EXHIBIT 4.33
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PREFERRED SHARE PURCHASE AGREEMENT
BY AND BETWEEN
360NETWORKS INC.
AND
ALCATEL
DATED AS OF
OCTOBER 31, 2000
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.01 Certain Definitions......................................................1
1.02 Other Terms.............................................................10
1.03 Interpretation..........................................................10
1.04 Construction............................................................10
1.05 Exhibits................................................................10
ARTICLE II
EQUITY INVESTMENT
2.01 Issuance of Securities..................................................11
2.02 Payment of Purchase Price...............................................11
2.03 Closings................................................................12
2.04 Deliveries by 360networks...............................................12
2.05 Deliveries by Alcatel...................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF 360NETWORKS
3.01 Organization and Good Standing; Subsidiaries............................13
3.02 Execution and Delivery..................................................14
3.03 No Violation............................................................14
3.04 Authorized and Issued Capital...........................................15
3.05 Reservation of Shares...................................................16
3.06 Corporate Action and Share Capital Status...............................16
3.07 Securities Laws.........................................................17
3.08 Consents and Approvals..................................................17
3.09 Financial Condition; No Material Adverse Change.........................17
3.10 Properties..............................................................17
3.11 Litigation and Environmental Matters....................................18
3.12 Holding Company Status..................................................19
3.13 ERISA...................................................................19
3.14 Insurance...............................................................19
3.15 Labor Matters...........................................................19
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3.16 Regulatory Compliance...................................................20
3.17 Canadian Pension Plans..................................................20
3.18 Certain Changes or Events...............................................20
3.19 Reports and Financial Statements........................................21
3.20 Compliance with Laws and Agreements.....................................21
3.21 Taxes...................................................................21
3.22 Indebtedness of 360networks.............................................22
3.23 No Broker or Finder.....................................................22
3.24 No General Solicitation.................................................22
3.25 No Liabilities..........................................................22
3.26 Rights of Way...........................................................22
3.27 Capital Stock of Subsidiaries...........................................22
3.28 Charter Documents.......................................................23
3.29 No Orders...............................................................23
3.30 Industry Canada Licenses................................................23
3.31 Canadian Telecommunications Arrangement.................................23
3.32 No Control of Urbanlink.................................................24
3.33 Affiliate Transactions..................................................24
3.34 Material Contracts......................................................24
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGEMENTS OF ALCATEL
4.01 U.S. Securities Laws Representations....................................25
4.02 Exempt Sale.............................................................25
4.03 No Advertisement........................................................25
4.04 Knowledge...............................................................25
4.05 No Registration.........................................................25
4.06 Certain Securities Laws.................................................26
4.07 No Broker or Finder.....................................................26
4.08 No Violation............................................................26
4.09 Organization; Execution and Delivery; Enforceability....................26
4.10 Consents and Approvals..................................................27
ARTICLE V
COVENANTS
5.01 Fulfillment of Conditions...............................................27
5.02 Transfer Restrictions...................................................27
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5.03 Publicity...............................................................28
5.04 Alcatel Board Nominee...................................................28
5.05 Reservation of Shares...................................................29
5.06 Listings................................................................29
5.07 Filings, etc............................................................29
5.08 Alcatel "Backstop"Financing.............................................29
5.09 Reporting Status........................................................30
5.10 Tax Certificate.........................................................30
5.11 Canadian Property.......................................................30
5.12 Tax Matters.............................................................30
5.13 Use of Proceeds.........................................................30
5.14 Alcatel Guarantee.......................................................30
5.15 Further Assurances......................................................31
5.16 Tax Gross-Up............................................................31
5.17 Reorganization of Capital...............................................31
ARTICLE VI
CONDITIONS TO CLOSINGS
6.01 Conditions to Obligations of 360networks at First Tranche Closing.......32
6.02 Conditions to Obligations of Alcatel at First Tranche Closing...........33
6.03 Conditions to Obligations of 360networks at Second Tranche Closing......35
6.04 Conditions to Obligations of Alcatel at Second Tranche Closing..........36
ARTICLE VII
INDEMNIFICATION
7.01 Indemnification by 360networks..........................................37
7.02 Indemnification by Alcatel..............................................38
7.03 Indemnity Limits........................................................38
7.04 Sole Remedy.............................................................38
7.05 Third-Party Claims......................................................38
ARTICLE VIII
MISCELLANEOUS
8.01 Termination.............................................................39
8.02 Entire Agreement........................................................39
8.03 Governing Law...........................................................40
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8.04 Jurisdiction............................................................40
8.05 Notices.................................................................40
8.06 Survival................................................................41
8.07 Amendments; No Waivers..................................................41
8.08 Successors and Assigns..................................................42
8.09 Descriptive Headings; Construction......................................42
8.10 Language................................................................42
8.11 Counterparts; Effectiveness.............................................42
SCHEDULE 3.01 Subsidiary Options
SCHEDULE 3.04 Share Commitments
SCHEDULE 3.06 Other Registration Rights
SCHEDULE 3.08 Consents and Approvals
SCHEDULE 3.11 Litigation and Environmental Matters
SCHEDULE 3.18 Certain Changes or Events
SCHEDULE 3.20 Compliance with Laws and Agreements
SCHEDULE 3.22 Indebtedness of 360networks
SCHEDULE 3.25 Liabilities
SCHEDULE 3.26 Rights of Way
SCHEDULE 4.10 Alcatel Consents and Approvals
EXHIBIT A Special Rights and Restrictions Attached to
Series 1 Convertible Preferred Shares
EXHIBIT B Special Rights and Restrictions Attached to
Series 2 Convertible Preferred Shares
EXHIBIT C Special Rights and Restrictions Attached to
Series 3 Convertible Preferred Shares
EXHIBIT D Registration Rights Agreement
EXHIBIT E Technology Cooperation Agreement
EXHIBIT F Amended and Restated Memorandum and Articles of 360networks
EXHIBIT G Form of Letter from WFH
EXHIBIT H Form of Opinion of Proskauer Rose
EXHIBIT I Form of Opinion of Farris, Vaughan, ▇▇▇▇▇ & ▇▇▇▇▇▇
EXHIBIT J Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Stirling Scales
EXHIBIT K Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
EXHIBIT L Form of Opinion of Osler, ▇▇▇▇▇▇ & Harcourt
EXHIBIT M Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
EXHIBIT N Form of Alcatel Guarantee
EXHIBIT O Form of Opinion of ▇▇▇▇▇▇▇▇▇ & May
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PREFERRED SHARE PURCHASE AGREEMENT
PREFERRED SHARE PURCHASE AGREEMENT, dated as of October 31, 2000 (this
"AGREEMENT"), by and between 360networks inc., a corporation continued under the
laws of the Province of Nova Scotia, Canada ("360NETWORKS"), and Alcatel, a
corporation organized under the laws of The Republic of France ("ALCATEL").
RECITALS
WHEREAS, Alcatel desires to acquire and 360networks desires to issue
and sell to Alcatel Convertible Preferred Shares in the capital of 360networks
upon the terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and undertakings contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following
capitalized terms shall have the following meanings, except as otherwise
expressly provided:
"360NETWORKS" shall have the meaning set forth in the Preamble.
"360NETWORKS FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.19.
"360NETWORKS SECURITIES LAWS FILINGS" shall have the meaning set forth in
Section 3.19.
"ACTION" shall mean a civil, criminal, administrative, investigative or
informal action, governmental audit, demand, suit, claim, arbitration,
hearing, litigation, dispute, investigation or other proceeding of any kind
or nature.
"ADDITIONAL AMOUNTS" shall have the meaning set forth in Section 5.15.
"ADDITIONAL TRANSACTION" shall mean the transaction identified as such in a
letter dated the First Tranche Closing Date between the Parties.
"AFFILIATE" of a specified Person shall mean a Person that directly, or
indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with, the Person specified.
"AGREEMENT" shall have the meaning set forth in the Preamble.
"ALCATEL" shall have the meaning set forth in the Preamble.
"ALCATEL PREFERRED SHARES" shall mean the First Tranche Alcatel Preferred
Shares, the Second Tranche Alcatel Preferred Shares and the shares of
Series 3 Convertible Preferred that may be purchased by Alcatel pursuant to
this Agreement.
"ANCILLARY AGREEMENTS" shall mean the Registration Rights Agreement and the
Technology Cooperation Agreement.
"ARTICLES" shall mean the amended and restated memorandum and articles of
360networks as of the First Tranche Closing Date in the form annexed hereto
as Exhibit F.
