5  Priority of Agreements
	2.  AMENDMENTS AND TRANSACTIONS
		2.1 US Non-FOTS Agreement
		2.2  MFN Collocation Agreement
		2.3  MFN IRU Agreement
		2.4  Canadian Non-FOTS Agreement
		2.5  360 Sale Agreement and 360 IRU Agreement
		2.6  Purchase Price Differential
		2.7 Obligations of Parties
		2.8  Mutual Releases
		2.9  Call-Net Review
	3.  ESCROW MATTERS
		3.1  Escrow Agent Directions
		3.2  Outstanding Escrow Items
		3.3  Reimbursement of Lease Agreement Obligations
	4.  WARRANTIES, REPRESENTATIONS AND COVENANTS
		4.1  Warranties, Representations and Covenants of Call-Net Group
		4.2  Warranties, Representations and Covenants of 360 Group
	5.  GENERAL
		5.1  Time of the Essence
		5.2  Further Assurances
		5.3  Entire Agreement
		5.4  Reliance & Non-Waiver
		5.5  Governing Law
		5.6  Resolution of Disputes
		5.7  Assignments
		5.8  Counterparts and Facsimile
		5.9  Severability
		5.10  Good Faith
		5.11  Agreement Binding
		5.12  No Other Provisions Affected
	Articles of Arrangement
	General By-law No. 1
	Amended and Restated Agreement
	Supplemental and Amending Agreement
	Global Settlement Agreement
	Subsidiaries of Call-Net Enterprises Inc.
	Glossary
	Audited Consolidated Financial Statements
	Section 906 Certification

Table of Contents

SUPPLEMENTAL AND AMENDING AGREEMENT

among

360NETWORKS INC.

and

360NETWORKS (CDN FIBER) LTD.

and

360NETWORKS (USA) INC.

and

CALL-NET ENTERPRISES INC.

and

SPRINT CANADA INC.

and

CALL-NET TECHNOLOGY SERVICES INC.

and

CNCS INC.

June 27, 2001

 

Table of Contents

SUPPLEMENTAL AND AMENDING AGREEMENT

Table of Contents

	 	 	 	 	 	 	 	 	 	 	 	 	 
	1.
	 	 	 	 	 	INTERPRETATION	 	 	3	 
	 
	 	 	1.1	 	 	Definitions	 	 	3	 
	 
	 	 	1.2	 	 	Construction	 	 	6	 
	 
	 	 	1.3	 	 	Amendment	 	 	7	 
	 
	 	 	1.4	 	 	Schedules	 	 	7	 
	 
	 	 	1.5	 	 	Priority of Agreements	 	 	7	 
	2.
	 	 	 	 	 	AMENDMENTS AND TRANSACTIONS	 	 	7	 
	 
	 	 	2.1	 	 	US Non-FOTS Agreement	 	 	7	 
	 
	 	 	2.2	 	 	[ * ] Collocation Agreement	 	 	8	 
	 
	 	 	2.3	 	 	[ * ] IRU Agreement	 	 	8	 
	 
	 	 	2.4	 	 	Canadian Non-FOTS Agreement	 	 	8	 
	 
	 	 	2.5	 	 	360 Sale Agreement and 360 IRU Agreement	 	 	8	 
	 
	 	 	2.6	 	 	Purchase Price Differential	 	 	8	 
	 
	 	 	2.7	 	 	Obligations of Parties	 	 	8	 
	 
	 	 	2.8	 	 	Mutual Releases	 	 	9	 
	 
	 	 	2.9	 	 	Call-Net Review	 	 	9	 
	3.
	 	 	 	 	 	ESCROW MATTERS	 	 	9	 
	 
	 	 	3.1	 	 	Escrow Agent Directions	 	 	9	 
	 
	 	 	3.2	 	 	Outstanding Escrow Items	 	 	10	 
	4.
	 	 	 	 	 	WARRANTIES, REPRESENTATIONS AND COVENANTS	 	 	10	 
	 
	 	 	4.1	 	 	Warranties, Representations and Covenants of Call-Net Group	 	 	11	 
	 
	 	 	4.2	 	 	Warranties, Representations and Covenants of 360 Group	 	 	12	 
	5.
	 	 	 	 	 	GENERAL	 	 	13	 
	 
	 	 	5.1	 	 	Time of the Essence	 	 	13	 
	 
	 	 	5.2	 	 	Further Assurances	 	 	13	 
	 
	 	 	5.3	 	 	Entire Agreement	 	 	13	 
	 
	 	 	5.4	 	 	Reliance & Non-Waiver	 	 	13	 
	 
	 	 	5.5	 	 	Governing Law	 	 	13	 
	 
	 	 	5.6	 	 	Resolution of Disputes	 	 	14	 
	 
	 	 	5.7	 	 	Assignments	 	 	14	 
	 
	 	 	5.8	 	 	Counterparts and Facsimile	 	 	14	 
	 
	 	 	5.9	 	 	Severability	 	 	14	 
	 
	 	 	5.10	 	 	Good Faith	 	 	14	 
	 
	 	 	5.11	 	 	Agreement Binding	 	 	14	 
	 
	 	 	5.12	 	 	No Other Provisions Affected	 	 	14	 

 

Table of Contents

SUPPLEMENTAL AND AMENDING AGREEMENT

THIS SUPPLEMENTAL AND AMENDING AGREEMENT dated as of June 27, 2001

A M O N G:

