Document:

Exhibit 10.4

 

THIS CENTRAL FIBER OPTIC NETWORK AGREEMENT amended as of January 1, 1998.

 

	
  BY AND
  BETWEEN:

  	
   

  	
  TELEGLOBE
  CANADA INC., a
  Canada business corporation having its registered office at 1000 de La
  Gauchetière Street West, in the City of Montréal, Province of Québec, H3B
  4X5, hereinafter referred to as “Teleglobe”;

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  STENTOR
  RESOURCE CENTRE INC.,
  a Canada business corporation having its registered office at 160 Elgin
  Street, in the City of Ottawa, Province of Ontario, K1G 3J4, hereinafter
  referred to as “Stentor”, acting as
  duly authorized agent for the Stentor Shareholders (meaning, collectively,
  the following:  Bell Canada, BC TEL,
  Island Telecom Inc., MTS Communications Inc., Maritime Tel & Tel Limited,
  The New Brunswick Telephone Company, Limited, NewTel Communications Inc.,
  Saskatchewan Telecommunications and TELUS Communications Inc.).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  individually also referred to as “party”
  and collectively as “parties”

  

 

 

WHEREAS each of Teleglobe and the Stentor Shareholders own,
operate, lease and/or use through agreements of use, facilities which
constitute a telecommunications system;

 

WHEREAS,  at the
request of Teleglobe, Stentor has agreed to make available for use by Teleglobe
on an exclusive basis certain digital capacity on the fiber optic network of
the Stentor Shareholders;

 

WHEREAS the parties have established the following terms,
covenants and conditions upon which the said digital capacity is to be provided
by Stentor to Teleglobe;

 

NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

1.             CAPACITY
TO BE PROVIDED BY STENTOR TO TELEGLOBE

 

1.1.          Subject to the terms and conditions contained
herein, Stentor shall, during the term hereof or any extension thereof, make
available to Teleglobe and provide access to Teleglobe for its own use or that
of the customers of Teleglobe, on a

 

1

 

continuous, dedicated and
exclusive basis, the following digital capacity, hereinafter referred to as the
“Network”:

 

1 X OC-24 (2
OC-12)

 

on two diverse fiber optic routes comprised of self-healing rings
systems, between the following locations:

 

Toronto -
Vancouver

 

1.2.          The Network will make
use of Synchronous Optical Network (“SONET”)
transmission facilities and fiber optic cables and will be furnished by Stentor
at the interconnection points located and described in Annex I herewith, and in
accordance with the technical specifications contained in Annex 2 of this
Agreement, both of which Annexes are made a part hereof by reference.

 

1.3.          Subject to the
provisions of Article 5.5, Stentor will undertake, at its own cost, whatever
construction of facilities required to meet the terms of this Agreement and the
Stentor Shareholders will retain ownership of their facilities.

 

1.4.          Teleglobe will
undertake, at its own cost, to provide the required transmission equipment
within its own terminal locations from an agreed upon demarcation point, as
described in Annex 1.  Stentor will
cooperate in the coordination of the installation activity.

 

1.5.          In case of any ambiguity
or inconsistency arising between the provisions of this Agreement and the
Annexes forming part thereof, the provisions of this Agreement shall have
precedence, except in the case of the technical parameters in which case Annex
2 shall govern.

 

1.6           Teleglobe agrees that it shall not lease,
share, sub-lease or assign, in any way whatsoever, any dedicated transport
capacity of the Network to Canadian telecommunications carriers or resellers or
Internet Service Providers (except to Teleglobe’s affiliates, as this term is
defined in the Canada Business Corporations Act, provided such affiliates agree
in writing to be bound by this Article 1.6) for non-international traffic.  A breach of this Article 1.6 by Teleglobe or
any Teleglobe affiliate shall be deemed to be a material breach of this
Agreement, entitling Stentor to terminate this Agreement upon ninety (90) days
written notice. Teleglobe or any Teleglobe affiliate may lease, share,
sub-lease or assign, in any way whatsoever, any dedicated transport capacity of
the Network to Canadian telecommunications carriers and resellers for
non-international traffic, provided that Teleglobe provide prior written notice
to Stentor and provided that Teleglobe and Stentor agree to revised rates and
charges under this Agreement to the mutual satisfaction of the Parties.

 

2

 

2.             DURATION

 

2.1.          The term of this
Agreement shall commence at 00:01 hours, local Montréal time, on October 01,
1995 (hereinafter called the “Service Date”)
and, subject to earlier termination as provided for herein, shall run for a
period of nine (9) years, three (3) months and fourteen (14) days, terminating
at 23:59 hours, local Montréal time on January 14, 2005.

 

2.2.          Should the performance
measurement of the Network not meet the specifications for Bringing Into
Service “BIS” contained in Annex
2, Stentor will use commercially reasonable efforts to provide alternative
connectivity to meet Teleglobe’s requirements at no extra cost to Teleglobe
over and above those charges provided for in Article 4 hereof.  In this event, a portion of the up-front
payment described in Article 4.1(B) will be withheld by Teleglobe in accordance
with Annex 3, Article 1 until Stentor can demonstrate BIS specifications are
met.

 

3.             MAINTENANCE AND
RESTORATION

 

3.1.          Subject to the terms and
conditions herein, and for the term of this Agreement as set out in Article 2
above, Stentor will be the sole provider of maintenance and restoration
services for the Network as identified in Article 1.

 

3.2.          Stentor will maintain or
have maintained, at no additional charge to Teleglobe other than as
specifically provided for in Article 4, in efficient working order as defined
in Annex 2, over the term of this Agreement or any extension thereof, the Network
made available to Teleglobe.

 

3.3.          Stentor does not warrant
uninterrupted working of the Network.

 

3.4.          However, in the event of
interruption or degradation of the Network, Stentor will use commercially
reasonable efforts to correct or remedy same to meet the performance
requirements specified in this Agreement and in the meantime to restore the
Network on an alternate facility. 
Stentor agrees to perform such correction, remedy or restoration at no
additional cost to Teleglobe, unless the cause of interruption or degradation
is due to the fault or negligence of Teleglobe or its customers, in which
event, Teleglobe will assume all expenses associated with such correction,
remedy or restoration.

 

4.             CONSIDERATION AND
PAYMENT

 

4.1.          In consideration of Stentor making available
the Network described in Article 1 during the term of this Agreement specified
in Article 2, and for the maintenance and operation of the Network as specified
in Article 3, Teleglobe shall pay to Stentor:

 

3

 

	
  Date

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A)

  	
  October 01, 1995

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  B)

  	
  January 15, 1996

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  
	
  C)

  	
  January 15, 1997

  	
   

  	
  $

  	
  7,400,000.00

  	
   

  
	
  D)

  	
  July 15, 1997

  	
   

  	
  $

  	
  7,400,000.00

  	
   

  
	
  E)

  	
  January 15, 1998

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  F)

  	
  July 15, 1998

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  G)

  	
  January 15, 1999

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  H)

  	
  July 15, 1999

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  I)

  	
  January 15, 2000

  	
   

  	
  $

  	
  1,460,000.00

  	
   

  
	
  J)

  	
  July 15, 2000

  	
   

  	
  $

  	
  1,460,000.00

  	
   

  
	
  K)

  	
  January 15, 2001

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  L)

  	
  July 15, 2001

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  M)

  	
  January 15, 2002

  	
   

  	
  $

  	
  1,460,000.00

  	
   

  
	
  N)

  	
  July 15, 2002

  	
   

  	
  $

  	
  1,460,000.00

  	
   

  
	
  O)

  	
  January 15, 2003

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  P)

  	
  April 01, 2003

  	
   

  	
  $

  	
  4,450,000.00

  	
   

  
	
  Q)

  	
  July 15, 2004

  	
   

  	
  $

  	
  8,900,000.00

  	
   

  

 

 

4.2           In addition to the
payments identified in Article 4.1, for the maintenance and operation of the
Network, a monthly charge of $60,000.00 will be payable by Teleglobe to Stentor
for each month period starting October 01, 1995 and ending December 31,
1997.  Subject to the terms of Article
5.4 hereof, for each month period starting January 1, 1998 and ending January
14, 2005, such monthly charge will be equal to $39,750.  This monthly charge will be payable by
Teleglobe to Stentor in advance on the first day of each month.  The last charge will be calculated on a
daily basis pro-rata to the monthly charge for 14 days.

 

4.3           Stentor may charge
Teleglobe and Teleglobe will pay Stentor any taxes imposed or based by any
government authority or agency on the provision by Stentor and the use by
Teleglobe or its customers of digital capacity under this Agreement, except
taxes on the income of Stentor.