"ATLANTIC AGREEMENT" shall mean a supply agreement between the Parties or
Affiliates of the Parties pursuant to which Alcatel shall agree to supply
and construct a transatlantic fiber optic submarine cable system for
360networks.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day
on which banks in New York City or Paris, France are authorized or
obligated by law or executive order to close.
"CANADIAN COMPANIES" shall have the meaning set forth in Section 3.30.
"CANADIAN PENSION PLAN" shall mean any plan, program or arrangement that is
a pension plan for the purposes of any applicable pension benefits
legislation or any tax laws of Canada or a province thereof, whether or not
registered under any such laws, which is maintained or contributed to by,
or to which there is or may be an obligation to contribute by, 360networks
or any of its Significant Subsidiaries in respect of any Person's
employment in Canada with any such Persons.
"CANADIAN SECURITIES LAWS" shall have the meaning set forth in Section
4.06.
"CARRIER HOLDCO" shall have the meaning set forth in Section 3.27.
"CODE" shall mean the U.S. Internal Revenue Code of 1986, as amended from
time to time.
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"COMMON SHARES" shall have the meaning set forth in Section 3.04.
"COMMUNICATIONS ACT" shall mean the U.S. Communications Act of 1934, as
amended by the Telecommunications Act of 1996, and any similar or successor
U.S. Federal statute and the rules, regulations and published policies of
the FCC thereunder, all as amended and as the same may be in effect from
time to time.
"CONTRACT" shall mean any contract, agreement, note, instrument, franchise,
lease, license, commitment, arrangement or understanding, written or oral.
"CRTC" shall mean the Canadian Radio-television and Telecommunications
Commission, and any successor agency thereto.
"DESIGNATED PURCHASER" shall have the meaning set forth in Section 8.08.
"DWDM" shall mean dense wavelength division multiplexing.
"ENVIRONMENTAL LAWS" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Entity,
relating to the pollution or protection of the environment, preservation or
reclamation of natural resources, the management, release or threatened
release of any Hazardous Material.
"ENVIRONMENTAL LIABILITY" shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of 360networks or any of its Significant
Subsidiaries, directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened
release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.
"ERISA" shall mean the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) that, together with 360networks, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
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"ERISA EVENT" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by
360networks or any of its ERISA Affiliates of any liability under Title IV
of ERISA with respect to the termination of any Plan; (e) the receipt by
360networks or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by 360networks
or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by 360networks or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from 360networks or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EXCHANGE ACT" shall mean the U.S. Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"FCC" shall mean the United States Federal Communications Commission, and
any successor agency thereto.
"FCC LICENSE" shall mean any license granted by the FCC.
"FIBER PAIR AGREEMENT" shall mean an agreement whereby 360networks agrees
to purchase 2 fiber pair on one of the following transatlantic undersea
cable systems: (i) a system currently being constructed for a third party
by Alcatel or an Affiliate of Alcatel under an "instruction to proceed",
(ii) a successor project to the system described in clause (i), or (iii) an
alternative project to the systems described in clauses (i) and (ii) in
which Alcatel or an Affiliate of Alcatel is constructing a transatlantic
undersea cable system.
"FIRST TRANCHE ALCATEL PREFERRED SHARES" shall have the meaning set forth
in Section 2.01.
"FIRST TRANCHE CLOSING" shall have the meaning set forth in Section 2.03.
"FIRST TRANCHE CLOSING DATE" shall have the meaning set forth in Section
2.03.
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"FIRST TRANCHE PURCHASE PRICE" shall have the meaning set forth in Section
2.02.
"FUNDAMENTAL CHANGE" shall have the meaning provided in Exhibits A, B and
C.
"FUNDAMENTAL CHANGE PRICE" shall mean the Reference Market Price (as
defined in Exhibits A, B and C) on the date of the consummation of the
Fundamental Change.
"GOVERNMENTAL ENTITY" shall mean any local, state, federal, national,
provincial, regional or other government, including all of their respective
branches, departments, agencies, courts, instrumentalities or other
subdivisions.
"HAZARDOUS MATERIALS" shall mean all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"INDEMNITEE" shall have the meaning set forth in Section 7.05.
"INDEMNITOR" shall have the meaning set forth in Section 7.05.
"LAW" shall mean any applicable national or local law, rule, standard,
requirement, administrative ruling, order, ordinance, code, regulation,
statute or international or multinational treaty or agreement.
"LEDCOM" shall have the meaning set forth in Section 3.03.
"LEDCOR LOCK-UP AGREEMENTS" shall mean (i) that certain Lock-Up Agreement
dated as of April 19, 2000 among WFH, 360networks and the Representatives
(as defined therein), (ii) that certain Lock-Up Agreement dated as of April
19, 2000 among Ledcor Limited Partnership, 360networks and the
Representatives and (iii) any additional lock-up agreements signed by
transferees of either WFH or Ledcor Limited Partnership in favor of the
Representatives.
"LIABILITIES" shall mean liabilities or obligations (direct or indirect,
contingent or absolute, matured or unmatured) of any nature whatsoever
whether arising out of contract, tort, statute or otherwise.
"LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or
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of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement
(or any financing lease having substantially the same economic effect as
any of the foregoing) relating to such asset and (c) in the case of
securities (other than any capital stock of 360networks that is subject
to issuance upon the exercise of any purchase option, call or similar
right granted by 360networks), any purchase option, call or similar
right of a third party with respect to such securities, except for any
liens granted pursuant to the Senior Credit Agreement or described as
Existing Liens in the Senior Credit Agreement.
"LOSSES" shall have the meaning set forth in Section 8.01.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change in the
business, properties, results of operations or financial condition of
360networks, its Subsidiaries and Urbanlink, taken as a whole.
"MATERIAL ADVERSE EFFECT" shall mean any effect that is or is reasonably
likely to be materially adverse to the properties, business, results of
operations or financial condition of 360networks, its Subsidiaries and
Urbanlink, taken as a whole.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"OBSERVER" shall have the meaning set forth in Section 5.04(b).
"ORDER" shall mean any award, decision, injunction, judgment, decree,
settlement, order, process, ruling, subpoena or verdict (whether temporary,
preliminary or permanent) entered, issued, made or rendered by any court,
administrative agency, arbitrator, Governmental Entity or other tribunal of
competent jurisdiction.
"OWNERSHIP REGULATIONS" shall mean the Canadian Telecommunications Common
Carrier Ownership and Control Regulations.
"PACIFIC AGREEMENT" shall mean the Supply Agreement dated the date hereof
and effective on the First Tranche Closing Date between Threesixty Pacific
(Barbados) inc. and Alcatel Submarine Networks, SA in relation to the
construction of a fiber optic submarine cable system between North America
and Japan and the letter agreement of even date between such parties
amending certain terms of such agreement.
"PARTY" shall mean each of 360networks and Alcatel.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PERMITS" shall mean any permit, right of use or occupation, license,
franchise, concession, order, certificate, authorization or approval of any
Governmental Entity.
"PERSON" shall mean any individual, corporation (including any non-profit
corporation), association, general or limited partnership, organization,
business, limited liability company, firm, Governmental Entity, joint
venture, estate, trust, unincorporated organization or any other entity,
association or organization.
"PLAN" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which
360networks or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined
in Section 3(5) of ERISA.
"PREFERRED SHARES" shall have the meaning set forth in Section 3.04.
"PRINCIPAL MARKETS" shall have the meaning set forth in Section 5.06.
"PURCHASE ORDER" shall mean a written agreement which constitutes an
obligation to buy property or services.
"PURCHASE ORDER CONDITION" shall mean 360networks shall have delivered
Purchase Orders to Alcatel to purchase from Alcatel or an Alcatel Affiliate
at least $100 million of Terrestrial Equipment. Such Terrestrial Equipment
will be ordered, for delivery during 2001, and 360networks and Alcatel will
use commercially reasonable efforts to ensure this result, subject to the
Parties' recognition that such deliveries may occur or, other than in the
case of clause (ii), be ordered for delivery in the first quarter of 2002
due to the following: (i) inability of Alcatel to deliver during 2001; (ii)
the requirement that the timing of such deliveries fit into the network
development program of 360networks; or (iii) any other reason mutually
acceptable to the Parties, acting reasonably.
"REGISTRATION RIGHTS AGREEMENT" shall mean the registration rights
agreement to be executed and delivered on the First Tranche Closing Date,
substantially in the form annexed hereto as Exhibit D.
"REPORTING PERIOD" shall have the meaning set forth in Section 5.09.