	 	360NETWORKS INC., a corporation continued under

the laws of the Province of Nova Scotia,

	 	 

	 	(hereinafter referred to as
“360”)

	 	 

	 	- and -

	 	 

	 	360NETWORKS (CDN FIBER) LTD., a corporation

amalgamated under the laws of the Province of Alberta

(the resulting corporation from the amalgamation

between 360networks (Cdn.) ltd. (formerly

360networks (CN) ltd.), 360networks (fiber

1) ltd., 360networks (fiber 2) ltd. and

360networks (fiber 3) ltd.), (hereinafter

referred to as “360 Cdn”),

	 	 

	 	- and -

	 	 

	 	360NETWORKS (USA) INC., a corporation merged

under the laws of the State of Nevada (the

resulting corporation from the merger between

360networks (USA) inc., 360networks services inc.

and 360 fiber (USA 1) inc.)

	 	 

	 	(hereinafter referred to as “360 USA”)

	 	 

	 	- and -

	 	 

	 	CALL-NET ENTERPRISES INC., a corporation

amalgamated under the federal laws of Canada,

	 	 

	 	(hereinafter referred to as “Call-Net”)

	 	 

	 	- and -

	 	 

	 	SPRINT CANADA INC., a corporation amalgamated

under the federal laws of Canada,

	 	 

	 	(hereinafter referred to as “Sprint Canada”)

	 	 

	 	- and -

 

Table of Contents

	 	 

	 	CALL-NET TECHNOLOGY SERVICES INC., a

corporation amalgamated under the federal

laws of Canada,

	 	(hereinafter referred to as “CNTS”)

	 	 

	 	- and -

	 	 

	 	CNCS INC., a corporation incorporated

under the laws of the State of Delaware

(as successor in interest to CNE FIBER

DEVELOPMENT INC.),

	 	 

	 	(hereinafter referred to as “CNCS”)

WHEREAS:

A.   Call-Net and 360 negotiated and completed on August 25, 2000 a transaction
involving the purchase and sale of certain fibre optic assets and such
transaction consisted of, inter alia, (i) the sale of and/or the assignment of
indefeasible rights of use and/or the granting of sub-indefeasible rights of
use relating to certain fibre optic assets from Call-Net and its Affiliates to
360 and its Affiliates, (ii) the sale of and/or the assignment of indefeasible
rights of use and/or the granting of sub-indefeasible rights of use relating to
certain fibre optic assets from 360 and its Affiliates to Call-Net and its
Affiliates, and (iii) certain related transactions and such transaction was
evidenced by the Transaction Documents;

B.   Pursuant to the Canadian Non-FOTS Agreement, Sprint Canada agreed to sell,
grant and deliver and 360networks (CN) ltd. (now 360 Cdn) agreed to purchase
and accept, upon and subject to the terms of the Canadian Non-FOTS Agreement,
inter alia, the Purchaser Assets (as defined in the Canadian Non-FOTS
Agreement) relating to Routes 6, 15 and 17.

C.   Pursuant to the 360 Sale Agreement, 360networks (CN) ltd. (now 360 Cdn)
agreed to sell , grant and deliver and CNTS agreed to purchase and accept, upon
and subject to the terms of the 360 Sale Agreement, inter alia, the Purchaser
Assets (as defined in the 360 Sale Agreement) relating to Route 360-3.

D.   Pursuant to the 360 IRU Agreement, 360networks (USA) inc. (now 360 USA)
agreed to sell, grant and deliver and CNE Fiber (predecessor in interest to
CNCS) agreed to receive, upon and subject to the terms of the 360 IRU
Agreement, inter alia, the IRU (as defined in the 360 IRU Agreement) in the
Purchaser Fiber Assets (as defined in the 360 IRU Agreement) relating to Route
360-3.

E.   Pursuant to the US FOTS Escrow Agreement, 360fiber (USA 1) inc. (now 360
USA) deposited with the Escrow Agent [ * ] of the purchase price payable
to the applicable members of the Call-Net Group under the US FOTS Agreement to
be dealt with in accordance with the terms of the US FOTS Escrow Agreement.

F.   Pursuant to the General Escrow Agreement, the applicable members of the 360
Group, as purchasers under the applicable Fibre Sale Agreements (as defined in
the General Escrow Agreement) deposited with the Escrow Agent from time to time
portions of the purchase price payable to the applicable members of the
Call-Net Group under such Fibre Sale Agreements (as defined in the General
Escrow Agreement) to be dealt with in accordance with the terms of the General
Escrow Agreement.

- 2 -

Table of Contents

NOW THEREFORE IN CONSIDERATION of the premises and mutual covenants and
agreements set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties covenant and agree as follows:

1.   INTERPRETATION

1.1   Definitions

Unless otherwise defined or provided for herein, capitalized terms used in this
Agreement shall have the respective meanings attributed to such terms in the
Canadian Non-FOTS Agreement. In this Agreement, the following terms shall have
the following meanings:

“Agreement” means this Agreement, including the recitals and the Schedules to
this Agreement, as it may from time to time be supplemented or amended.

“Call-Net Group” means collectively Call-Net, Sprint Canada, CNTS and CNCS, or
any one or more of them as the context requires.

“Canadian Non-FOTS Agreement” means the Fibre Sale Agreement (Canadian
Non-FOTS) dated August 25, 2000, among 360, 360networks (CN) ltd. (now 360
Cdn), Call-Net and Sprint Canada.