 

4.4.          Subject to Article 2.2 hereof, whenever said
monthly installments or payments, as listed in Article 4.1 above, or any other
amounts payable by Teleglobe to Stentor under this Agreement, have not been
received by Stentor on or before the due date, the late payment charge
specified in Tariff Item 25 of Bell Canada’s General Tariff shall apply in
accordance with the terms therein.

 

4

 

5.             ADDITION, REDUCTION
AND CANCELLATION OF CAPACITY

 

5.1.          Subject to appropriate Stentor facilities
being available, Stentor will make available to Teleglobe upon Teleglobe’s
request additional digital capacity by increments of OC-3 (155.52 Mb/s) in
addition to the minimum capacity initially contracted for as stipulated in
Article 1 hereof, at the rate(s) provided for in Article 5.2.4.

 

5.2.          Subject to appropriate Stentor facilities
being available, Teleglobe may, at any time during the term hereof or any
extension thereof, exercise its right to use the said additional capacity by
giving at least thirty (30) days prior notice to Stentor, provided that
Teleglobe has informed Stentor of its potential requirements by means of annual
forecasts, under the following terms and conditions:

 

5.2.1.           This option to use such additional capacity
will remain open to Teleglobe during the entire term hereof, as defined as
Article 2, or any extension thereof.

 

5.2.2.           Teleglobe has the right to terminate its use
of initial or additional capacity anytime after the first thirty (30) - day
period by giving at least fifteen (15) days prior written notice to Stentor,
without any penalty but always subject to Article 5.2.4.  Subject to Article 5.2.4, this shall be
applicable to both initial and additional capacity on a OC-3 basis on any of
the cross-section segments referred to herein or in the Eastern Ring Fiber
Optic Agreement entered into among the parties and amended as of January 1,
1998 (the “Eastern Agreement”).  Notwithstanding any other provision of the
Agreement, Stentor shall be free to redeploy any such capacity which is
returned or canceled by Teleglobe.

 

5.2.3.           The minimum period of utilization of initial
or additional capacity is thirty (30) days. 
Subject to Article 5.2.4, there will be no penalty to Teleglobe for the
return or cancellation of capacity after the minimum period of utilization for
any capacity ordered during the term of this Agreement or any extension
thereof.

 

5.2.4.           Teleglobe
will have the right to return initial capacity in OC-3 increments, at any time
during the term of this Agreement or any extension thereof, for a monthly
credit as stated below:

 

	
  Cross Section

  	
   

  	
  Monthly
  Credit Per OC-3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Toronto – Vancouver

  	
   

  	
  $

  	
  44,867

  	
   

  
					

 

5

 

Credits may be
accumulated by Teleglobe and used to acquire additional capacity at any time on
the cross section mentioned above or on any of the cross sections referred to
in the first table found in Article 5.2.4 of the Eastern Agreement at the same
prices as those indicated in the above-mentioned table or the first table found
in Article 5.2.4 of the Eastern Agreement, as the case may be, until such
credits have been totally utilized. 
Teleglobe may opt to be reimbursed fully or partially for any of the
outstanding credits at any point in time.

 

The minimum
capacity requirement for 1998 will be one OC-l2.  The minimum capacity requirement for the years 1999 to 2005
inclusively for the purposes of both this Agreement and the Eastern Agreement
will be, collectively, a capacity under any agreements equivalent to $26.7
million using rates from the above table and the first table found in Article
5.2.4 of the Eastern Agreement, without any minimum yearly commitment and
Teleglobe will have no restrictions with regards to the return of capacity
under either this Agreement or the Eastern Agreement or the reasons for the
return.  For greater certainty, the
minimum capacity requirement set out above for the years 1999 to 2005,
inclusive, shall apply notwithstanding the termination of either this Agreement
or the Eastern Agreement.

 

In the event
Teleglobe terminates this Agreement at its discretion pursuant to Article 9.1
prior to having fulfilled the above minimum capacity requirement obligations,
Teleglobe agrees to pay Stentor, in a single payment as liquidated damages for
early termination of this Agreement and not as a penalty, the amount described
in Article 9.1.

 

Prices for
additional capacity in place and to be ordered by Teleglobe which is over and
above the utilizations of credits for returned capacity will not exceed the
following:

 

 

	
  Cross Section

  	
   

  	
  Monthly
  Credit Per OC-3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Toronto – Vancouver

  	
   

  	
   

  	
  $

  	
  163,332

  	
   

  
						

 

5.2.5.           If,
during the term hereof or any extension thereof, Stentor’s General Tariff for
comparable MEGA services become more economical (i.e. lower tariffed rates) for
Teleglobe, Teleglobe will have the option to terminate this Agreement and
concurrently migrate to such service without penalty provided it subscribes to
similar digital capacity for, as a minimum, a similar term.

 

6

 

5.3.          If, during the term of
this Agreement or any extension thereof, Teleglobe wishes to increase its
Network by increments of OC-12, Stentor will respond to Teleglobe in keeping
with the principles of this Agreement both with respect to rates and
maintenance and operation charges.

 

5.4.          If, during the term of
this Agreement or any extension thereof, Teleglobe returns capacity as provided
in Article 5.2.4 hereof and is reimbursed any amount in respect thereof, the
monthly maintenance and operation charges specified in Article 4.2 will be
reduced in a proportion equivalent to the proportion the payments referred to
in Article 4.1 have been reduced as a result of such returned capacity.

 

5.5.          Notwithstanding any other provision of this
Agreement, Stentor shall not be obligated to construct facilities so as to meet
the anticipated requirements of Teleglobe as set out in any forecasts provided
to Stentor pursuant to Article 5.2, unless there is a commitment on the part of
Teleglobe to take such additional capacity, on terms and conditions acceptable
to Stentor.

 

6.             TECHNOLOGICAL
ADVANCES

 

6.1.          Stentor does not warrant that the same
transmission equipment will be used to provide the capacity described in
Article 1 throughout the term of this Agreement. If it becomes advantageous to
Stentor to upgrade some or all the transmission equipment, Stentor will inform
Teleglobe at least six (6) months in advance and will provide service within
the bounds of Article 3 during the period of facility upgrade.  All reasonable efforts will be made to
coordinate equipment changes to minimize interruptions and to provide, subject
to the requirements of Stentor, to Teleglobe benefits of improved service
and/or reduced maintenance costs resulting from such equipment upgrades with
corresponding adjustments to the payments specified in Article 4.2.  For greater certainty, Articles 8 and 10
will not apply with respect to unit unavailability or Network performance
during such period of facility upgrade provided Teleglobe has given its prior
consent to the facility upgrade which will be provided in a timely manner and
not unreasonably withheld.

 

6.2.          If during the term of
this Agreement or any extension thereof, technological advances make practical
the carriage of more or different telecommunications traffic on the fiber optic
cable utilized to furnish the Network to Teleglobe, upon Teleglobe’s request
Stentor will use commercially reasonable efforts to make those technological
and operational modifications and install the equipment necessary to allow
Teleglobe to take advantage of such advances subject to mutual agreements as to
associated charges, if any.

 

7

 

6.3.          Subject to Article 6.1,
Stentor agrees that it will not make Network impacting technological changes
without the prior consent of Teleglobe, acting reasonably.

 

7.             OPTION OF EXTENSION

 

7.1.          No later than twelve (12) months prior to the
expiration of the initial term referenced in Article 2.1, Teleglobe shall
notify Stentor in writing of its intention not to extend this Agreement or its
willingness to negotiate an extension of this Agreement.  The terms and conditions of such extension
will be negotiated by the parties immediately following such notification.

 

8.             LOSSES AND REBATES

 

8.1.          Stentor shall not be liable for any loss or
damage sustained by Teleglobe by reason of any failure in or a breakdown of any
fiber optic cable furnishing the Network. 
However, should the Network be affected by breakdowns resulting in
outages or degradations, and provided that such outages or degradations are not
caused by the fault, negligence or failure in whole or in part by Teleglobe,
its employees, agents, contractors or sub-lessees, a rebate will be made by
Stentor to Teleglobe as hereinafter set out.

 

8.2.          Rebates will be credited
to Teleglobe based on monthly amounts as set out in Annex 3, Article 2.1 and as
per the percentage set out in Article 8.3 and 8.4 below.

 

8.3.          All outages, as defined
in Annex 2, Article 2.3, will be accumulated on a monthly basis and credited as
follow:

 

•              A monthly cumulative
unit* unavailability of between 15 minutes and up to 1 hour will result in a
rebate of 5% of the monthly amounts.

 

•              A monthly cumulative
unit* unavailability of more than 1 hour and up to 3 hours will result in a
rebate of 15% of the monthly amounts.

 

•              A monthly cumulative
unit* unavailability of more than 3 hours and up to 24 hours will result in a
rebate of 25% of the monthly amounts.