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"SDH" shall mean synchronous digital hierarchy.
"SECOND TRANCHE ALCATEL PREFERRED SHARES" shall have the meaning set forth
in Section 2.01.
"SECOND TRANCHE CLOSING" shall have the meaning set forth in Section 2.03.
"SECOND TRANCHE CLOSING DATE" shall have the meaning set forth in Section
2.03.
"SECOND TRANCHE PURCHASE PRICE" shall have the meaning set forth in Section
2.02.
"SECURITIES ACT" shall mean the U.S. Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SENIOR CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
September 29, 2000 among 360networks, 360networks Holdings (USA) Inc., the
lenders party thereto and The Chase Manhattan Bank, as administrative
agent.
"SERIES 1 CONVERTIBLE PREFERRED" shall mean the Series 1 Convertible
Preferred Shares in the capital of 360networks having the rights and
restrictions attached thereto in the form annexed hereto as Exhibit A.
"SERIES 2 CONVERTIBLE PREFERRED" shall mean the Series 2 Convertible
Preferred Shares in the capital of 360networks having the rights and
restrictions attached thereto in the form annexed hereto as Exhibit B.
"SERIES 3 CONVERTIBLE PREFERRED" shall mean the Series 3 Convertible
Preferred Shares in the capital of 360networks having the rights and
restrictions attached thereto in the form annexed hereto as Exhibit C.
"SHARE COMMITMENTS" shall have the meaning set forth in Section 3.04.
"SHARES" shall have the meaning set forth in Section 3.04.
"SIGNIFICANT INDEBTEDNESS" shall have the meaning set forth in Section
3.22.
"SIGNIFICANT SUBSIDIARY" shall mean a "significant subsidiary" within the
meaning set forth in Rule 1-02(w) of Regulation S-X and, with respect to
360networks, shall also mean 360Urbanlink, Urbanlink Holdings Ltd. and
Urbanlink Equipment Ltd.
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"SONET" shall mean synchronous optical network technology.
"SUBORDINATE VOTING SHARES" shall have the meaning set forth in Section
3.04.
"SUBSIDIARY" shall mean, with respect to 360networks or Alcatel, as the
case may be, any entity, whether incorporated or unincorporated, of which
at least a majority of the securities or ownership interests having by
their terms ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its
respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries.
"TAXES" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Entity.
"TECHNOLOGY COOPERATION AGREEMENT" shall mean the technology cooperation
agreement to be executed and delivered on the First Tranche Closing Date in
substantially the form annexed hereto as Exhibit E.
"TELECOMMUNICATIONS ACT" shall mean the Telecommunications Act (Canada),
and any similar or successor Canadian statute and the rules, regulations
and published policies of the Canadian Radio-television and
Telecommunications Commission thereunder, all as amended and as the same
may be in effect from time to time.
"TERRESTRIAL EQUIPMENT" shall mean terrestrial equipment, including but not
limited to SDH/DWDM/SONET and network management and similar
network-related services provided by Alcatel from time to time, but for the
purposes of the Purchase Order Condition shall not include any fiber or
submarine cable.
"THRESHOLD" shall have the meaning set forth in Section 7.03.
"TRIGGER PRICE" shall mean the highest Fundamental Change Price that would
cause there to have been issued upon conversion of all shares of any Series
of Alcatel Preferred Shares a number of Subordinate Voting Shares greater
than 20% of the number of Subordinate Voting Shares outstanding on the date
of issuance of such Series of Alcatel Preferred Shares, subject to
adjustment for stock splits, subdivisions, combinations and similar events.
"URBANLINK" shall mean WFI Urbanlink Ltd., an Alberta corporation.
"WF SERVICES" shall have the meaning set forth in Section 3.31.
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"WFH" shall mean Worldwide Fiber Holdings Ltd.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.02 OTHER TERMS. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such
meaning throughout this Agreement.
1.03 INTERPRETATION. (a) Unless the context clearly requires
otherwise, the words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) References herein to a specific Article, Section, clause,
subsection, Schedule or Exhibit shall refer, respectively, to Articles,
Sections, clauses, subclauses, Schedules or Exhibits of this Agreement,
unless the express context otherwise requires.
(d) Whenever the word "include," "includes" or "including" is
used in this Agreement, it shall be deemed to be followed by the words
"without limitation" unless clearly indicated otherwise.
1.04 CONSTRUCTION. The parties acknowledge that this Agreement
has been fully negotiated and that all parties have been represented by
counsel throughout such negotiation. In the event of any ambiguity or
uncertainty with respect to any language contained in this Agreement, this
Agreement shall not be construed against any party hereto.
1.05 EXHIBITS. The following exhibits are annexed to and form an
integral part of this Agreement.
Exhibit A Special Rights and Restrictions Attached to Series 1 Convertible
Preferred
Exhibit B Special Rights and Restrictions Attached to Series 2 Convertible
Preferred
Exhibit C Special Rights and Restrictions Attached to Series 3 Convertible
Preferred
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Exhibit D Registration Rights Agreement
Exhibit E Technology Cooperation Agreement
Exhibit F Amended and Restated Memorandum and Articles of 360networks
Exhibit G Form of Letter from WFH
Exhibit H Form of Opinion of Proskauer Rose
Exhibit I Form of Opinion of Farris, Vaughan, ▇▇▇▇▇ & ▇▇▇▇▇▇
Exhibit J Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Stirling Scales
Exhibit K Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit L Form of Opinion of Osler, ▇▇▇▇▇▇ & Harcourt
Exhibit M Form of Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit N Form of Alcatel Guarantee
Exhibit O Form of Opinion of ▇▇▇▇▇▇▇▇▇ & May
ARTICLE II
EQUITY INVESTMENT
2.01 ISSUANCE OF SECURITIES. Upon the terms and subject to the
conditions set forth herein and on the basis of the representations,
warranties, covenants, agreements, undertakings and obligations contained
herein, (i) at the First Tranche Closing, in consideration for the First
Tranche Purchase Price set forth in Section 2.02, 360networks will issue and
sell to Alcatel 700,000 shares (the "FIRST TRANCHE ALCATEL PREFERRED SHARES")
of newly issued Series 1 Convertible Preferred and (ii) at the Second Tranche
Closing, in consideration for the Second Tranche Purchase Price set forth in
Section 2.02, 360networks will issue and sell to Alcatel 300,000 shares (the
"SECOND TRANCHE ALCATEL PREFERRED SHARES") of newly issued Series 2
Convertible Preferred.
2.02 PAYMENT OF PURCHASE PRICE. Upon the terms and subject to the
conditions set forth herein and on the basis of the representations,
warranties, covenants, agreements, undertakings and obligations contained
herein, (i) at the First Tranche Closing, in consideration for the First
Tranche Alcatel Preferred Shares, Alcatel will pay to 360networks
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US$700,000,000 (the "FIRST TRANCHE PURCHASE PRICE") and (ii) at the Second
Tranche Closing, in consideration for the Second Tranche Alcatel Preferred
Shares, Alcatel will pay to 360networks US$300,000,000 (the "SECOND TRANCHE
PURCHASE PRICE"). The First Tranche Purchase Price shall be paid on the First
Tranche Closing Date by wire transfer of immediately available funds to an
account or accounts designated by 360networks and the Second Tranche Purchase
Price shall be paid on the Second Tranche Closing Date by wire transfer of
immediately available funds to an account or accounts designated by
360networks.
2.03 CLOSINGS. The closing (the "FIRST TRANCHE CLOSING") of the
purchase and sale of the First Tranche Alcatel Preferred Shares shall take
place upon satisfaction of the conditions set forth in Sections 6.01 and 6.02
at 9:00 a.m., New York time, on November 8, 2000, or the next Business Day if
such date is not a Business Day, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
New York, New York, or at such other time and place as the parties may
mutually agree (the date and time of the First Tranche Closing being herein
referred to as the "FIRST TRANCHE CLOSING DATE"). The closing (the "SECOND
TRANCHE CLOSING") of the purchase and sale of the Second Tranche Alcatel
Preferred Shares shall take place five Business Days after the conditions set
forth in Sections 6.03 and 6.04 are satisfied, provided that such conditions
are satisfied on or prior to the 120th day after the date of this Agreement,
at such time and place as the parties may mutually agree (the date and time
of the Second Tranche Closing being herein referred to as the "SECOND TRANCHE
CLOSING DATE").