“Canadian Non-FOTS Notice of Claim” means the Notice of Claim dated November
22, 2000 by 360 Cdn to the Escrow Agent and Sprint Canada.

“Closing” means the completion of the transactions contemplated herein.

“Closing Date” means June 27, 2001, or such earlier or later date as may be
mutually agreed upon by the parties hereto.

“CNE Fiber” means CNE Fiber Development Inc., the predecessor in interest to
CNCS.

“Escrow Agent” means The Trust Company of Bank of Montreal.

“General Escrow Agreement” means the Escrow Agreement dated August 25, 2000,
among 360, Call-Net, CNTS, Sprint Canada, 360fiber (USA 1) inc. (now 360 USA),
360networks (CN) ltd. (now 360 Cdn), CNE Fiber Development Inc. (predecessor in
interest to CNCS), 360networks (USA) inc. (now 360 USA) and Escrow Agent.

“Landlord” means [ * ] , including its
successors and assigns.

“Lease Agreement” means the Lease dated as of November 1, 2000 between the
Landlord and 360networks (USA) inc. (now 360 USA).

“Lease Commencement Date” means December 1, 2000.

“Lease Year” means each twelve (12) month period commencing on December 1 and
ending on November 30 of the following year.

- 3 -

Table of Contents

“[ * ] Collocation Agreement” means the Collocation Licence Agreement dated as of
August 25, 2000 between CNE Fiber (predecessor in interest to CNCS), CNTS and
360 fiber (USA 1) inc. (now 360 USA).

“[ * ] IRU Agreement” means the Fibre Asset Transfer and IRU Agreement
( [ * ] ) dated as of August 25, 2000 between 360fiber (USA 1) inc. (now 360
USA), CNE Fiber (predecessor in interest to CNCS) and CNTS.

“Non-FOTS Purchase Price” means the sum of [ * ] on account of
the purchase and sale of Routes 6, 15 and 17 under the Canadian Non-FOTS
Agreement.

“Person” means a natural person, corporation, firm, limited or unlimited
liability company, partnership or other form of legal entity.

“Purchase Price Differential” means the sum of [ * ] being the
difference between the Route 360-3 Purchase Price and the Non-FOTS Purchase
Price.

“Reimbursement Amount” has the meaning ascribed to such term in Section 3.3
hereof.

“Routes 6, 15 and 17” means the Purchaser Assets (as defined in the Canadian
Non-FOTS Agreement) relating to the Segments (Completed) To Be Transferred (as
defined in the Canadian Non-FOTS Agreement) to be sold, granted and delivered
pursuant to the Canadian Non-FOTS Agreement.

“Route 360-3” means the Purchaser Assets (as defined in the 360 Sale Agreement)
and the Purchaser Fibre Assets (as defined in the 360 IRU Agreement) relating
to Segment No. (number) (as defined in the 360 Sale Agreement and the 360 IRU
Agreement) 360-3 (Detroit to London to Toronto) to be sold, granted and
delivered pursuant to the 360 Sale Agreement and the 360 Fibre Agreement.

“Route 360-3 Purchase Price” means the sum of [ * ] on account
of the purchase and sale of Route 360-3 under the 360 Sale Agreement and the
360 IRU Agreement.

“Segment Transfer Documents” has the corresponding meaning provided in each of
the Transaction Documents, as applicable.

“Transaction Documents” means

	 	(a)	 	this Agreement;
	 
	 	(b)	 	all Segment Transfer Documents;
	 
	 	(c)	 	all other agreements executed or to be executed and delivered
pursuant to the terms of this Agreement;
	 
	 	(d)	 	the Fibre Sale Agreement (Canadian Fibre) dated as of August
25, 2000 among 360, 360networks (CN) ltd. (now 360 Cdn), Call-Net
and CNTS;
	 
	 	(e)	 	the Fibre IRU Agreement (United States Fibre) dated as of
August 25, 2000 among 360, 360networks (USA) inc. (now 360 USA),
Call-Net and CNE Fiber (predecessor in interest to CNCS);

- 4 -

Table of Contents

	 	(f)	 	the Fibre Sale Agreement (Canadian Non-FOTS) dated as of
August 25, 2000 among 360, 360networks (CN) ltd. (now 360Cdn),
Call-Net and Sprint Canada;
	 
	 	(g)	 	the Fibre Sale Agreement (U.S. Non-FOTS) dated as of August
25, 2000 among 360, 360fiber (USA 1) inc. (now 360 USA), Call-Net
and CNE Fiber (predecessor in interest to CNCS);
	 
	 	(h)	 	the Fibre Sale Agreement (U.S. FOTS) dated as of August 25,
2000 among 360, 360fiber (USA 1) inc. (now 360 USA), Call-Net and
CNE Fiber (predecessor in interest to CNCS);
	 
	 	(i)	 	the Fibre Swap Agreement dated as of August 25, 2000 among
360, 360networks (CN) ltd. (now 360 Cdn), 360networks (USA) inc.
(now 360 USA), Call-Net and Sprint Canada;
	 
	 	(j)	 	the Fibre Exchange Agreement (Canadian Non-FOTS) dated as of
August 25, 2000 among 360, 360networks (CN) ltd. (now 360 Cdn),
Call-Net and Sprint Canada;
	 