 

•              A monthly cumulative
unit* unavailability of more than 24 hours will result in a rebate as set out
in Annex 3, Article 2.2 for each additional 24 hour period or part thereof the
service is unavailable.

 

*              Either DS-3 or OC-3.

 

8.4.          In the case of degradation of services,
Network error performance will be accumulated on a monthly basis.  Rebates will be credited to Teleglobe for
each 

 

8

 

day the unit error performance
limits are exceeded and when the monthly limits are also exceeded as follows:

 

Severely Errored Second (SES) / Measured on
units of DS-3 or OC-3:  When the monthly limit of 156 SES is exceeded:

 

•              A daily cumulation
of 6 SES to 34 SES will result in a rebate of 0.15% of the monthly amounts.

 

•              A daily cumulation
of 35 SES to 69 SES will result in a rebate of 0.5% of the monthly amounts.

 

•              A daily cumulation
of more than 70 SES will result in a rebate of 1% of the monthly amounts.

 

Errored Second (ES) DS-3:  When the monthly limit of 5,833 ES,
excluding SES, is exceeded:

 

•              A daily cumulation
of 195 ES to 1,299 ES will result in a rebate of 0.15% of the monthly amounts.

 

•              A daily cumulation
of 1,300 ES to 2,599 ES will result in a rebate of 0.5% of the monthly amounts.

 

•              A daily cumulation
of more than 2,600 ES will result in a rebate of 1% of the monthly amounts.

 

Errored Second (ES) OC-3:  When the monthly limit of 12,443 ES,
excluding SES, is exceeded:

 

•              A daily cumulation
of 414 ES to 2,765 ES will result in a rebate of 0.15% of the monthly amounts.

 

•              A daily cumulation
of 2,766 ES to 5,529 ES will result in a rebate of 0.5% of the monthly amounts.

 

•              A daily cumulation
of more than 5,530 ES will result in a rebate of 1% of the monthly amounts.

 

8.4.1.           The
calculation of all rebates is based on individual units of bandwidth (i.e.,
either a DS3 or an OC3) rather than the entire Network.  Error performance measurement for the
purpose of rebates is not applicable during periods of unavailable time
(outages), as defined in Annex 2, Article 2.3 should a rebate for outage be
claimed under Article 8.3.  Also, when
counting Error Seconds for the purpose of rebates, the total

 

9

 

number shall be discounted by
the number of Severe Error Seconds (SESs) occurring during the same periods, as
the measurement of the two are not mutually exclusive.

 

8.5.          The rebate structure for
outages will become effective six (6) months after acceptance by Teleglobe of
the complete Network while the rebate structure for degradation will become
effective twelve (12) months after the said acceptance.

 

8.6.          Severely Errored Second
and Errored Second caused by released maintenance will not be subject to
rebates.  Released Maintenance shall be per
Stentor AP 47.004.

 

8.7.          The performance limits
used in the present rebate structure are calculated using the current ITU
Recommendation M.2101.  Once a year, on
the October 01 contract anniversary date, the performance limits will be reviewed
and modified to reflect any revision to ITU Recommendation M.2101 provided the
Network equipment then in service is capable of supporting said M.2101
revision.

 

9.             TERMINATION

 

9.1.          Teleglobe shall have the right to terminate
this Agreement during the term hereof or any extension thereof upon giving
thirty (30) days prior written notice to that effect to Stentor, provided that
it is not then in default of its payment obligations as set out in Article
4.  A cancellation charge equal to 40%
of the minimum capacity requirement identified in Article 5.2.4 as well as with
respect to any extension period negotiated pursuant to Article 7 still not
fulfilled by Teleglobe will be paid by Teleglobe to Stentor on or before the
effective date of termination.  For
greater certainty, the cancellation charge for the year 1998 shall include 40%
of the remaining payments for 1998 in addition to 40% of the minimum capacity
requirement identified in Article 5.2.4. Maintenance charges specified in
Article 4.2 will be payable to the effective date of said termination.

 

9.2.          For the purposes of this Article,
“Interconnection Agreement” means the Interconnection and Operating Agreement
dated as of January 1, 1998 entered into between Teleglobe, Stentor and the
Stentor Shareholders.  Notwithstanding
any other provision of this Agreement, in the event the Interconnection
Agreement terminates prior to December 1, 2000 for any reason other than a
breach of the Interconnection Agreement by Teleglobe, Teleglobe shall have the
right to terminate this Agreement upon thirty (30) day prior written notice to
Stentor.  In addition, Teleglobe will
have the right to terminate this Agreement upon thirty (30) days written notice
if Stentor materially defaults under this Agreement or under the Eastern
Agreement, after having provided Stentor with a period of thirty (30) days
within which to correct such default.

 

10

 

Should
Teleglobe terminate this Agreement as provided for above, Stentor shall remit
to Teleglobe, within forty five (45) days of Teleglobe’s notice of termination
to Stentor, an amount equal to the difference between (i) the total amounts
paid by Teleglobe pursuant to Article 4.1 of this Agreement as of the date of
termination of the Interconnection Agreement or of Stentor’s default, as
applicable, and (ii) the sums of the annualized amounts due by Stentor (as per
the following table) as of the date of termination of the Interconnection
Agreement or of Stentor’s default, as applicable.

 

 

	
  Year

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  
	
  Annualized Amount ($M)

  	
   

  	
  3.5

  	
   

  	
  13.7

  	
   

  	
  13.7

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  8.2

  	
   

  	
  0.3

  	
   

  

 

9.3.          Stentor will have the right to terminate this
Agreement upon thirty (30) day written notice if Teleglobe fails to pay any
amount owing or materially defaults under this Agreement, after having provided
Teleglobe with a period of thirty (30) days within which to correct such
default.

 

10.           TERMINATION FOR POOR
PERFORMANCE

 

10.1.        Subject to Article 10.3, Teleglobe may
terminate this Agreement after giving notice in writing to Stentor if:

 

10.1.1.     Stentor is unable to
demonstrate that the Network meets BIS specifications by January 1, 1996 or, in
the case where Teleglobe exercises its option of extension pursuant to Article
7, within three (3) months of the termination of the initial term of the
Agreement.

 

10.1.2.     During the term hereof or any
extension thereof, the availability of the Network, as defined in Annex 2,
Article 2.2, is less than 99.5% per month for more than three (3) consecutive
months.

 

10.2.        In the event of
termination for poor performance, as specified in Article 10.1 above and as
defined in Article 10.1.1 and Article 10.1.2, Teleglobe will be entitled to a
refund which will be calculated and paid as provided in Article 9.2 from the
date of the notice of termination.

 

10.3.        Any outage which is the
result of force majeure (i.e. any matter beyond the reasonable control of
Stentor) will not be considered as a cause for termination provided Stentor
informs Teleglobe of the cause of such an outage and endeavors to reroute such
digital capacity affected.

 

11

 

11.           LIMITATION OF LIABILITY

 

11.1.        Except as specifically provided for in Articles
8, 10 and Annex 3 to this Agreement, Stentor does not guarantee error-free or
uninterrupted operation of the Network. 
Except as specifically provided for in this Agreement, Stentor makes no
warranties, representations or conditions of any nature whatsoever, either
express or implied, including, without limitation, any warranty, representation
or condition of fitness for a particular purpose or merchantability with
respect to the Network and any services provided hereunder, and all warranties,
representations and conditions, express or implied are hereby excluded.

 

11.2.        Except as specifically provided for in Articles
8, 9 and 10 and Annex 3 to this Agreement, and except for all of Teleglobe’s
obligations to pay under this Agreement, either party’s total cumulative liability,
if any, to the other or any third party for damages related to this Agreement,
for any cause or causes whatsoever, including damages arising directly or
indirectly from a breach of this Agreement (including a fundamental breach or
otherwise), negligence, any act or omission of either party or its
representatives, or under any other theory of law or equity will be limited to
those damages actually proven as directly attributable to either party, and
will in no event exceed $10,000.00 (ten thousand dollars).  Under no circumstances will either party be
liable to the other or any third party for any indirect, special,
consequential, incidental, economic or punitive damages, including, without
limitation, loss of data, loss of income, loss of profit or failure to realize
expected savings arising directly or indirectly from breach of contract
(including fundamental breach or otherwise), negligence, any act or omission of
either party or its representatives, or under any other theory of law or
equity, even if either party had been advised of, had knowledge of, or
reasonably could have foreseen, the possibility of such damages.

 

11.3.        Neither party will be liable to the other or
any third party for:  (a) any act or
omission of the other party or any carrier other than the parties; (b) any
claims or actions related to defamation, copyright or trademark infringement,
or the violation of any third party rights, arising from use of the Network
(except as expressly provided herein); or (c) any unauthorized use of the
Network, except where such unauthorized use contravenes any provision of this
Agreement.