2.04 DELIVERIES BY 360NETWORKS. On the First Tranche Closing Date,
360networks shall deliver, or cause to be delivered, to Alcatel the following:
(a) the certificates, and other documents and instruments, to be
delivered pursuant to Section 6.02 hereof;
(b) duly executed copies of each of the Technology Cooperation
Agreement, the Registration Rights Agreement and the Pacific Agreement;
and
(c) a certificate or certificates evidencing all of the First
Tranche Alcatel Preferred Shares duly issued to Alcatel.
On the Second Tranche Closing Date, 360networks shall deliver, or cause to be
delivered, to Alcatel the following:
(a) the certificates, and other documents and instruments, to be
delivered pursuant to Section 6.04 hereof;
(b) a certificate or certificates evidencing all of the Second
Tranche Alcatel Preferred Shares duly issued to Alcatel;
(c) a duly executed copy of the Atlantic Agreement and/or the Fiber
Pair Agreement; and
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(d) receipt of Purchase Orders to satisfy the Purchase Order
Condition.
2.05 DELIVERIES BY ALCATEL. On the First Tranche Closing Date,
Alcatel shall deliver, or cause to be delivered, to 360networks the following:
(a) the certificates, and other documents and instruments, to be
delivered pursuant to Section 6.01 hereof;
(b) a duly executed copy of the Technology Cooperation Agreement,
the Registration Rights Agreement and the Pacific Agreement; and
(c) a payment of US$700,000,000 to 360networks in respect of the
First Tranche Alcatel Preferred Shares.
On the Second Tranche Closing Date, Alcatel shall deliver, or cause to be
delivered, to 360networks the following:
(a) the certificates, and other documents and instruments, to be
delivered pursuant to Section 6.03 hereof;
(b) a payment of US$300,000,000 to 360networks in respect of the
Second Tranche Alcatel Preferred Shares; and
(c) a duly executed copy of the Atlantic Agreement and/or the
Fiber Pair Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF 360NETWORKS
360networks hereby represents and warrants to Alcatel that as of
the date hereof:
3.01 ORGANIZATION AND GOOD STANDING; SUBSIDIARIES. 360networks is
a corporation continued and validly existing and in good standing as to the
payment of annual fees and the filing of annual returns under the laws of the
jurisdiction of its continuance, and has all requisite corporate power and
authority to enter into and carry out the transactions contemplated by this
Agreement and the Ancillary Agreements and the performance by 360networks of
its obligations hereunder and thereunder and to own and operate its
properties and assets and to carry on its business as presently conducted,
except, where the failure to be in good standing is not reasonably likely to
have a Material Adverse Effect. Urbanlink and each Significant Subsidiary of
360networks is a corporation or other entity (including partnerships,
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limited liability companies and other business associations), duly organized,
validly existing and in good standing, to the extent applicable, under the
respective laws of the jurisdiction of its organization and has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted except where the failure to be so organized or in
good standing or to have such power and authority is not reasonably likely to
have a Material Adverse Effect. Except as set forth on Schedule 3.01, there
are not outstanding (and neither 360networks nor any Subsidiary has any plan
to issue, grant or enter into) any options, warrants, rights (including
conversion or preemptive rights), subscriptions or agreements for the
purchase or acquisition, from or by Urbanlink or 360networks or from any
Subsidiary, of any shares of capital stock of any Subsidiary. Urbanlink and
each Significant Subsidiary is duly qualified and in good standing as a
foreign corporation or other entity authorized to do business in each
jurisdiction (other than the jurisdiction of its incorporation) in which the
nature of its activities or the character of the properties it owns or leases
makes such qualification necessary and in which the failure so to qualify
would have a Material Adverse Effect.
3.02 EXECUTION AND DELIVERY. The execution and delivery by
360networks of this Agreement and the Ancillary Agreements, the execution and
delivery of the Pacific Agreement by the relevant Subsidiary of 360networks,
and the performance by 360networks or its Subsidiary, as the case may be, of
its obligations hereunder and thereunder have been duly and validly
authorized by all necessary corporate action on the part of 360networks,
enforceable against 360networks in accordance with its terms except to the
extent that enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and by equitable
principles generally, whether enforced in a court of law or at equity.
3.03 NO VIOLATION. The execution, delivery and performance by
360networks of this Agreement and the Ancillary Agreements do not (i)
conflict with, or result in any violation or breach of any provision of, the
charter documents of 360networks, any of its Significant Subsidiaries,
Urbanlink or Ledcom Holdings Ltd. ("Ledcom"); (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation, modification
or acceleration of any obligation or loss of any material benefit) under, or
require 360networks to obtain any consent or approval of or give any notice
to any Person under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, Contract or other agreement, instrument or
obligation to which 360networks or any of its Significant Subsidiaries,
Urbanlink or Ledcom is a party or by which any of their respective properties
or assets may be bound; (iii) contravene, conflict with, or constitute or
result in a breach or violation of, or a default under, any provision of, or
give any Governmental Entity the right to revoke, withdraw, suspend, cancel,
terminate or modify, any approval, franchise, certificate of authority,
Order, license, Permit, waiver or other authorization granted, given or
otherwise made available by or under the authority of any Governmental Entity
or pursuant to any Law applicable to 360networks, any of its Significant
Subsidiaries, Urbanlink or Ledcom ("GOVERNMENTAL AUTHORIZATION"); or (iv)
conflict with or violate any Permit, franchise, license, Order or Law
applicable to
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360networks, any of its Significant Subsidiaries, Urbanlink or Ledcom or any
of their respective properties or assets except in the case of (ii), (iii)
and (iv), for any such violations, defaults, breaches, terminations,
cancellations, accelerations, losses or conflicts that would not have a
material adverse effect on the validity or enforceability of this Agreement
or on the ability of 360networks to perform its obligations hereunder.
3.04 AUTHORIZED AND ISSUED CAPITAL. The authorized, issued and
outstanding share capital ("SHARES") of 360networks, as of the date hereof
(for clarity, prior to the issuance of the Alcatel Preferred Shares),
consists of:
Class or Series Number Number
of Shares Authorized Issued
--------------- ---------- ------
Preferred Shares 500,000,000,000 Nil
Series 1 Convertible Preferred 700,000 Nil
Series 2 Convertible Preferred 300,000 Nil
Series 3 Convertible Preferred 125,000 Nil
(collectively, the "PREFERRED SHARES")
Number
Outstanding
Number Number (as at October
Common Shares Authorized Issued 20, 2000)
------------- ---------- ------ --------------
Subordinate Voting Shares 500,000,000,000 814,390,729 814,390,729
Multiple Voting Shares 500,000,000,000 81,840,000 81,840,000
(collectively, the "COMMON SHARES")
As of October 20, 2000, 158,841,991 shares are reserved for
issuance to employees, officers, directors and consultants of 360networks and
its Affiliates and third parties pursuant to options and share commitments
described on Schedule 3.04 (the "SHARE COMMITMENTS"). As of the date hereof,
except for the Share Commitments and except for conversion rights of issued
and outstanding shares of Alcatel Preferred Shares, as of the First Tranche
Closing and the Second Tranche Closing or upon issuance of the Series 3
Convertible Preferred, 360networks will not (i) have outstanding any capital
stock or other securities convertible into or exchangeable for any shares of
its capital stock, and no person will have any right to subscribe for or to
purchase (including conversion or preemptive rights), or any options for the
purchase of, or any agreements providing for the issuance (contingent or
other-
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wise) of, any calls, commitments or other claims of any character relating
to, any capital stock or any stock or securities convertible into or
exchangeable for any capital stock of 360networks; (ii) have any capital
stock, equity interests or other securities reserved for issuance for any
purpose; or (iii) be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or
any convertible securities, rights or options of the type described in the
preceding clause (i).
3.05 RESERVATION OF SHARES. 360networks has reserved a sufficient
number of:
(a) Series 1 Convertible Preferred, Series 2 Convertible Preferred
and Series 3 Convertible Preferred for issuance to Alcatel in accordance
with the terms of this Agreement and pursuant to the terms of the special
rights or restrictions set forth in Exhibit A, B or C; and
(b) Subordinate Voting Shares for issuance to Alcatel upon the
exercise of any conversion rights contemplated by this Agreement and the
special rights or restrictions set forth in Exhibit A, B or C.
3.06 CORPORATE ACTION AND SHARE CAPITAL STATUS. The
authorization, issuance, sale and delivery of the Alcatel Preferred Shares
pursuant to this Agreement have been duly authorized by all requisite
corporate action on the part of 360networks and, when issued, sold and
delivered in accordance with this Agreement, the Alcatel Preferred Shares
will be validly issued and outstanding, fully paid and nonassessable with no
personal liability attaching to the ownership thereof and not subject to
preemptive or similar rights of the shareholders of 360networks or others.