	 	(k)	 	the Fibre IRU Agreement dated as of August 25, 2000 among
360, 360networks (USA) inc. (now 360 USA), Call-Net and Sprint
Canada;
	 
	 	(l)	 	the Escrow Agreement dated as of August 25, 2000 among 360,
Call-Net, CNTS, Vendor, 360fiber (USA 1) inc. (now 360 USA), CNE
Fiber (predecessor in interest to CNCS), 360networks (USA) inc. (now
360 USA) and the Escrow Agent;
	 
	 	(m)	 	the Escrow Agreement (US FOTS) dated as of August 25, 2000
among 360, Call-Net, 360fiber (USA 1) inc. (now 360 USA), CNE Fiber
(predecessor in interest to CNCS) and the Escrow Agent;
	 
	 	(n)	 	the Fibre Swap Agreement dated as of August 25, 2000 among
360, 360networks (USA) inc. (now 360 USA), 360networks (CN) ltd.
(now 360 Cdn), 360fiber (USA 1) inc. (now 360 USA), Call-Net, Sprint
Canada and CNE Fiber (predecessor in interest to CNCS);
	 
	 	(o)	 	the Fibre Exchange Agreement (Canadian FOTS) dated as of
August 25, 2000 among 360, 360networks (CN) ltd. (now 360 Cdn),
Call-Net and Sprint Canada;
	 
	 	(p)	 	the Fibre Exchange Agreement (United States FOTS) dated as of
August 25, 2000 among 360, 360fibre (USA 1) inc. (now 360 USA) and
CNE Fiber (predecessor in interest to CNCS);
	 
	 	(q)	 	the Fibre IRU Agreement dated as of August 25, 2000 among
360, 360networks (USA) inc. (now 360 USA), Call-Net and Sprint
Canada; and
	 
	 	(r)	 	all other agreements executed or to be executed and delivered
pursuant to the terms of such agreements.

“US FOTS Agreement” means the Fibre Sale Agreement (US FOTS) dated August 25,
2000, among 360, 360fiber (USA 1) inc. (now 360 USA), Call-Net and CNE Fiber
(predecessor in interest to CNCS).

- 5 -

Table of Contents

“US FOTS Escrow Agreement” means the Escrow Agreement (US FOTS) dated August
25, 2000, among 360, Call-Net, 360 fiber (USA 1) inc. (now 360 USA), CNE Fiber
(predecessor in interest to CNCS) and Escrow Agent;

“US Non-FOTS Agreement” means the Fibre Sale Agreement (United States Non-FOTS)
dated as of August 25, 2000 between 360, 360networks (USA) inc. (now 360 USA),
Call-Net and CNE Fiber (predecessor in interest to CNCS).

“US Non-FOTS Notice of Claim” means the Notice of Claim dated November 22, 2000
by 360fiber (USA 1) inc. (now 360 USA) to the Escrow Agent and CNE Fiber
(predecessor in interest to CNCS).

“360 Group” means collectively, 360, 360 Cdn and 360 USA or any one or more of
them, as the context requires.

“360 IRU Agreement” means the Fibre IRU Agreement dated August 25, 2000, among
360, 360networks (USA) inc. (now 360 USA), Call-Net and CNE Fiber (predecessor
in interest to CNCS) (Route 360-1 — Albany to Boston; Route 360-2 — Seattle to
Vancouver; Route 360-3 — Detroit to London to Toronto);

“360 Sale Agreement” means the Canadian Fibre Sale Agreement (including
agreement for purchase of products and services) dated August 25, 2000, among
360, Call-Net, 360networks (CN) ltd. (now 360 Cdn) and CNTS (Route 360-1 -
Albany to Boston; Route 360-2 — Seattle to Vancouver; Route 360-3 — Detroit to
London to Toronto);

1.2   Construction

In this Agreement, except as otherwise expressly provided or as the context
otherwise requires:

	(a)	 	all references to a designated “Article”, “Section”, “Subsection” or
other subdivision or to a “Schedule” are to the designated article,
section, subsection or other subdivision of, or schedule to, this
Agreement;
	 
	(b)	 	the words “herein”, “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section, Subsection or other subdivision or Schedule;
	 
	(c)	 	the headings and captions are for convenience only and do not form a part
of this Agreement and are not intended to interpret, define, or limit the
scope, extent or intent of this Agreement or any provision hereof;
	 
	(d)	 	the singular of any term includes the plural, and vice versa, the use of
any term is equally applicable to any gender and, where applicable, any
Person that is not a human being; the word “or” is not exclusive and the
word “including” is not limiting (whether or not non-limiting language,
such as “without limitation” or “but not limited to” or words of similar
import, is used with reference thereto);
	 
	(e)	 	any accounting term not otherwise defined has the meaning assigned to it
by GAAP and all accounting matters will be determined in accordance with
GAAP, applied on a consistent basis;

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	(f)	 	any reference to a statute includes and is a reference to that statute
and to the regulations made pursuant thereto, with all amendments made
thereto and in force from time to time, and to any statute or regulation
that may be passed which has the effect of supplementing or superseding
that statute or regulation;
	 
	(g)	 	unless indicated otherwise, all references to currency mean Canadian
currency and all sums of money are expressed in Canadian currency;
	 
	(h)	 	any other term defined within the text of this Agreement has the meaning
so ascribed;
	 
	(i)	 	a reference to a time or date is to the local time or date at Toronto,
Ontario;
	 
	(j)	 	a reference to an approval, authorization, consent, designation, waiver
or notice means written approval, authorization, consent, designation,
waiver or notice; and
	 
	(k)	 	a capitalized cognate of a defined term has a meaning corresponding to
that of the defined term.