 

11.4.        Notwithstanding Article 11.2, the rebates and
reimbursements set out in Articles 8, 9, and 10 and Annex 3 to this Agreement
are the exclusive remedy available to Teleglobe arising out of Articles 8 or 10
and Annexes 1, 2 or 3 under this Agreement or otherwise.

 

11.5.        Neither party shall have a claim or demand
against the other party for any injury, including personal injury resulting in
death, or loss of or any damage to any property, suffered or sustained by it or
its employees or by any other person or 

 

12

 

corporation
which directly or indirectly results from, arises out of or is connected with
the use of the Network, except to the extent that such injury resulting in
death, loss or damage is caused by the negligence of the other party or that of
its employees or agents.

 

12.           PATENT INFRINGEMENT

 

12.1.        Teleglobe shall, at its own expense, use its
own apparatus, systems or methods to connect with the Network and shall
indemnify and save harmless Stentor from any claims and expenses arising out of
alleged patent infringement relating to the said apparatus, systems or
methods.  Stentor shall indemnify and
save harmless Teleglobe from any claims and expenses arising out of alleged
Canadian patent infringement based upon the use by Teleglobe of the Network.

 

13.           LOCATION OF
INTERCONNECTION POINTS

 

13.1.        The connections to the Network shall be
provided by Stentor at its expense, at the demarcation points specified in
Annex l.  Teleglobe shall have the right
to request Stentor to relocate some or all connections, and the work required
will be performed by Stentor, but at the expense of Teleglobe.

 

14.           ASSIGNMENT

 

14.1.        Subject to Article 14.2,
this Agreement, and the respective rights and obligations hereunder, may not be
assigned by either party without the prior written consent of the other party.

 

14.2.        Notwithstanding Article
14.1 above, any party including any of the Stentor Shareholders (the
“Assignor”) may, without the other parties’ consent, make a complete assignment
of its interest under this Agreement to another entity (the “Assignee”)
provided that the Assignor shall remain jointly and severally liable with the
Assignee for the fulfillment of all the terms and conditions hereof and
provided the Assignee, if the Assignor is one of the Stentor Shareholders, is
an Affiliate of at least one of the Stentor Shareholders.  In the case of an assignment of this Agreement
by Teleglobe to a Teleglobe Affiliate, the Affiliate shall not be a Stentor
Shareholder or a Stentor Shareholder Affiliate.

 

15.           INDEPENDENT PARTIES

 

15.1.        This Agreement shall not constitute, create,
give effect to, or imply a pooling arrangement, partnership, joint venture or
formal business organization of any kind. 
Nothing in this Agreement shall grant to either party the right to make
commitments of any kind for or on behalf of the other party without the prior

 

13

 

consent of the other party, it
being specifically recognized that one party cannot act as an agent for the
other.

 

16.           APPLICABLE LAW

 

16.1.        This Agreement, and all documents and
instruments contemplated hereby, shall be governed by the law of the Province
of Ontario and the laws of Canada applicable therein, without regards to its
rules on conflicts of laws.

 

17.           RESOLUTION OF DISPUTES

 

17.1.        The parties shall attempt
amicably to resolve any disagreement or dispute which may arise between them
regarding the interpretation, the performance of or the failure to perform
under this Agreement.

 

17.2.        In the event that any
disagreement or dispute between the parties continues for a period greater than
thirty (30) days, the following procedures may be invoked by one of the parties
(the “Initiating Party”) by
providing a full written description of its position and the grounds for its
dissatisfaction, then:

 

17.2.1.     the two parties shall meet
within five (5) business days of the other party receiving such written
description, to review the information provided pursuant to Article 17.2;

 

17.2.2.     the other party shall, within
ten (10) business days of receipt of the information provided by the Initiating
Party, provide a written response to the Initiating Party fully describing its
position;

 

17.2.3.     in the event that the matter
remains unresolved for a further ten (10) business days after receipt by the
Initiating Party of the information provided pursuant to Article 17.2.2, the
parties shall, within a further ten (10) business days, arrange for their
respective Vice-Presidents responsible for this Agreement to meet to attempt to
resolve the dispute.

 

17.3.        In the event that the process in Article 17.2
is followed and the dispute remains unresolved for a further ten (10) business
days following the meeting of the parties’ respective Vice-Presidents, the
following procedures shall apply:

 

17.3.1.     the dispute, addressed in
Article 17.2, shall be settled by arbitration in Montréal under the Rules of Conciliation  and  Arbitration
of the International Chamber of Commerce and applying the substantive laws of
the Province of Ontario and the laws of Canada applicable therein;

 

17.3.2.     such arbitration shall be
heard by a panel of three (3) arbitrators;

 

14

 

17.3.3.     each party shall nominate one
(1) arbitrator, and the two arbitrators so nominated shall agree on the
appointment of a third arbitrator as chairman within ten (10) days of the
confirmation of the appointment of the second arbitrator;

 

17.3.4.     in the event that the
arbitrators nominated by the parties fail to agree on a chairman within the
period stated, the chairman shall be appointed by the Court of Arbitration of
the International Chamber of Commerce in accordance with Article 2(4) of the Rules of Conciliation and Arbitration;

 

17.3.5.     all arbitrators shall be
qualified in law and shall have expertise in commercial law;

 

17.3.6.     any monetary award by the
arbitration panel shall include interest calculated from the date of initial
written description pursuant to Article 17.2 using the Bank of Canada prime
rate plus two percent (2%);

 

17.3.7.     the decision of the
arbitration panel shall be final and binding upon the parties and in any event,
shall be rendered within one hundred and twenty (120) days of the issuance by
the Initiating Party of its written description under Article 17.2.

 

18.           STIPULATION

 

18.1.        This Agreement shall be binding upon the
parties hereto and upon their respective successors and duly permitted assigns.

 

19.           DISCLOSURE

 

19.1.        Except where and to the extent required by law
or lawful authority, no formal public disclosure or announcement concerning
this Agreement will be made by Stentor or Teleglobe prior to advising the other
party of such disclosure and to obtaining such other party’s agreement prior to
making such formal disclosure or announcement.

 

20.           NOTICES

 

20.1.        All notices required to be given hereunder by
any party to the other(s), and all formal requests or other formal communications
required or desired to be given or made pursuant to or in connection with this
Agreement, shall be in writing and shall be effective if delivered in person,
mailed by registered or certified post or sent by facsimile to the recipient
party indicated hereunder, as follows:

 

15

 

a)             From Stentor to
Teleglobe:

 

Director,
Procurement and Administration

Teleglobe
Canada Inc.

1000 de La
Gauchetière Street West

Montréal,
Québec H3B 4X5

Telecopier:  (514) 868-8043

 

b)            From Teleglobe to
Stentor:

 

Vice President
- Wholesale Services

Stentor
Resource Centre Inc.

160 Elgin
Street, Floor 23

Ottawa,
Ontario K1G 3J4

Telecopier:  (613) 781-6065

 

With a copy
to:

 

Vice President
- Alliances and Legal Services

1800 McGill
College, Floor 20

Montréal,
Québec H3A 3J6

Telecopier:  (514) 870-0851

 

20.2.        If mailed, such notice shall be deemed to have
been received on the third business day following the date sent; if sent by
facsimile or delivered in person, such notice shall be deemed to have been
received on the next business day following the date sent.

 

20.3.        Any party may by written notice change its
address or the designated office or officer in the address.

 

21.           PARAGRAPH HEADINGS

 

21.1.        The paragraph headings and titles of this
Agreement shall not be considered in interpreting the text of this Agreement
and are inserted for convenience only.

 

22.           REGULATORY APPROVAL

 

22.1.        The performance of this Agreement by the
parties is contingent upon the obtaining and continuance of such governmental
and/or regulatory approvals, consents, authorizations and permits as may be
required or deemed necessary by the parties and as may be satisfactory to them.

 

16

 

23.           ENTIRE AGREEMENT

 

23.1.        The express obligations herein contracted by
the parties, as amended by the parties from time to time, including the content
of all Annexes forming part hereof, together with all matters specifically
incorporated by reference therein, embody the entire and sole agreement of the
parties relating to the matters dealt with herein.  Without limiting the generality of the foregoing, this Agreement
supersedes all previous communications, negotiations and agreements, either
written or oral, relating to the matters dealt with herein.

 

24.           FORCE MAJEURE

 

24.2.        Neither party to the Agreement shall be liable
to the other for any delay or failure in performance hereunder due to and
including without limitation, fires, work stoppages, strikes, lock-outs,
slow-downs and similar labour disruptions, embargoes, requirements imposed by
governmental regulations, civil or military authorities, acts of God, the
public enemy or other causes and circumstances which are beyond the reasonable
control of the party unable to perform. 
If an excused performance occurs, the party delayed or unable to perform
shall give immediate notice to the other party.