The authorization, issuance, sale and delivery of Subordinate Voting Shares
pursuant to the exercise of rights of conversion contemplated by this
Agreement and the special rights and restrictions attached to the Alcatel
Preferred Shares as set forth in Exhibits A, B and C have been duly
authorized by all requisite corporate action on the part of 360networks and,
when issued in accordance with this Agreement and the Articles on such terms,
such Subordinate Voting Shares will be validly issued and outstanding, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof and not subject to preemptive or similar rights of the shareholders
of 360networks or others. The terms, designations, powers, preferences and
relative participating, optional and other special rights, and the
qualifications, limitations and restrictions, of any series of Common Shares,
or any series of Preferred Shares of 360networks, are as stated in the
Articles. All of the issued and outstanding Common Shares are fully paid and
nonassessable with no personal liability attaching to the ownership thereof
and not subject to preemptive or similar rights of the shareholders of
360networks or others. The value of the equity securities of 360networks is
not derived, directly or indirectly, principally from immovable property
situated in Canada and the assets of 360networks do not principally consist,
directly or indirectly, of such immovable property. Neither 360networks nor
any of its Subsidiaries is a party to, or has knowledge of, any agreement
(other than this Agreement or the Registration Rights Agreement) restricting
the transfer
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of any shares of 360networks' capital stock which would affect the
transferability of the Subordinate Voting Shares issuable upon conversion of
the Alcatel Preferred Shares. Except with respect to the registration rights
to be granted to Alcatel and except as set forth on Schedule 3.06,
360networks is not a party to or bound by any agreement or commitment
pursuant to which 360networks is or could be required to register any of its
securities under the Securities Act or qualify any of its securities for
distribution or distribution to the public, under the Canadian securities
rules and regulations.
3.07 SECURITIES LAWS. Assuming the accuracy of the
representations and warranties contained in Article 4 hereof, the offer, sale
and/or the issuance and delivery of the Alcatel Preferred Shares as
contemplated herein is exempt from the prospectus and registration
requirements under applicable securities laws.
3.08 CONSENTS AND APPROVALS. Except as described in Schedule
3.08, no permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person is required in connection with the
execution, delivery and performance by 360networks of this Agreement or the
Ancillary Agreements, the consummation by 360networks of the transactions
contemplated hereby or thereby, or the issuance, sale or delivery of the
Alcatel Preferred Shares or the Subordinate Voting Shares into which such
Alcatel Preferred Shares are convertible (other than such notifications or
filings required under applicable provincial securities laws, the rules of
the Toronto Stock Exchange, the New York Stock Exchange or Nasdaq, if any,
which shall be made by 360networks on a timely basis, and other than as
provided for in this Agreement or the Registration Rights Agreement).
3.09 FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a)
360networks has heretofore furnished to Alcatel its consolidated balance
sheet and statements of income, stockholders equity and cash flows (i) as of
and for the fiscal year ended December 31, 1999, reported on by
PricewaterhouseCoopers LLP, independent public accountants, and (ii) as of
and for the fiscal quarter and the portion of the fiscal year ended June 30,
2000, certified by its chief financial officer. Such financial statements
present fairly, in all material respects, the financial position and results
of operations and cash flows of 360networks and its consolidated Subsidiaries
as of such dates and for such periods in accordance with GAAP, subject to
year-end audit adjustments and the absence of footnotes in the case of the
statements referred to in clause (ii) above.
(b) Since December 31, 1999, there has been no Material Adverse
Change and no event or occurrence reasonably likely to result in a Material
Adverse Change not reflected in the financial statements referred to in
clause (ii) above.
3.10 PROPERTIES. (a) Each of 360networks, its Significant
Subsidiaries and, to the knowledge of 360networks, Urbanlink and Ledcom has
good (and, in the case of real property, marketable) title to, or valid
leasehold interests in, all its real and personal property used in the
business of 360networks, its Significant Subsidiaries and, to the knowledge
of
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360networks, Urbanlink and Ledcom, taken as a whole, except for Liens and
defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their
intended purposes or that could not reasonably be expected to have a Material
Adverse Effect and any real property and buildings held under lease by
360networks, its Significant Subsidiaries and, to the knowledge of
360networks, Urbanlink and Ledcom are held by them under valid, subsisting
and enforceable leases with such exceptions as could not reasonably be
expected to have a Material Adverse Effect.
(b) Each of 360networks and its Significant Subsidiaries owns, or
is licensed to use, all trademarks, trade names, copyrights, patents and
other intellectual property necessary to carry on its business (the
"INTELLECTUAL PROPERTY"), and the use thereof by 360networks and its
Significant Subsidiaries does not infringe upon the rights of any other
Person, nor has 360networks received any written notice of any claim
asserting such infringement or the invalidity or unenforceability of its
ownership, license or right to use any of the Intellectual Property, except
where any such infringement, invalidity or unenforceability, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
3.11 LITIGATION AND ENVIRONMENTAL MATTERS. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Entity pending against or, to the knowledge of 360networks, threatened
against or affecting 360networks, any of its Significant Subsidiaries or, to
the knowledge of 360networks, Urbanlink or Ledcom that could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than as disclosed on Schedule 3.11) or that relate to this
Agreement or the Ancillary Agreements or the transactions contemplated hereby
or thereby.
(b) Except as disclosed on Schedule 3.11 and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither
360networks or its Subsidiaries nor, to the knowledge of 360networks,
Urbanlink or ▇▇▇▇▇ (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any
Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any
Environmental Liability.
(c) Except as described in the 360networks Securities Laws
Filings, there are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures
required for clean-up (including, without limitation, to remediate any
substance which exceeds decommissioning, remediation or similar guidelines,
standards or criteria under Environmental Laws or applied by Governmental
Entities acting under Environmental Laws), closure of properties or
compliance with Environmental Laws or any Permits, certificates, consents,
exemptions, waivers and other approvals of any Governmental Entity under any
Environmental Laws, any related constraints on operating activities
-18-
and any potential liabilities to third parties or as a result of government
action) which would, individually or in the aggregate, have a Material
Adverse Effect.
3.12 HOLDING COMPANY STATUS. Neither 360networks nor any of its
Significant Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
3.13 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of such Plan by an amount that
could reasonably be expected to result in a Material Adverse Effect, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed the fair market value of
the assets of all such underfunded Plans by an amount that could reasonably
be expected to result in a Material Adverse Effect.
3.14 INSURANCE. 360networks believes that the insurance
maintained by or on behalf of 360networks and its Subsidiaries is adequate.
All premiums in respect of any such insurance that is material have been paid
to the extent due.
3.15 LABOR MATTERS. As of the date of this Agreement, there are
no strikes, lockouts or slowdowns against 360networks, any of its
Subsidiaries or, to the knowledge of 360networks, Urbanlink or Ledcom pending
or, to the knowledge of 360networks, threatened. The hours worked by and
payments made to employees of 360networks, its Subsidiaries and, to the
knowledge of 360networks, Urbanlink and Ledcom have not been in violation of
the Fair Labor Standards Act or any other Federal, state, provincial, local
or foreign law dealing with such matters applicable to them, except where
such violation could not reasonably be expected to result in a Material
Adverse Effect. All payments due from 360networks, any of its Subsidiaries
or, to the knowledge of 360networks, Urbanlink or Ledcom, or for which any
claim may be made against 360networks, any of its Subsidiaries or, to the
knowledge of 360networks, Urbanlink or Ledcom, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of 360networks, such Subsidiary or, to
the knowledge of 360 networks, Urbanlink or ▇▇▇▇▇, as the case may be, in
accordance with GAAP. The consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining
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agreement to which 360networks, any of its Subsidiaries or, to the knowledge
of 360networks, Urbanlink or Ledcom is bound.
3.16 REGULATORY COMPLIANCE. (a) 360networks and each of its
Significant Subsidiaries are in compliance with the Communications Act and
the Telecommunications Act and the Full Competition Directive, the Licensing
Directive, and the Interconnection Directive and the related rules,
regulations and policies of each of the member states of the European Union,
except where the failure to do so could not reasonably be expected to result
in a Material Adverse Effect.
(b) Except as set forth in the 360networks Securities Laws
Filings, 360networks has not received any written notice and does not have
any knowledge of any investigation, notice of apparent liability, violation,
forfeiture or other order or complaint issued by or before the FCC or the
CRTC, or any other proceedings of or before the FCC or the CRTC, affecting
360networks, any of its Subsidiaries or, to the knowledge of 360networks,
Urbanlink or Ledcom which could reasonably be expected to have a Material
Adverse Effect.