1.3   Amendment

No amendment, waiver, termination or variation of the terms, conditions,
warranties, covenants, agreements and undertakings set out herein will be of
any force or effect unless the same is reduced to writing duly executed by all
parties hereto in the same manner and with the same formality as this Agreement
is executed, except that, as between any two parties solely, such may be
binding on such parties if executed by them, and a waiver in writing executed
by one party shall be binding on such party.

1.4   Schedules

The following Schedules to this Agreement are an integral part of this
Agreement:

	 	 	 
	Schedule	 	Description
	
	 	

	“A”

“B”

“C”

“D”	 	
Revised Schedule “B” and Exhibit “B-1” to the US Non-FOTS Agreement

Revised Schedule “1” to the [ * ] Collocation Agreement

Revised Schedule “A” to the [ * ] IRU Agreement

List of Claimed Deficiencies and Proposed Resolutions

1.5   Priority of Agreements

In the event of any inconsistency or other conflict between the terms of the
main body of this Agreement and the terms of any Schedule, the terms of the
main body of this Agreement shall prevail and have priority over the terms of
such Schedule.

2.     AMENDMENTS AND TRANSACTIONS

2.1   US Non-FOTS Agreement

Schedule “B” and Exhibit “B-1” to the US Non-FOTS Agreement are hereby deleted
in their entirety and are replaced with Schedule “A” attached hereto.

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2.2   [ * ] Collocation Agreement

Schedule “1” to the [ * ] Collocation Agreement is hereby deleted in its entirety
and is replaced with Schedule “B” attached hereto.

2.3   [ * ] IRU Agreement

Schedule “A” to the [ * ] IRU Agreement is hereby deleted in its entirety and is
replaced with Schedule “C” attached hereto.

2.4   Canadian Non-FOTS Agreement

The 360 Group hereby acknowledges and agrees that the applicable members of the
Call-Net Group are no longer obligated to sell, grant and deliver Routes 6, 15
and 17 pursuant to the provisions of the Canadian Non-FOTS Agreement and that
all of the obligations, liabilities and responsibilities of such applicable
members of the Call-Net Group pursuant to, arising under or in connection with
the sale, grant and delivery of Routes 6, 15 and 17 pursuant to the Canadian
Non-FOTS Agreement are hereby terminated. The Call-Net Group hereby
acknowledges and agrees that the applicable members of the 360 Group shall no
longer be required to purchase and accept Routes 6, 15 and 17 pursuant to the
provisions of the Canadian Non-FOTS Agreement or to pay the Non-FOTS Purchase
Price and that all of the obligations, liabilities and responsibilities of the
applicable members of the 360 Group pursuant to, arising under or in connection
with the purchase and acceptance of Routes 6, 15 and 17 pursuant to the
Canadian Non-FOTS Agreement, including, the obligation to pay such Non-FOTS
Purchase Price, are hereby terminated.

2.5   360 Sale Agreement and 360 IRU Agreement

The Call-Net Group hereby acknowledges and agrees that the applicable members
of the 360 Group are no longer obligated to sell, grant or deliver Route 360-3
pursuant to the provisions of the 360 Sale Agreement and the 360 IRU Agreement,
respectively, and that all of the obligations, liabilities and responsibilities
of the applicable members of the 360 Group pursuant to, arising under or in
connection with the sale, grant and delivery of Route 360-3 pursuant to the
provisions of the 360 Sale Agreement and the 360 IRU Agreement are hereby
terminated. The 360 Group hereby acknowledges and agrees that the applicable
members of the Call-Net Group shall no longer be required to purchase and
accept Route 360-3 pursuant to the provisions of the 360 Sale Agreement and the
360 IRU Agreement or to pay the Route 360-3 Purchase Price and that all of the
obligations, liabilities and responsibilities of the applicable members of the
Call-Net Group pursuant to, arising under or in connection with the purchase
and acceptance of Route 360-3 pursuant to the 360 Sale Agreement and the 360
IRU Agreement, including, the obligation to pay such Route 360-3 Purchase Price
are hereby terminated.

2.6   Purchase Price Differential

On the Closing Date, the applicable members of the Call-Net Group shall pay to
the applicable members of the 360 Group the Purchase Price Differential.

2.7   Obligations of Parties

In the event that any member of the Call-Net Group or any member of the 360
Group executed and delivered any Segment Transfer Documents (as such term is
defined in the Canadian Non-FOTS Agreement, the 360 Sale Agreement and the 360
IRU Agreement, as the case may be) or any other agreements, documents or
instruments in favour of any third parties which create any obligations and/or

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liabilities on any such members of the Call-Net Group or such members of the
360 Group in respect of Route 360-3 or Routes 6, 15 and 17, respectively, then
on the Closing Date the parties shall deliver mutually acceptable releases duly
executed by such third parties in favour of such members of the Call-
Net Group or such members of the 360 Group, as applicable, therein fully
releasing and discharging such parties from any such obligations and/or
liabilities.