 

25.           EXECUTION

 

25.1.        This Agreement shall be executed in eleven (11)
counterparts each of which shall be considered original with identical legal
effect.  Notwithstanding that this
Agreement may be executed at different locations and on properly identified
individual loose execution pages in eleven (11) counterparts, this Agreement,
once so executed by all parties and assembled into eleven (11) original and
identical counterparts, shall constitute but one and the same instrument of the
said originals being complete in itself for all legal purposes.

 

26.           STENTOR SHAREHOLDERS
BOUND BY AGREEMENT

 

26.1.       The Stentor Shareholders shall agree to be bound
by and shall benefit from the provisions of this Agreement, as parties to such
Agreement by executing Annex 4 to this Agreement.  Each reference in this Agreement to Stentor or to the party (when
aimed at Stentor) shall also refer to each and every Stentor Shareholder
individually, unless the context specifically dictates otherwise.  The Stentor Shareholders agree that they
shall use commercially reasonable efforts to use Stentor Resource Centre Inc.
or any other duly appointed agent as their representative in discussions with
Teleglobe.

 

17

 

IN WITNESS WHEREOF this Agreement has been executed by the parties
hereto.

 

	
   

  	
  TELEGLOBE CANADA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STENTOR RESOURCE CENTRE INC.

  as agent for the Stentor Shareholders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

18Exhibit 10.5

 

THIS EASTERN RING FIBER OPTIC AGREEMENT
amended as of January 1, 1998.

 

	
  BY AND BETWEEN:

  	
   

  	
  TELEGLOBE CANADA INC., a Canada business
  corporation having its registered office at 1000 de La Gauchetière Street
  West, in the City of Montréal, Province of Québec, H3B 4X5, hereinafter
  referred to as “Teleglobe”;

  
	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  STENTOR RESOURCE CENTRE INC., a Canada
  business corporation having its registered office at 160 Elgin Street, in the
  City of Ottawa, Province of Ontario, K1G 3J4, hereinafter referred to as “Stentor”, acting as duly authorized agent
  for the Stentor Shareholders (meaning, collectively, the following: Bell
  Canada, BC TEL, Island Telecom Inc., MTS Communications Inc., Maritime Tel
  & Tel Limited, The New Brunswick Telephone Company, Limited, NewTel
  Communications Inc., Saskatchewan Telecom-munications and TELUS
  Communications Inc.).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  individually
  also referred to as “party” and collectively as “parties”

  

 

WHEREAS each of
Teleglobe and the Stentor Shareholders own, operate, lease and/or use through
agreements of use, facilities which constitute a telecommunications system;

 

WHEREAS, at the
request of Teleglobe, Stentor has agreed to make available for use by Teleglobe
on an exclusive basis certain digital capacity on the fiber optic network of
the Stentor Shareholders;

 

WHEREAS the parties
have established the following terms, covenants and conditions upon which the
said digital capacity is to be provided by Stentor to Teleglobe;

 

NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

1.             CAPACITY TO BE PROVIDED BY STENTOR TO TELEGLOBE

 

1.1.          Subject
to the terms and conditions contained herein, Stentor shall, during the term
hereof or any extension thereof, make available to Teleglobe and provide access
to Teleglobe for its own use or that of the customers of Teleglobe, on a
continuous, dedicated and exclusive basis, the following digital capacity,
hereinafter referred to as the “Network”:

 

1

 

On multiple self healing rings between the following locations:

 

Pennant Point,
N.S. - Montréal

 

1995-2005               1 X OC-24 link (2 X
OC-12)

 

Montréal -
Toronto

 

1995-2005               1 X OC-24  link (2 X OC-12)

 

and;

 

with ring
interconnection or equivalent between the following locations:

 

Montréal - US
Border (near Mooer’s Forks)

 

1995-2005               1 X OC-12 link

 

Toronto - US
Border (near Buffalo)

 

1995-2005               1 X OC-12 link

 

Montréal -
Laurentides (Weir)

 

1995-2005               1 X OC-12 link

 

1.2.          These
communications links will make use of Synchronous Optical Network (“SONET”) transmission facilities and fibre
optic cables and will be furnished by Stentor at the interconnection points
located and described in Annex 1 herewith, and in accordance with the technical
specifications contained in Annex 2 of this Agreement, both of which Annexes
are made a part hereof by reference.

 

1.3.          Subject
to the provisions of Article 5.5,  Stentor
will undertake, at its own costs, whatever construction of facilities required
to meet the terms of this Agreement and the Stentor Shareholders will retain
ownership of their facilities.

 

1.4.          Teleglobe
will undertake, at its own cost, to provide the required transmission equipment
within its own terminal locations from an agreed upon demarcation point, as
described in Annex 1.  Stentor will
cooperate in the coordination of the installation activity.

 

1.5.          In
case of any ambiguity or inconsistency arising between the provisions of this
Agreement and the Annexes forming part thereof, the provisions of this
Agreement shall have precedence, except in the case of the technical parameters
in which case Annex 2 shall govern.

 

2

 

1.6           Teleglobe
agrees that it shall not lease, share, sub-lease or assign, in any way
whatsoever, any dedicated transport capacity of the Network to Canadian telecommunications
carriers or resellers or Internet Service Providers (except to Teleglobe’s
affiliates, as this term is defined in the Canada Business Corporations Act,
provided such affiliates agree in writing to be bound by this Article 1.6) for
non-international traffic.  A breach of
this Article 1.6 by Teleglobe or any Teleglobe affiliate shall be deemed to be
a material breach of this Agreement, entitling Stentor to terminate this
Agreement upon ninety (90) days written notice.  Teleglobe or any Teleglobe affiliate may lease, share, sub-lease
or assign, in any way whatsoever, any dedicated transport capacity of the
Network to Canadian telecommunications carriers and resellers for
non-international traffic, provided that Teleglobe provide prior written notice
to Stentor and provided that Teleglobe and Stentor agree to revised rates and
charges under this Agreement to the mutual satisfaction of the Parties.

 

2.             DURATION

 

2.1.          The
term of this Agreement shall commence at 00:01 hours, local Montréal time, on
January 15, 1995  (hereinafter
called the “Service Date”) and, subject to earlier termination as provided for
herein, shall run for a period of ten (10) years, terminating at 23:59 hours,
local Montréal time on January 14, 2005.

 

2.2.          In
addition to the above mentioned period Stentor shall make the digital link(s)
available to Teleglobe for a period of thirty (30) days prior to the required
Service Date for the purposes of testing by Teleglobe.

 

2.3.          Should
the performance measurement of the Network not meet the specifications for
Bringing Into Service (“BIS”)
contained in Annex 2 by the Service Date, Stentor will use commercially
reasonable efforts to provide alternative connectivity to meet Teleglobe’s
requirements at no extra cost to Teleglobe over and above those charges
provided for in Article 4 hereof.  In
this event, a portion of the up-front payment described in Article 4.1 (B) will
be withheld by Teleglobe in accordance with Annex 3, Article 1 until Stentor can
demonstrate BIS specifications are met.

 

3.             MAINTENANCE AND RESTORATION

 

3.1.          Subject
to the terms and conditions herein, and for the term of this Agreement as set
out in Article 2 above, Stentor will be the sole provider of maintenance and
restoration services for the Network provided by Stentor as identified in
Article 1.

 

3.2.          Stentor
will maintain or have maintained, at no additional charge to Teleglobe other
than as specifically provided for in Article 4, in efficient working order as
defined in Annex 2, over the term of this Agreement or any extension thereof,
the Network made available to Teleglobe.

 

3

 

3.3.          Stentor
does not warrant uninterrupted working of the Network provided to Teleglobe
under this Agreement.

 

3.4.          However,
in the event of interruption or degradation of the Network, Stentor will use
commercially reasonable endeavors to correct or remedy same to meet the
performance requirements specified in this Agreement and in the meantime to
restore the Network on an alternate facility. 
Stentor agrees to perform such correction, remedy or restoration at no
additional cost to Teleglobe, unless the cause of interruption or degradation
is due to the fault or negligence of Teleglobe or its customers, in which
event, Teleglobe will assume all expenses associated with such correction,
remedy or restoration.