(c) No event has occurred which (i) results in, or after notice
or lapse of time or both would result in, revocation, suspension, adverse
modifications, non-renewal, impairment, restriction or termination of, or
order of forfeiture with respect to, any FCC License in any respect which
could reasonably be expected to have a Material Adverse Effect or (ii)
affects or could reasonably be expected in the future to affect any of the
rights of 360networks or any of its Subsidiaries under any FCC License in any
respect which could reasonably be expected to have a Material Adverse Effect.
(d) 360networks and each Significant Subsidiary have duly filed
in a timely manner all filings, reports, applications, documents, instruments
and information required to be filed by them under the Communications Act and
the Telecommunications Act, and all such filings were when made true, correct
and complete in all respects except where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
3.17 CANADIAN PENSION PLANS. As of the date of this Agreement,
there is no Canadian Pension Plan other than a group registered retirement
savings plan.
3.18 CERTAIN CHANGES OR EVENTS. Since December 31, 1999, except
as set forth in any of the 360networks Securities Laws Filings or in Schedule
3.18, the business of each of 360networks and its Subsidiaries has been
operated only in the ordinary course, consistent with past practice, and in
addition to, and not in limitation of, the foregoing: (i) there has been no
change of Laws, revocation or change in any Contract or Permit or right to do
business, and no other event or occurrence of any character, whether or not
insured against, which has resulted, or could reasonably be expected to
result, in a Material Adverse Effect; (ii) 360networks has not authorized or
made any distributions, or declared or paid any dividends, upon or with
respect to any of its capital stock, or other equity interests, nor has
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360networks redeemed, purchased or otherwise acquired, or issued or sold, any
of its capital stock or other equity interests; (iii) none of 360networks or
its Subsidiaries has entered into any material transaction, other than in the
ordinary course of business and consistent with past practice; (iv) there has
been no damage, destruction or loss to the property of 360networks or its
Subsidiaries, whether or not covered by insurance, which could have a
Material Adverse Effect; and (v) there has been no agreement or commitment by
any of 360networks or its Subsidiaries to do or perform any of the acts
described in this Section 3.18.
3.19 REPORTS AND FINANCIAL STATEMENTS. The filings (the
"360NETWORKS SECURITIES LAWS FILINGS") made by 360networks with the United
States Securities and Exchange Commission and the British Columbia and
Ontario Securities Commissions after December 31, 1999 include all of the
filings that were required to be made after such date with such entities and
complied, as of their respective dates, with all applicable requirements of
the appropriate statutes and the rules and regulations thereunder, except for
such filings the failure of which to have been made or to so comply would not
result in a Material Adverse Effect. As of their respective dates, the
360networks Securities Laws Filings did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited financial statements
and unaudited interim financial statements of 360networks included in the
360networks Securities Laws Filings (collectively, the "360NETWORKS FINANCIAL
STATEMENTS") have been prepared in accordance with GAAP (except as may be
indicated therein or in the notes thereto) and fairly present in all material
respects the financial position of 360networks as of the dates thereof and
the results of operations and cash flows for the periods then ended, subject,
in the case of the unaudited interim financial statements, to normal,
recurring and year-end audit adjustments. True, accurate and complete copies
of the 360networks Articles and 360networks by-laws, as in effect on the date
hereof, have been provided to Alcatel.
3.20 COMPLIANCE WITH LAWS AND AGREEMENTS. Except as set forth on
Schedule 3.20, each of 360networks, its Significant Subsidiaries and, to the
knowledge of 360networks, Urbanlink and Ledcom is in compliance with (a) all
laws, regulations and orders of any Governmental Entity applicable to it or
its property and (b) all indentures, Contracts and other instruments binding
upon it or its property, except, in the case of clause (a) and clause (b),
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
3.21 TAXES. Each of 360networks and its Subsidiaries has timely
filed or caused to be filed all tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid
by it, except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which 360networks or such Subsidiary, as
applicable, has set aside on its books adequate reserves or (b) to the extent
that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
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3.22 INDEBTEDNESS OF 360NETWORKS. (a) Schedule 3.22 lists
all secured and unsecured indebtedness of 360networks and its Subsidiaries
(other than intercompany items) outstanding, or for which 360networks or one of
its Subsidiaries has commitments, which is individually in excess of $5,000,000
(excluding operating leases) ("SIGNIFICANT INDEBTEDNESS"), as of the date set
forth on Schedule 3.22.
(b) Neither 360networks nor any of its Subsidiaries is in default
with respect to any Significant Indebtedness or any instrument or agreement
relating thereto, nor has any event occurred that with the giving of notice
or the lapse of time or both would give rise to a right of termination,
amendment, cancellation or acceleration of any right or obligation of
360networks or any of its Subsidiaries thereunder, or to a loss of any
material benefit to which 360networks or any of its Subsidiaries is entitled
thereunder.
3.23 NO BROKER OR FINDER. None of 360networks or its Subsidiaries
or any of their respective Affiliates has entered or will enter into any
agreement pursuant to which any of 360networks or its Subsidiaries or Alcatel
will be liable, as a result of the transactions contemplated by this
Agreement or any related transaction, for any claim of any person for any
commission, fee or other compensation as finder or broker, other than
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, whose fees shall be the sole responsibility of
360networks.
3.24 NO GENERAL SOLICITATION. Neither 360networks, nor any of its
Affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D of the Securities Act) in connection with the offer and sale of
the Alcatel Preferred Shares.
3.25 NO LIABILITIES. Neither 360networks nor any of its
Subsidiaries has any Liabilities, except (i) as reflected in the notes to the
360networks Financial Statements for the year ended December 31, 1999 and not
heretofore discharged, (ii) as reflected or reserved against in the unaudited
balance sheet of 360networks at June 30, 2000 and not heretofore discharged,
(iii) Liabilities incurred in the ordinary course of business, (iv)
Liabilities incurred in connection with any acquisition of another business
entity made by 360networks after June 30, 2000, (v) other Liabilities that do
not, singly or in the aggregate, have a Material Adverse Effect, (vi) as
disclosed in the 360networks Securities Laws Filings or (vii) as set forth in
Schedule 3.25.
3.26 RIGHTS OF WAY. Except as provided on Schedule 3.26, each of
360networks and its Subsidiaries has all necessary licenses or rights of
occupation with respect to its installed fiber, except in such cases where
the failure to have obtained the same could not reasonably be expected to
have a Material Adverse Effect.
3.27 CAPITAL STOCK OF SUBSIDIARIES. All of the outstanding shares
of capital stock of each of 360network's Significant Subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and,
except for Ledcom, Urbanlink Holdings Ltd.
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("CARRIER HOLDCO"), Urbanlink and Urbanlink Equipment Ltd., are owned by
360networks, directly or indirectly through one or more of its Subsidiaries,
free and clear of any Lien. 360networks owns 50% of Ledcom, directly or
indirectly through one or more Subsidiaries, free and clear of any Lien
except for the security interest granted to Ledcor Inc. pursuant to the
Unanimous Shareholders Agreement, dated as of December 1, 1998, by and among
Worldwide Fiber Communications Ltd., Ledcor Inc., Ledcor Industries Limited
and Ledcor Holdings Ltd. 360networks owns 33 1/3% of the voting securities of
Carrier Holdco and 51% of the equity securities of Carrier Holdco, in each
case free and clear of any Lien.
3.28 CHARTER DOCUMENTS. None of 360networks, any of its
Significant Subsidiaries or, to the knowledge of 360networks, Urbanlink or
Ledcom is in violation of its respective (a) articles or by-laws or (b)
Memorandum of Association or Articles of Association except violations which
could not reasonably be expected, in the aggregate, to have a Material
Adverse Effect.
3.29 NO ORDERS. Except as disclosed in the 360networks Securities
Law Filings, none of 360networks, any of its Subsidiaries or Urbanlink is a
party or subject to the provisions of any Order of any Governmental Entity,
except as would not have a Material Adverse Effect.