2.8   Mutual Releases

Save and except for the obligations imposed by the provisions of this
Agreement, including, without limitation, the obligations set out in Section
2.7 hereof, the parties hereto hereby irrevocably release and forever discharge
each other of and from any and all obligations arising under, pursuant to or in
connection with the grant, sale and delivery of Routes 6, 15 and 17 and the
grant, sale and delivery of Route 360-3, as applicable, pursuant to the
provisions of the Canadian Non-FOTS Agreement and the provisions of the 360
Sale Agreement and 360 IRU Agreement, respectively.

2.9   Call-Net Review

[ * ]

 

 

 

 

 

 

 

 

 

 

 

 

3.   ESCROW MATTERS

3.1   Escrow Agent Directions

On the Closing Date, the applicable members of the 360 Group and to the
applicable members of the Call-Net Group shall execute and deliver the
following directions to the Escrow Agent in respect of the amounts set out

below (each such direction to be in form and substance in accordance with the
applicable provisions of the General Escrow Agreement and the US FOTS Escrow
Agreement):

	(a)	 	a direction to the Escrow Agent directing the Escrow Agent to release to
the applicable members of the Call-Net Group the sum of [ * ] , together with interest thereon, from
the Escrow Fund (United States Non-FOTS) (as defined in the General Escrow
Agreement) representing funds being released from escrow in respect of
item numbers 1, 3, 4, 5 and 6 set out in the US Non-FOTS Notice of Claim;
	 
	(b)	 	a direction to the Escrow Agent directing the Escrow Agent to release to
the applicable members of the Call-Net Group the sum of [ * ] , together
with interest thereon, from the Escrow Fund (Canadian Non-FOTS) (as
defined in the General Escrow Agreement) representing funds being released
from escrow in respect of item number 3 set out in the Canadian Non-FOTS
Notice of Claim;

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	(c)	 	a direction to the Escrow Agent directing the Escrow Agent to release to
the applicable members of the Call-Net Group the sum of [ * ] , together
with interest thereon, from the Escrow Fund (as defined in the US FOTS
Escrow Agreement) representing funds being released from escrow pursuant
to the provisions of the US FOTS Escrow Agreement; and

3.2   Outstanding Escrow Items

The parties hereby acknowledge and agree that the sole claimed deficiencies by
the 360 Group including, without limitation, any deficiencies claimed pursuant
to the Canadian Non-FOTS Notice of Claim and the US Non-FOTS Notice of Claim,
which relate to the remaining funds being held by the Escrow Agent pursuant to
the General Escrow Agreement and the US FOTS Escrow Agreement after the release
of the funds contemplated by Section 3.1 hereof, are set out on Schedule “D”
attached hereto. Nothing contained in this Agreement shall be interpreted, or
deemed to interpreted, as the Call-Net Group having agreed that the amounts set
out on Schedule “D” are correct and/or being validly claimed by the applicable
members of the 360 Group and the Call-Net Group does not waive any rights it
may have to challenge the validity to such amounts all in accordance with the
provisions of the General Escrow Agreement or the US FOTS Escrow Agreement.
Schedule “D” attached hereto also sets out the proposed resolutions to rectify
such claimed deficiencies. The parties acknowledge and agree that upon the
applicable members of the Call-Net Group resolving, to the mutual satisfaction
of the parties, any of the claimed deficiencies set out on Schedule “D”
attached hereto, the applicable members of the 360 Group shall forthwith
execute and deliver the necessary and appropriate directions to the Escrow
Agent directing the Escrow Agent to release the applicable remaining funds
being held by the Escrow Agent pursuant to the General Escrow Agreement and the
US FOTS Escrow Agreement to the applicable members of the Call-Net Group. It is
the intention of the parties that such claimed deficiencies and the directions
to the Escrow Agent referred to in this Section 3.2 are to be completed on or
before July 11, 2001. However, for greater certainty, in the event that the
Call-Net Group is unable to resolve such deficiencies prior to July 11, 2001,
the parties acknowledge and agree that a commercially reasonable time, as such
phrase is used in the General Escrow Agreement and the US FOTS Escrow
Agreement, has not lapsed or expired and the Call-Net Group will continue to
use commercially reasonable efforts to resolve the deficiencies as soon as
possible after July 11, 2001.

3.3   Reimbursement of Lease Agreement Obligations

	(a)	 	In consideration for the release of funds from the Escrow Fund (United
States Non-FOTS) (as defined in the General Escrow Agreement) in respect
of item number 4 set out in the US Non-FOTS Notice of Claim, CNCS hereby
agrees to reimburse 360 USA the maximum sum of [ * ] per annum
after the end of each Lease Year for a maximum of [ * ] Lease Years
commencing on the Lease Year running from the Lease Commencement Date to
November 30, 2001 on account of rent and/or other costs paid by 360 USA to
the Landlord pursuant to the provisions of the Lease Agreement (the
“Reimbursement Amount”). The Reimbursement Amount shall be subject to a
[ * ] increase after the end of each Lease Year, such increase to commence
after the Lease Year ending on November 30, 2001 on account of the Lease
Year commencing on December 1, 2001 and ending on November 30, 2002. In
the event that 360 USA pays an aggregate amount to the Landlord under the
Lease Agreement which is less than the Reimbursement Amount in any Lease
Year, then the Reimbursement Amount shall be reduced and shall not exceed
such lesser amount so paid by 360 USA under the Lease Agreement in such
Lease Year. Under no circumstances will the Reimbursement Amount exceed
[ * ] per annum plus the applicable [ * ] increase contemplated in
this Section 3.3(a).
	 