 

4.             CONSIDERATION AND PAYMENT

 

4.1.          In
consideration of Stentor making available the Network described in Article 1
during the term of this Agreement specified in Article 2, and for the maintenance
and operation of the Network as specified in Article 3, Teleglobe shall pay to
Stentor:

 

	
  Date

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A)

  	
  November 15, 1994

  	
   

  	
  $

  	
  20,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B)

  	
  January 15,
  1995

  	
   

  	
  $

  	
  25,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C)

  	
  July 01, 1997

  	
   

  	
  $

  	
  30,350,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D)

  	
  January 01, 2000

  	
   

  	
  $

  	
  5,980,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E)

  	
  July 01, 2002

  	
   

  	
  $

  	
  5,980,000.00

  	
   

  

 

4.2.          In
addition to the payment identified in Article 4.1, for the maintenance and
operation of the Network, a monthly charge of $45,000 will be payable by
Teleglobe to Stentor for each month period starting January 15, 1995  and ending December 31, 1997.  Subject to the terms of Article 5.4 hereof,
for each month period starting January 1, 1998 and ending January 14, 2005,
such monthly charge will be equal to $29,833.33.  This monthly charge will be payable by Teleglobe to Stentor in
advance on the first day of each month. 
The last charge will be calculated on a daily basis pro-rata to the monthly
charge for 14 days.

 

4.3.          Stentor
may add to all charges under this Agreement any tax imposed or based on the
provision or use of the digital capacity except taxes on the income of Stentor.

 

4.4.          Subject
to Article 2.3 hereof, whenever said monthly installments or payments, as
listed in Article 4.1 above, or any other amounts payable by Teleglobe to
Stentor

 

4

 

under this
Agreement, have not been received by Stentor on or before the due date, the
late payment charge specified in Article 25 of Bell Canada’s General Tariff
shall apply in accordance with the terms therein.

 

5.             ADDITION, REDUCTION AND CANCELLATION OF CAPACITY

 

5.1.          Subject
to appropriate Stentor facilities being available, Stentor will make available
to Teleglobe upon Teleglobe’s request additional digital capacity by increments
of OC-3 (155.52 Mb/s) in addition to the minimum capacity initially contracted
for as stipulated in Article 1 hereof, at the rate(s) provided for in Article
5.2.4.

 

5.2.          Subject
to appropriate Stentor facilities being available, Teleglobe may, at any time
during the term hereof or any extension thereof, exercise its right to use the
said additional capacity by giving at least thirty (30) days prior notice to
Stentor, provided that Teleglobe has informed Stentor of its potential
requirements by means of annual forecast, under the following terms and
conditions:

 

5.2.1.       This
option to use such additional capacity will remain open to Teleglobe during the
entire term hereof, as defined as Article 2, or any extension thereof.

 

5.2.2.       Teleglobe
has the right to terminate its use of initial or additional capacity anytime
after the first thirty (30) - day period by giving at least fifteen (15) days
prior written notice to Stentor, without any penalty but always subject to
Article 5.2.4.  Subject to Article 5.2.4, this shall be applicable to
both initial and additional capacity on a OC-3 basis on any of the
cross-section segments referred to herein or in the Central Fiber Optic Network
Agreement entered into among the parties and amended as of January 1, 1998 (the
“Central Agreement”).  Notwithstanding any other provision of the
Agreement, Stentor shall be free to redeploy any such capacity which is
returned or cancelled by Teleglobe.

 

5.2.3.       The
minimum period of utilization of initial or additional capacity is thirty (30)
days.  Subject to Article 5.2.4, there
will be no penalty to Teleglobe for the return or cancellation of capacity
after the minimum period of utilization for any capacity ordered during the
term of this Agreement or any extension thereof.

 

5.2.4.       Teleglobe
will have the right to return initial capacity in OC-3 increments, at any time
during the term of this Agreement or any extension thereof, for monthly
credit(s) as stated below:

 

5

 

	
  Cross Section

  	
   

  	
  Monthly
  Credit per OC-3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Toronto - Montréal

  	
   

  	
  $

  	
  16,942

  	
   

  
	
  Montréal - Pennant Point

  	
   

  	
  $

  	
  26,733

  	
   

  
	
  Montréal - US Border

  	
   

  	
  $

  	
  1,892

  	
   

  
	
  Montréal – Weir

  	
   

  	
  $

  	
  3,358

  	
   

  
	
  Toronto - US Border

  	
   

  	
  $

  	
  3,083

  	
   

  

 

 

Credits may be accumulated by Teleglobe and used to acquire additional
capacity at any time on any of the cross sections mentioned above or in the
first table found in Article 5.2.4 of the Central Agreement at the same prices
as those indicated in the above-mentioned tables until such credits have been
totally utilized.  Teleglobe may opt to
be reimbursed fully or partially for any of the outstanding credits at any
point in time.

 

The minimum capacity requirement for 1998 will be one OC-24 for the
Toronto-Montréal cross section, one OC-24 for the Montréal-Pennant Point cross
section, one OC-12 for the Montréal-US Border cross section, one OC-12 for the
Montréal-Weir cross section and one OC-12 for the Toronto-US Border cross
section.  The minimum capacity
requirement for the years 1999 to 2005 inclusively for the purposes of both
this Agreement and the Central Agreement will be, collectively, a capacity
under any agreements equivalent to $26.7 million using rates from the above
table and the first table found in Article 5.2.4 of the Central Agreement,
without any minimum yearly commitment and Teleglobe will have no restrictions
with regards to the return of capacity under either this Agreement or the
Central Agreement or the reasons for the return.  For greater certainty, the minimum capacity requirement set out
above for the years 1999 to 2005, inclusive, shall apply notwithstanding the
termination of either this Agreement or the Central Agreement.

 

In the event Teleglobe terminates this Agreement at its discretion
pursuant to Article 9.1 prior to having fulfilled the above minimum capacity
requirement obligations, Teleglobe agrees to pay Stentor, in a single payment
as liquidated damages for early termination of this Agreement and not as a
penalty, the amount described in Article 9.1.

 

Prices for additional capacity in place and to be ordered by Teleglobe
which is over and above the utilizations of credits for returned capacity will
not exceed the following:

 

6

 

	
  Cross Section

  	
   

  	
  Monthly
  Rate per OC-3

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Toronto - Montréal

  	
   

  	
  $

  	
  48,800

  	
   

  
	
  Montréal - Pennant Point

  	
   

  	
  $

  	
  77,020

  	
   

  
	
  Montréal - US Border

  	
   

  	
  $

  	
  13,125

  	
   

  
	
  Montréal – Weir

  	
   

  	
  $

  	
  26,040

  	
   

  
	
  Toronto - US Border

  	
   

  	
  $

  	
  21,375

  	
   

  

 

5.2.5.       If,
during the term hereof or any extension thereof, Stentor’s General Tariff for
comparable MEGA services become more economical (i.e. lower tariffed rates) for
Teleglobe, Teleglobe will have the option to terminate this Agreement and
concurrently migrate to such service without termination charges, provided it
subscribes to similar digital capacity, as a minimum, for a similar term.

 

5.3.          If,
during the term of this Agreement or any extension thereof, Teleglobe wishes to
increase its Network by increments of OC-l2, Stentor will respond to Teleglobe
in keeping with the principles of this Agreement, both with respect to rates
and maintenance and operation charges.

 

5.4.          If,
during the term of this Agreement or any extension thereof, Teleglobe returns
capacity as provided in Article 5.2.4 hereof and is reimbursed any amount in
respect thereof, the monthly maintenance and operation charges specified in
Article 4.2 will be reduced in a proportion equivalent to the proportion the
payments referred to in Article 4.1 have been reduced as a result of such
returned capacity.

 

5.5           Notwithstanding
any other provision of this Agreement, Stentor shall not be obligated to
construct facilities so as to meet the anticipated requirements of Teleglobe as
set out in any forecasts provided to Stentor pursuant to Article 5.2, unless
there is a commitment on the part of Teleglobe to take such additional
capacity, on terms and conditions acceptable to Stentor.

 

6.             TECHNOLOGICAL ADVANCES

 

6.1.          Stentor
does not warrant that the same transmission equipment will be used to provide
the capacity described in Article 1 throughout the term of this Agreement.  If it becomes advantageous to Stentor to
upgrade some or all the transmission equipment, Stentor will inform Teleglobe
at least six (6) months in advance and will provide service within the bounds
of Article 3 during the period of facility upgrade.  All reasonable efforts will be made to coordinate equipment
changes to minimize interruptions and to provide, subject to the requirements
of Stentor, to Teleglobe benefits of improved service/reduced maintenance costs
resulting from such equipment upgrades with corresponding adjustments to the
payments

 

7

 

specified in
Article 4.2.  For greater certainty,
Articles 8 and 10 will not apply with respect to unit availability or Network
performance during such period of facility upgrade provided Teleglobe has given
its prior consent to the facility upgrade which will be provided in a timely
manner and not unreasonably withheld.

 

6.2.          If
during the term of this Agreement or any extension thereof, technological
advances make practical the carriage of more or different telecommunications
traffic on the fiber optic cable utilized to furnish the Network to Teleglobe,
upon Teleglobe’s request Stentor will use commercially reasonable efforts to
make those technological and operational modifications and install the
equipment necessary to allow Teleglobe to take advantage of such advances
subject to mutual agreement as to associated charges, if any.