3.30 INDUSTRY CANADA LICENSES. 360networks and each of its
Canadian subsidiaries (collectively, the "CANADIAN COMPANIES") and, to the
knowledge of 360networks, Urbanlink and Ledcom hold all CRTC and Industry
Canada licenses or authorizations and possess adequate certificates,
authorities or Permits issued by appropriate Governmental Entities or bodies
necessary to conduct the business now operated by them, other than those the
absence of which could not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect, and have not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authority or Permit that, if determined adversely, could
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
3.31 CANADIAN TELECOMMUNICATIONS ARRANGEMENT. The Canadian
Telecommunications Arrangement as described in the 360networks Securities Law
Filings, including the execution, delivery and performance by the parties
thereto of (i) the Reseller Agreement dated April 17, 2000 between Urbanlink,
360networks and Worldwide Fiber Network Services Ltd. ("WF SERVICES"), (ii)
the Co-Development Agreement dated April 17, 2000 between 360networks and
Urbanlink, (iii) the Definitive Agreement dated April 17, 2000 between
Urbanlink and 360networks, (iv) the Shareholders Agreement dated April 17,
2000 between Carrier Holdco, Urbanlink, 360networks, 360 Urbanlink Ltd. and
WFH, (v) the Capacity Purchase Agreement dated April 17, 2000 between
Urbanlink and WF Services, (vi) the Fibre Optic Maintenance Agreement dated
April 17, 2000 between Urbanlink and WF Services, (vii) the Roll-Over
Agreement dated April 17, 2000 between 360 Urbanlink Ltd. and Ledcor
Communications Ltd., (viii) the Roll-Over Agreement dated April 17, 2000
between 360 Urbanlink
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Ltd. and WFI-CN Fibre Inc., (ix) the Roll-Over Agreement dated April 17, 2000
between 360 Urbanlink Ltd. and Worldwide Fiber (F.O.T.S.) No. 3, Ltd., (x)
the Roll-Over Agreement dated April 17, 2000 between 360 Urbanlink Ltd. and
WF Services, (xi) the Roll-Over Agreement dated April 17, 2000 between 360
Urbanlink Ltd. and Worldwide Fiber Networks Ltd., (xii) the Roll-Over
Agreement dated April 17, 2000 between Carrier Holdco and 360 Urbanlink Ltd.,
(xiii) the Roll-Over Agreement dated April 17, 2000 between Carrier Holdco
and WFH, (xiv) the Asset Purchase Agreement dated April 17, 2000 between
Urbanlink and Ledcor Communications Ltd., (xv) the Asset Purchase Agreement
dated April 17, 2000 between WFI-CN Fibre Inc. and Ledcor ▇▇▇▇▇ Inc., (xvi)
the Asset Purchase Agreement dated April 17, 2000 between Urbanlink and WF
Services, (xvii) the Asset Purchase Agreement dated April 17, 2000 between
Urbanlink Equipment Ltd. and WF Services, (xviii) the Asset Purchase
Agreement dated April 17, 2000 between Urbanlink and WFI-CN Fibre Inc., (xix)
the Asset Purchase Agreement dated April 17, 2000 between Urbanlink and
Ledcor Communications Ltd., (xx) the Asset Purchase Agreement dated April 17,
2000 between Urbanlink and Worldwide Fiber (F.O.T.S.) No. 3, Ltd., (xxi) the
Asset Purchase Agreement dated April 17, 2000 between Urbanlink and WFI-CN
Fibre Inc., (xxii) the Asset Purchase Agreement dated April 17, 2000 between
WFI-CN Fibre Inc. and Ledcor Communications Ltd., (xxiii) the Asset Purchase
Agreement dated April 17, 2000 between WFI-CN Fibre Inc. and Ledcor ▇▇▇▇▇
Inc. and (xxiv) the Asset Purchase Agreement dated April 17, 2000 between
WFI-CN Fibre Inc. and Ledcor Communications Ltd. (as the foregoing agreements
have been amended as of the date hereof), does not violate or conflict with
any provisions of the Telecommunications Act or the Ownership Regulations or
any applicable Law or Order of any Governmental Entity having jurisdiction
over any of the Canadian Companies and will not result in any tax or other
consequence to 360networks, actual or contingent, which could reasonably be
expected to have a Material Adverse Effect.
3.32 NO CONTROL OF URBANLINK. 360networks does not control
(within the meaning ascribed to such term in the Telecommunications Act)
Urbanlink.
3.33 AFFILIATE TRANSACTIONS. 360networks is not a party to any
agreement having a value of $5,000,000 or more with any Affiliate on terms
less favorable to 360networks than could have been obtained from an
unaffiliated third party.
3.34 MATERIAL CONTRACTS. 360networks is not party to any supply
agreement, framework purchasing arrangement or similar Contract that could
reasonably be expected to limit or impair the performance of 360networks'
obligations under this Agreement, the Ancillary Agreements or any of the
other agreements or arrangements contemplated hereby.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
ACKNOWLEDGEMENTS OF ALCATEL
Alcatel hereby represents and warrants to 360networks that, as of
the date hereof:
4.01 U.S. SECURITIES LAWS REPRESENTATIONS. Alcatel is an
"Accredited Investor" (as defined in Rule 501(a)(1), (2), (3), (7) or (8)
under the Securities Act).
4.02 EXEMPT SALE. Alcatel is purchasing the Alcatel Preferred
Shares as principal and acknowledges that no offering memorandum, prospectus
or registration statement has been prepared or filed by 360networks with any
securities commission or similar authority in any jurisdiction in connection
with the issue and sale of the Alcatel Preferred Shares. Such issue and sale
to Alcatel is subject to such sale being exempt from the requirements of
applicable securities laws as to the filing of an offering memorandum,
prospectus or registration statement.
4.03 NO ADVERTISEMENT. To Alcatel's knowledge, the Alcatel
Preferred Shares were not advertised in printed media of general and regular
paid circulation, radio or television, and Alcatel will not have purchased
the Alcatel Preferred Shares as a result of any form of general solicitation
or general advertising, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio, or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general advertising.
4.04 KNOWLEDGE. Alcatel has such knowledge and experience in
financial and business affairs as to be capable of evaluating the merits and
risks of the investment hereunder and is able to bear the economic risk of
loss of such investment.
4.05 NO REGISTRATION. Alcatel understands that the Alcatel
Preferred Shares have not been and will not be registered under the
Securities Act or the securities laws of any state of the United States and
that the sales contemplated hereby are being made in reliance on an exemption
from such registration requirements, and Alcatel understands and agrees that
the Alcatel Preferred Shares may not be traded in the United States unless
either registered under the Securities Act and any applicable state
securities laws or an exemption from such registration requirements is
available and that certificates representing the Alcatel Preferred Shares
will bear a legend to such effect. Alcatel is purchasing the Alcatel
Preferred Shares for investment only, for its own account and not with a view
to resale or distribution in violation of applicable securities laws.
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4.06 CERTAIN SECURITIES LAWS. Alcatel understands that no
prospectus has been or will be filed in accordance with the securities laws,
and the regulations thereunder, of, and the applicable published rules,
policy statements, blanket orders and notices of the securities regulatory
authorities in the provinces and territories of Canada (the "CANADIAN
SECURITIES LAWS") qualifying the distribution of the Alcatel Preferred
Shares. The Alcatel Preferred Shares may not be offered or sold by Alcatel in
any province or territory of Canada except pursuant to an applicable
exemption from the prospectus requirements of the applicable Canadian
Securities Laws and from a dealer appropriately registered under the
applicable Canadian Securities Laws or in accordance with an exemption from
the registration requirements of such laws.
4.07 NO BROKER OR FINDER. Alcatel has not employed any broker or
finder in connection with the transactions contemplated by this agreement.
360networks acknowledges that Alcatel has retained ▇.▇. ▇▇▇▇▇▇ as an advisor
to Alcatel and Alcatel will be responsible for all fees payable to ▇.▇.
▇▇▇▇▇▇.
4.08 NO VIOLATION. The execution, delivery and performance by
Alcatel of this Agreement and the Ancillary Agreements do not (i) conflict
with, or result in any violation or breach of any provision of, its charter
documents, (ii) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both) a default (or give rise to a right
of termination, cancellation, modification or acceleration of any obligation
or loss of any material benefit) under, require Alcatel to obtain any consent
or approval of, or give any notice to any Person under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which Alcatel or any
of its Subsidiaries is a party or by which any of the properties or assets of
Alcatel or any of its Subsidiaries may be bound, (iii) contravene, conflict
with, or constitute or result in a breach or violation of, or a default
under, any provision of, or give any Governmental Entity the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization or (iv) conflict with or violate any permit, concession,
franchise, license, Order or Law applicable to Alcatel or any of its
Subsidiaries or any of the properties or assets of Alcatel or any of its
Subsidiaries, except in the case of (ii), (iii) and (iv), for any such
violations, defaults, breaches, terminations, cancellations, accelerations,
losses or conflicts that would not have a material adverse effect on the
validity or enforceability of this Agreement or on the ability of Alcatel to
perform its obligations hereunder.