	(b)	 	Prior to 360 USA being entitled to the Reimbursement Amount, 360 USA
shall deliver to CNCS satisfactory evidence that the amount or amounts
equal to the Reimbursement Amount has or 

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	 	 	have been paid to the Landlord by
360 USA under the Lease Agreement and upon being provided such
satisfactory evidence, CNCS shall, within forty-five (45) days from the
date of receiving such satisfactory evidence, pay the Reimbursement Amount
to 360 USA.
	 
	(c)	 	In the event that the Lease Agreement in in any way terminated by either
360 USA or the Landlord, or both, as the case may be, for any reason, or
is terminated by operation of law or for any other reason, or if 360 USA
is no longer bound to make payments pursuant to the Lease Agreement for
any reason, or if the Lease Agreement is assigned or transferred by 360
USA to any person in any manner, or if the Lease Agreement in any way is
modified, amended or supplemented, then the obligation of CNCS to pay the
Reimbursement Amount to 360 USA as provided by Section 3.3(a) shall
automatically and immediately terminate. 360 USA hereby covenants with
CNCS to provide CNCS with notice in respect of the Lease Agreement or in
respect of 360 USA ceasing to be bound to make payments pursuant to the
Lease Agreement.
	 
	(d)	 	Nothing contained herein shall be deemed an assignment to, or an
assumption by, CNCS of the Lease Agreement or any obligations, liabilities
or responsibilities arising under, pursuant to or in connection with the
Lease Agreement.

4.   WARRANTIES, REPRESENTATIONS AND COVENANTS

4.1   Warranties, Representations and Covenants of Call-Net Group

Each member of the Call-Net Group warrants and represents to, and covenants
with each member of the 360 Group that:

	(a)	 	Status. Each member of the Call-Net Group is a corporation incorporated,
existing and in good corporate standing under the laws of the jurisdiction
of its incorporation, amalgamation or continuance with respect to all
filings required under such laws.
	 
	(b)	 	Authority. Each member of the Call-Net Group has all necessary corporate
capacity, power, and authority to carry on its business, and has the
necessary corporate capacity, power and authority to enter into this
Agreement and to carry out the terms of this Agreement.
	 
	(c)	 	Compliance with Constating Documents, Agreements and Laws. The making of
this Agreement, the completion of the transactions contemplated by this
Agreement and the performance of and compliance with the terms of this
Agreement, does not and will not:

	 	(i)	 	conflict with or result in a breach of or violate any of the
terms, conditions or provisions of the constating documents of any
member of the Call-Net Group; or
	 
	 	(ii)	 	conflict with or result in a breach of or violate any of the
terms, conditions or provisions of any law, judgment, order,
injunction, decree, regulation or ruling of any governmental
authority, or constitute or result in a material default under any
agreement, contract or commitment to which any member of the
Call-Net Group is a party or by which their properties or assets are
bound, which would have a material adverse effect upon the ability
of any member of the Call-Net Group to perform any of its
obligations under this Agreement;

	(d)	 	Valid, Binding and Enforceable. This Agreement constitutes a valid and
binding agreement and obligation, enforceable against each member of the
Call-Net Group in accordance with its 

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	 	 	terms, subject to bankruptcy,
insolvency, reorganization, arrangement, winding-up, moratorium, and
similar laws of general application affecting the enforcement of
creditors’ rights generally, and subject to general equitable principles,
including the fact that the availability of equitable remedies, such as
injunctive relief or specific performance, is in the discretion of the
court.
	 
	(e)	 	Parties and Non-Assignment. Other than
the Call-Net Group, there are no other Affiliates of Call-Net which
are party to or that can claim any interest in any of the Transaction
Documents. Each member of the Call-Net Group is and continues to be
bound and subject to the provisions of the Transaction Documents and
no member of the Call-Net Group has assigned or transferred any of its
rights and obligations arising under, pursuant to or in connection
with the Transaction Documents.

4.2   Warranties, Representations and Covenants of 360 Group

Each member of the 360 Group warrants and represents to, and covenants with
each member of the Call-Net Group that:

	(a)	 	Status. Each member of the 360 Group is a corporation incorporated,
existing and in good corporate standing under the laws of the jurisdiction
of its incorporation, amalgamation or continuance with respect to all
filings required under such laws.
	 
	(b)	 	Authority. Each member of the 360 Group has all necessary corporate
capacity, power, and authority to carry on its business, and has the
necessary corporate capacity, power and authority to enter into this
Agreement and to carry out the terms of this Agreement.
	 
	(c)	 	Compliance with Constating Documents, Agreements and Laws. The making of
this Agreement, the completion of the transactions contemplated by this
Agreement and the performance of and compliance with the terms of this
Agreement, does not and will not:

	 	(i)	 	conflict with or result in a breach of or violate any of the
terms, conditions or provisions of the constating documents of any
member of the 360 Group; or
	 
	 	(ii)	 	conflict with or result in a breach of or violate any of the
terms, conditions or provisions of any law, judgment, order,
injunction, decree, regulation or ruling of any governmental
authority, or constitute or result in a material default under any
agreement, contract or commitment to which any member of the 360
Group is a party or by which their properties or assets are bound,
which would have a material adverse effect upon the ability of any
member of the 360 Group to perform any of its obligations under this
Agreement;

	(d)	 	Valid, Binding and Enforceable. This Agreement constitutes a valid and
binding agreement and obligation, enforceable against each member of the
360 Group in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, arrangement, winding-up, moratorium, and similar laws of
general application affecting the enforcement of creditors’ rights
generally, and subject to general equitable principles, including the fact
that the availability of equitable remedies, such as injunctive relief or
specific performance, is in the discretion of the court.