 

6.3.          Subject
to Articles 6.1, Stentor agrees that it will not make Network impacting
technological changes without the prior written consent of Teleglobe, acting
reasonably.

 

7.             OPTION OF EXTENSION

 

7.1.          No
later than twelve (12) months prior to the expiration of the initial term of
this Agreement specified in Article 2.1, Teleglobe shall notify Stentor in
writing of its intention to extend or not to extend the term of this Agreement;
the terms and conditions of such extension will be negotiated at the time of
the request.

 

8.             LOSSES  AND
REBATES

 

8.1.          Stentor
shall not be liable for any loss or damage sustained by Teleglobe by reason of
any failure in or a breakdown of any fiber optic cable furnishing the
Network.  However, should the Network be
affected by breakdowns resulting in outages or degradations, and provided that
such outages or degradations are not caused by the fault, negligence or failure
on the part of Teleglobe, its employees, agents, contractors or sub-lessees, a
rebate will be made by Stentor to Teleglobe as hereinafter set out.

 

8.2.          Rebates
will be credited to Teleglobe based on monthly charges as set out in Annex 3,
Article 2 and as per the percentage set out in Article 8.3 below.

 

8.3.          All
outages, as defined in Annex 2 will be accumulated on a monthly basis and
credited as follow:

 

•              A
monthly cumulative unit unavailability of between 15 minutes and up to 1 hour
will result in a rebate of 10%.

 

8

 

•              A
monthly cumulative unit unavailability of more than 1 hour and up to 3 hours
will result in a rebate of 30%.

 

•              A
monthly cumulative unit unavailability of more than 3 hours will result in a
rebate of 60%.

 

8.4.          The
rebate structure will only become effective six (6) months after acceptance by
Teleglobe of the complete Network.

 

9.             TERMINATION

 

9.1.          Teleglobe
shall have the right to terminate this Agreement during the term hereof or any
extension thereof upon giving thirty (30) days prior written notice to that
effect to Stentor, provided that it is not then in default of its payment
obligations as set out in Article 4.  A
cancellation charge equal to 40% of the minimum capacity requirement identified
in Article 5.2.4 as well as with respect to any extension period negotiated
pursuant to Article 7 still not fulfilled by Teleglobe will be paid by Teleglobe
to Stentor on or before the effective date of termination.  For greater certainty, the cancellation
charge for the year 1998 shall include 40% of the remaining payments for 1998
in addition to 40% of the minimum capacity requirement identified in Article
5.2.4.  Maintenance charges specified in
Article 4.2 will be payable to the effective date of the said termination.

 

9.2.          For
the purposes of this Article, “Interconnection Agreement” means the
Interconnection and Operating Agreement dated as of January 1, 1998 entered
into between Teleglobe, Stentor and the Stentor Shareholders.  In the event the Interconnection Agreement
terminates prior to December 1, 2000 for any reason other than a breach by
Teleglobe of the Interconnection Agreement, Teleglobe shall have the right to
terminate this Agreement upon thirty (30) day prior written notice to
Stentor.  In addition, Teleglobe will
have the right to terminate this Agreement upon thirty (30) day written notice
if Stentor materially defaults under this Agreement or under the Central
Agreement, after having provided Stentor with a period of thirty (30) days
within which to correct such default

 

9.3.          Should
Teleglobe terminate this Agreement as provided for above, Stentor shall remit
to Teleglobe, within forty five (45) days of Teleglobe’s notice of termination
to Stentor, an amount equal to the difference between (i) the total amounts
paid by Teleglobe pursuant to Article 4.1 of this Agreement as of the date of
termination of the Interconnection Agreement or of Stentor’s default, as
applicable, and (ii) the sums of the annualized amounts due by Stentor (as per
the following table) as of the date of termination of the Interconnection
Agreement or of Stentor’s default, as applicable.

 

9

 

 

	
  Year

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  
	
  Annualized Amount ($M)

  	
   

  	
  13.0

  	
   

  	
  13.6

  	
   

  	
  13.6

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  6.7

  	
   

  	
  0.3

  	
   

  

 

9.4.          Stentor
will have the right to terminate this Agreement upon thirty (30) day written
notice if Teleglobe fails to pay any amount owing or materially defaults under
this Agreement, after having provided Teleglobe with a period of thirty (30)
days within which to correct such default.

 

10.           TERMINATION FOR POOR PERFORMANCE

 

10.1.        Teleglobe
may terminate this Agreement after giving notice in writing to Stentor if:

 

10.1.1.     Stentor
is unable to demonstrate that the Network meets BIS specifications by July 15,
1995  or, in the case where
Teleglobe exercises its option of extension pursuant to Article 7, within six
(6) months of the termination of the initial term of this Agreement.

 

10.1.2.     During
the term hereof or any extension thereof, the availability of the Network is
less than 99.5%  for more than
three (3) consecutive months.

 

10.2.        In
the event of termination for poor performance, Teleglobe will be entitled to a
refund which will be calculated and paid as provided in Article 9.2 from the
date of the notice of termination.

 

10.3.        Any
outage which is the result of force majeure (i.e. any matter reasonably beyond
the reasonable control of Stentor) will not be considered as a cause for
termination provided Stentor informs Teleglobe of the cause of such an outage
and endeavors to reroute such digital capacity affected.

 

11.           LIMITATION OF LIABILITY

 

11.1.        Except
as specifically provided for in Articles 8 and 10 and Annex 3 to this
Agreement, Stentor does not guarantee error-free or uninterrupted operation of
the Network.  Except as specifically
provided for in this Agreement, Stentor makes no warranties, representations or
conditions of any nature whatsoever, either express or implied., including,
without limitation, any warranty, representation or condition of fitness for a
particular purpose or merchantability with respect to the network and any
services provided hereunder, and all warranties, representations and
conditions, express or implied, are hereby excluded.

 

10

 

11.2.        Except
as specifically provided for in Articles 8, 9 and 10 and Annex 3 to this
Agreement, and except for all of Teleglobe’s obligations to pay under this
Agreement, either party’s total cumulative liability, if any, to the other or
any third party for damages related to this Agreement, for any cause or causes
whatsoever, including damages arising directly or indirectly from a breach of
this Agreement (including a fundamental breach or otherwise), negligence, any
act or omission of either party or its representatives, or under any other
theory of law or equity will be limited to those damages actually proven as
directly attributable to either party, and will in no event exceed $10,000.00
(ten thousand dollars).  Under no
circumstances will either party be liable to the other or any third party for
any indirect, special, consequential, incidental, economic or punitive damages,
including, without limitation, loss of data, loss of income, loss of profit or
failure to realize expected savings arising directly or indirectly from breach
of contract (including fundamental breach or otherwise), negligence, any act or
omission of either party or its representatives, or under any other theory of
law or equity, even if either party had been advised of, had knowledge of, or
reasonably could have foreseen, the possibility of such damages.

 

11.3.        Neither
party will be liable to the other or any third party for:  (a) any act or omission of the other party
or any carrier other than the parties; (b) any claims or actions related to
defamation, copyright or trademark infringement, or the violation of any third
party rights, arising from use of the Network (except as expressly provided
herein); or (c) any unauthorized use of the Network except where such
unauthorized use contravenes any provision of this Agreement.

 

11.4.        Notwithstanding
Article 11.2, the rebates and reimbursements set out in Articles 8, 9 and 10
and Annex 3 to this Agreement are the exclusive remedy available to Teleglobe
arising out of Article 8 or 10 and Annexes 1, 2 or 3 to this Agreement by
Stentor under this Agreement or otherwise.

 

11.5.        Neither
party shall have a claim or demand against the other party for any injury,
including personal injury resulting in death, or loss of or any damage to any
property, suffered or sustained by it or its employees or by any other person
or corporation which directly or indirectly results from, arises out of or is
connected with the use of the Network, except to the extent that such injury
resulting in death, loss or damage is caused by the negligence of the other
party or that of its employees or agents.

 

12.           PATENT INFRINGEMENT

 

12.1.        Teleglobe
shall, at its own expense, use its own apparatus, systems or methods to connect
with the Network and shall indemnify and save harmless Stentor from any claims
and expenses arising out of alleged patent infringement relating to the said
apparatus, systems or methods.  Stentor
shall indemnify and save harmless

 

11

 

Teleglobe from
any claims and expenses arising out of alleged Canadian patent infringement
based upon the use by Teleglobe of the Network.

 

13.           LOCATION OF INTERCONNECTION POINTS

 

13.1.        The
connections to the Network shall be provided by Stentor at its expense, at the
demarcation points specified in Annex 1.