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	(e)	 	Parties and Non-Assignment. Other than the 360 Group, there are no other
Affiliates of 360 which are party to or that can claim any interest in any
of the Transaction Documents. Each member of the 360 Group is and
continues to be bound and subject to the provisions of the Transaction
Documents and no member of the 360 Group has assigned or transferred any
of its rights or obligations arising under, pursuant to or in connection
with the Transaction Documents.
	 
	(f)	 	Lease Agreement. 360 USA is a party to and continues to be bound by and
subject to the provisions of the Lease Agreement and 360 USA has not
assigned or transferred any of its rights or obligations arising under,
pursuant to or in connection with the Lease Agreement.

5.   GENERAL

5.1   Time of the Essence

Time shall be of the essence of this Agreement.

5.2   Further Assurances

Subject to the terms of this Agreement, each party shall execute and deliver
all such further documents and instruments and do all acts and things as the
other party may reasonably require to carry out the full intent and meaning of
this Agreement, including (without limitation) all documents necessary or
useful in connection with the transfer and grant of the Purchaser Assets
contemplated in this Agreement.

5.3   Entire Agreement

This Agreement, together with the other Transaction Documents, the other
agreements or instruments between the parties executed and delivered pursuant
to this Agreement and the other Transaction Documents, and the amended and
restated mutual non-disclosure and confidentiality agreement dated August 25,
2000 between 360 and Call-Net, constitute the entire agreement between the
parties hereto pertaining to the subject matter of this Agreement and the other
Transactions Documents and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written, express or implied,
statutory or otherwise between the parties.

5.4   Reliance & Non-Waiver

Each signatory to this Agreement acknowledges and agrees that the other
signatories have entered into this Agreement relying on the representations,
warranties, covenants and agreements and other terms and conditions of this
Agreement. No waiver of any condition or other provision, in whole or in part,
shall constitute a waiver of any other condition or provision (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.

5.5   Governing Law

This Agreement shall be governed by and construed in accordance with the laws
of the Province of British Columbia and the federal laws of Canada applicable
in the Province of British Columbia, without regard for the conflict of law
rules of such laws.

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5.6   Resolution of Disputes

In the event any dispute, claim, question or difference arises with respect to
this Agreement or its performance, enforcement, breach, termination or
validity, the parties shall settle such dispute, claim, question or difference
in accordance with provisions of the applicable Transaction Document to which
such dispute, claim, question or difference relates.

5.7   Assignments

This Agreement may only be assigned or transferred by any party hereto in the
event that any such party hereto assigns or transfers its interest in any
Transaction Document to which it is a party provided that such Transaction
Document is assigned or transferred in accordance with the applicable
provisions of such Transaction Document.

5.8   Counterparts and Facsimile

	(a)	 	This Agreement and any amendment, supplement, restatement or termination
of any provision of this Agreement may be executed and delivered in any
number of counterparts, each of which when executed and delivered is an
original but all of which taken together constitute one and the same
instrument.
	 
	(b)	 	This Agreement may be executed by facsimile and the facsimile execution
pages will be binding upon the executing party to the same extent as the
original executed pages. The executing party covenants to provide
originals of the facsimile execution pages for insertion into the original
Agreement in place of the facsimile pages.

5.9   Severability

If any clause or part of a clause in this Agreement shall be illegal, it shall
be considered separate and severable from this Agreement and the remaining
provisions shall remain in full force and effect and shall be binding upon the
parties as though the said clause or part thereof had never been included,
provided that this Agreement as thus modified remains operable.

5.10   Good Faith

Each of Purchaser, 360, Vendor and Call-Net shall have a duty to act in good
faith in the performance and enforcement of this Agreement and the other
Transaction Documents.

5.11   Agreement Binding

This Agreement will enure to the benefit of and be binding upon each of the
parties and their successors and permitted assigns.

5.12   No Other Provisions Affected

Nothing contained in this Agreement shall be deemed to be a waiver of any
covenant or agreement contained in or a waiver of any breach or default under,
any of the Transaction Documents, and each of the parties hereto agree that,
except as modified, amended and supplemented by the provisions of this
Agreement all of the covenants, agreements, obligations, liabilities and other
provisions contained in the

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Transaction Documents are hereby ratified and confirmed in all respects and
shall remain in full force and effect and unamended or modified in any way.

 

 

 

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IN WITNESS WHEREOF the parties have executed this Agreement effective as of the
date specified on the first page of this Agreement.

360NETWORKS INC.

 

Per:

Signature

 

Signature

 

360NETWORKS (CDN FIBER) LTD.

 

Per:

Signature

 

Signature

 

360NETWORKS (USA) INC.

 

Per:

Signature

 

Signature

 

CALL-NET ENTERPRISES INC.

 

Per:

Signature

 

Signature

 

 

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SPRINT CANADA INC.

 

Per:

Signature

 

Signature

 

 

CALL-NET TECHNOLOGY SERVICES INC.

 

Per:

Signature

 

Signature

 

 

CNCS INC.

 

Per:

Signature

 

Signature

 

 

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