 

13.2.        Teleglobe
shall have the right to request Stentor to relocate some or all connections,
and the work required will be performed by Stentor, but at the expense of
Teleglobe.

 

14.           ASSIGNMENT

 

14.1.        Subject
to Article 14.2, this Agreement, and the respective rights and obligations
hereunder, may not be assigned by either party without the prior written
consent of the other party.

 

14.2         Notwithstanding
Article 14.1 above, any party including any of the Stentor Shareholders (the
“Assignor”) may, without the other parties’ consent, make a complete assignment
of its interest under this Agreement to another entity (the “Assignee”)
provided that the Assignor shall remain jointly and severally liable with the
Assignee for the fulfillment of all the terms and conditions hereof and provided
the Assignee, if the Assignor is one of the Stentor Shareholders, is an
Affiliate of at least one of the Stentor Shareholders.  In the case of an assignment of this
Agreement by Teleglobe to a Teleglobe Affiliate, the Affiliate shall not be a
Stentor Shareholder or a Stentor Shareholder Affiliate.

 

15.           INDEPENDENT PARTIES

 

15.1.        This
Agreement shall not constitute, create, give effect to, or imply a pooling
arrangement, partnership, joint venture or formal business organization of any
kind.  Nothing in this Agreement shall
grant to either party the right to make commitments of any kind for or on
behalf of the other party without the prior consent of the other party, it
being specifically recognized that one party cannot act as an agent for the
other.

 

16.           APPLICABLE LAW

 

16.1.        This
Agreement, and all documents and instruments contemplated hereby, shall be
governed by the law of the Province of Ontario and the laws of Canada
applicable therein, without regards to its rules on conflicts of laws.

 

12

 

17.           RESOLUTION OF DISPUTES

 

17.1.        The
parties shall attempt amicably to resolve any disagreement or dispute which may
arise between them regarding the interpretation, the performance of or the
failure to perform under this Agreement.

 

17.2.        In
the event that any disagreement or dispute between the parties continues for a
period greater than thirty (30) days, the following procedures may be invoked
by one of the parties (the “Initiating Party”)
by providing a full written description of its position and the grounds for its
dissatisfaction, then:

 

17.2.1.     the
two parties shall meet within five (5) business days of the other party
receiving such written description to review the information provided pursuant
to Article 17.2;

 

17.2.2.     the
other party shall, within ten (10) business days of receipt of the information
provided by the Initiating Party, provide a written response to the Initiating
Party fully describing its position;

 

17.2.3.     in
the event that the matter remains unresolved for a further ten (10) business
days after receipt by the Initiating Party of the information provided pursuant
to Article 17.2.2, the parties shall, within a further ten (10) business days,
arrange for their respective Vice-Presidents responsible for this Agreement to
meet to attempt to resolve the dispute.

 

17.3.        In
the event that the process in Article 17.2 is followed and the dispute remains
unresolved for a further ten (10) business days following the meting of the
parties’ respective Vice-Presidents, the following procedures shall apply:

 

17.3.1.     the
dispute, addressed in Article 17.2. shall be settled by arbitration in Montréal
under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce and applying
the substantive laws of the Province of Ontario and the laws of Canada
applicable therein;

 

17.3.2.     such arbitration shall be
heard by a panel of three (3) arbitrators;

 

17.3.3.     each
party shall nominate one (1) arbitrator, and the two arbitrators so nominated
shall agree on the appointment of a third arbitrator as chairman within ten
(10) days of the confirmation of the appointment of the second arbitrator;

 

17.3.4.     in
the event that the arbitrators nominated by the parties fail to agree on a
chairman within the period stated, the chairman shall be appointed by the Court
of Arbitration of the International Chamber of Commerce in accordance with
Article 2(4) of the Rules of Conciliation
and Arbitration;

 

13

 

17.3.5.     all arbitrators shall be
qualified in law and shall have expertise in commercial law;

 

17.3.6.     any
monetary award by the arbitration panel shall include interest calculated from
the date of initial written description pursuant to Article 17.2 using the Bank
of Canada prime rate plus two percent (2%);

 

17.3.7.     the
decision of the arbitration panel shall be final and binding upon the parties
and in any event, shall be rendered within one hundred and twenty (120) days of
the issuance by the Initiating Party of its written description under Article
17.2.

 

18.           STIPULATION

 

18.1.        This
Agreement shall be binding upon the parties hereto and upon their respective
successors and duly permitted assigns.

 

19.           DISCLOSURE

 

19.1.        Except
where and to the extent required by law or lawful authority, no formal public
disclosure or announcement concerning this Agreement will be made by Stentor or
Teleglobe prior to advising the other party of such disclosure and to obtaining
such other party’s agreement prior to making such formal disclosure or
announcement.

 

20.           NOTICES

 

20.1.        All
notices required to be given hereunder by any party to the other(s), and all
formal requests or other formal communications required or desired to be given
or made pursuant to or in connection with this Agreement, shall be in writing
and shall be effective if delivered in person, mailed by registered or
certified post or sent by facsimile to the recipient party indicated hereunder,
as follows:

 

a)            From Stentor to
Teleglobe:

 

Director, Procurement and Administration

Teleglobe Canada Inc.

1000 de La Gauchetière Street West

Montréal, Québec H3B 4X5

Telecopier:  (514) 868-8043

 

14

 

b)            From Teleglobe to
Stentor:

 

Vice President - Wholesale Services

Stentor Resource Centre Inc.

160 Elgin Street, Floor 23

Ottawa, Ontario K1G 3J4

Telecopier:  (613) 781-6065

 

With a copy to:

 

Vice President - Alliances and Legal Services

1800 McGill College, Floor 20

Montréal, Québec H3A 3J6

Telecopier:  (514) 870-0851

 

20.2.        If
mailed, such notice shall be deemed to have been received on the third business
day following the date sent; if sent by facsimile or delivered in person, such
notice shall be deemed to have been received on the next business day following
the date sent.

 

20.3.        Any
party may by written notice change its address or the designated office or
officer in the address.

 

21.           PARAGRAPH HEADINGS

 

21.1.        The
paragraph headings and titles of this Agreement shall not be considered in
interpreting the text of this Agreement and are inserted for convenience only.

 

22.           REGULATORY APPROVAL

 

22.1.        The
performance of this Agreement by the parties is contingent upon the obtaining
and continuance of such governmental and/or regulatory approvals, consents,
authorizations and permits as may be required or deemed necessary by the
parties and as may be satisfactory to them.

 

23.           ENTIRE AGREEMENT

 

23.1.        The
express obligations herein contracted by the parties, as amended by the parties
from time to time, including the content of all Annexes forming part hereof,
together with all matters specifically incorporated by reference therein,
embody the entire and sole agreement of the parties relating to the matters
dealt with herein.  Without limiting the
generality of the foregoing, this Agreement supersedes all previous
communications, negotiations and agreements, either written or oral, relating
to the matters dealt with herein.

 

15

 

24.           FORCE MAJEURE

 

24.1         Neither
party to the Agreement shall be liable to the other for any delay or failure in
performance hereunder due to and including without limitation, fires, work
stoppages, strikes, lock-outs, slow-downs and similar labour disruptions,
embargoes, requirements imposed by governmental regulations, civil or military
authorities, acts of God, the public enemy or other causes and circumstances
which are beyond the reasonable control of the party unable to perform.  If an excused performance occurs, the party
delayed or unable to perform shall give immediate notice to the other party.

 

25.           EXECUTION

 

25.1.        This
Agreement shall be executed in eleven (11) counterparts each of which shall be
considered original with identical legal effect.  Notwithstanding that this Agreement may be executed at different
locations and on properly identified individual loose execution pages in eleven
(11) counterparts, this Agreement, once so executed by all parties and
assembled into eleven (11) original and identical counterparts, shall
constitute but one and the same instrument, of the said originals being
complete in itself for all legal purposes.

 

26.           STENTOR SHAREHOLDERS BOUND BY AGREEMENT

 

26.1.        The
Stentor Shareholders shall agree to be bound by and shall benefit from the
provisions of this Agreement, as parties to such Agreement by executing Annex 4
to this Agreement.  Each reference in
this Agreement to Stentor or to the party (when aimed at Stentor) shall also
refer to each and every Stentor Shareholder individually, unless the context
specifically dictates otherwise.  The
Stentor Shareholders agree that they shall use commercially reasonable efforts
to use Stentor Resource Centre Inc. or any other duly appointed agent as their
representative in the discussions with Teleglobe.

 

 

	
   

  	
  TELEGLOBE CANADA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

16

 

	
   

  	
  STENTOR RESOURCE CENTRE INC.

  as agent for the Stentor Shareholders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STENTOR RESOURCE CENTRE INC.

  as agent for the Stentor Shareholders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

17

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