4.09 ORGANIZATION; EXECUTION AND DELIVERY; ENFORCEABILITY. Alcatel
is duly organized and validly existing under the laws of the jurisdiction of
its organization and has all corporate authority to enter into and carry out
the transactions contemplated by this Agreement and to perform its
obligations hereunder. The execution and delivery by Alcatel of this
Agreement and the performance by Alcatel of its obligations hereunder have
been duly authorized by all necessary corporate action on the part of
Alcatel. This Agreement constitutes a valid and binding agreement of Alcatel
enforceable against Alcatel in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, insolvency or
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other similar laws affecting creditors' rights generally and by equitable
principles generally whether enforced in a court of law or at equity.
4.10 CONSENTS AND APPROVALS. Except as described in Schedule
4.10, no permit, authorization, consent or approval of or by, or any
notification of or filing with, any Governmental Entity is required by
Alcatel in connection with the execution, delivery and performance by Alcatel
of this Agreement, the consummation by Alcatel of the transactions
contemplated hereby.
ARTICLE V
COVENANTS
5.01 FULFILLMENT OF CONDITIONS. (a) Between the date of this
Agreement and the First Tranche Closing Date, each of the Parties hereto
shall use its commercially reasonable efforts to perform, comply with and
fulfill all of the conditions required by this Agreement under Sections 6.01
and 6.02 to be performed, complied with or fulfilled on its part at or prior
to the First Tranche Closing. Between the date of this Agreement and the
Second Tranche Closing Date, each of the Parties hereto shall use its
commercially reasonable efforts to perform, comply with and fulfill all of
the conditions required by this Agreement under Sections 6.03 and 6.04 to be
performed, complied with or fulfilled on its part at or prior to the Second
Tranche Closing. Between the date of this Agreement and the date of any
closing contemplated by Section 5.08, each of the Parties hereto shall use
its commercially reasonable efforts to perform, comply with and fulfill all
of the conditions referred to in Section 5.08.
(b) No later than 120 days after the First Tranche Closing,
360networks will submit Purchase Orders to Alcatel sufficient to cause the
Purchase Order Condition to be satisfied.
5.02 TRANSFER RESTRICTIONS. Alcatel or the Designated Purchaser,
as the case may be, agrees not to sell or in any other way, directly or
indirectly, transfer, assign, distribute, pledge, encumber or otherwise
dispose of, any of the Alcatel Preferred Shares, or transfer the financial
risk of owning any of the Alcatel Preferred Shares, to any Person before the
first anniversary of the First Tranche Closing Date; PROVIDED, HOWEVER, that
Alcatel or the Designated Purchaser may transfer Alcatel Preferred Shares to
any of its Affiliates subject to the restrictions contained in this Section
5.02. Notwithstanding the foregoing, if (a) a Fundamental Change (as defined
in Exhibits A, B and C) occurs and either Party has exercised its right to
convert or require a share capital reorganization, as the case may be,
pursuant to Exhibits A, B and C or (b) the Ledcor Lock-Up Agreements are
waived or otherwise terminated or amended, in each case prior to the first
anniversary of the First Tranche Closing Date, then, effective upon such
waiver, termination or amendment, Alcatel or the Designated Purchaser, as the
case
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may be, will no longer be subject to such transfer restrictions; PROVIDED,
HOWEVER, that if the Ledcor Lock-Up Agreements are waived or amended, but not
terminated, the restrictions set forth in this Section 5.02 shall be waived
or amended to the same extent; PROVIDED, FURTHER, that if any partial waiver
of the Ledcor Lock-Up Agreements is conditioned on any other terms or
provisions, then the termination of the restrictions in this Section 5.02
shall be subject to the same terms or provisions, but only to the extent such
restrictions by their nature could reasonably be applicable to Alcatel or the
Designated Purchaser, as the case may be.
5.03 PUBLICITY. An initial press release announcing the execution
of this Agreement, the Pacific Agreement (in the form previously agreed upon
by 360networks and Alcatel), the Parties' intention to build the Atlantic
network, Alcatel's designation as a preferred provider of terrestrial and
submarine equipment and services and 360 network's commitment to make a
Terrestrial Equipment purchase commitment to Alcatel of not less than $100
million shall be released jointly by 360networks and Alcatel promptly
following the execution hereof, and 360networks and Alcatel shall consult
with each other prior to issuing any press releases or otherwise making any
public announcements with respect to the transactions contemplated herein and
prior to making any filings with any Governmental Entity or with any
securities exchange with respect thereto, except as may be required by Law or
by obligations pursuant to any listing agreement with or rules of any
securities exchange or in connection with securing public or private
financing.
5.04 ALCATEL BOARD NOMINEE. So long as Alcatel and its Affiliates
retain not less than 50% of the Alcatel Preferred Shares purchased hereunder
(which percentage shall include any Subordinate Voting Shares of 360networks
into which such Alcatel Preferred Shares have been converted, as equitably
adjusted to reflect any stock split, combination, reorganization,
recapitalization or other similar event involving such Alcatel Preferred
Shares or Subordinate Voting Shares), 360networks shall:
(a) cause Christian Reinaudo (or such other person who is a
member of Alcatel's executive committee selected by Alcatel, subject to
the approval of 360networks, acting reasonably) to be nominated for
election to the Board of Directors of 360networks, which election shall
occur no later than November 12, 2000; and
(b) at any time when Alcatel meets the ownership requirements
set forth in the first paragraph of this Section 5.04 but has not
exercised its right pursuant to Section 5.04(a), after receiving notice
from Alcatel as to the identity of a representative (the "OBSERVER") of
Alcatel acceptable to 360networks, acting reasonably, and subject to
obtaining written assurances satisfactory to 360networks, acting
reasonably, as to the Observer's obligations to treat 360networks and
information obtained by the Observer as though he were a member of the
Board of Directors of 360networks:
(i) permit the Observer to attend all Board of Directors
meetings of 360networks as an observer; and
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(ii) provide the Observer advanced notice of each such
meetings, including the time and place, at the same time and in the
same manner as such notice is provided to the members of the Board
of Directors, and copies of all materials distributed to members of
the board at the same time as such materials are distributed to
such board. All expenses incurred by the Observer for the purposes
of attending board meetings will be paid by Alcatel.
5.05 RESERVATION OF SHARES. 360networks shall at all times have
authorized and reserved the maximum number of Subordinate Voting Shares that
may be issuable and deliverable upon conversion of the Alcatel Preferred
Shares.
5.06 LISTINGS. 360networks shall promptly secure the listing of
all of the Subordinate Voting Shares into which the Alcatel Preferred Shares
are convertible upon The Toronto Stock Exchange and either the New York Stock
Exchange or the Nasdaq National Market (the "PRINCIPAL MARKETS") (subject to
official notice of issuance) and shall use commercially reasonable efforts to
maintain, so long as any other shares of Subordinate Voting Shares shall be
so listed, such listing of all Subordinate Voting Shares into which the
Alcatel Preferred Shares are convertible from time to time issuable under the
terms of this Agreement and Exhibits A, B and C. Neither 360networks nor any
of its Subsidiaries shall take any action which would be reasonably expected
to result in the delisting or suspension of the Subordinate Voting Shares
from the Principal Markets during such period, PROVIDED that 360networks may
change the listing of the Subordinate Voting Shares from Nasdaq to the New
York Stock Exchange or delist the Subordinate Voting Shares from the Toronto
Stock Exchange provided the Subordinated Voting Shares remain listed on
either Nasdaq or the New York Stock Exchange. 360networks shall promptly, and
in no event later than the following Business Day, provide to Alcatel copies
of any notices it receives from the Principal Markets regarding the continued
eligibility of the Subordinate Voting Shares for listing. 360networks shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 5.06.
5.07 FILINGS, ETC. Each of 360networks and Alcatel hereby agrees
to make any filings and use commercially reasonable efforts to obtain any
consents in a timely manner that may be required to be made with or obtained
from any Governmental Entity or Principal Market relating to the transactions
contemplated hereby.
5.08 ALCATEL "BACKSTOP" FINANCING. In the event that 360networks
consummates the Additional Transaction prior to September 30, 2001 and the
Purchase Order Condition has been satisfied, Alcatel shall have the
obligation, if 360networks so elects, to purchase, at Alcatel's sole
discretion, either (x) bonds having terms and conditions reasonably
satisfactory to 360networks and Alcatel for aggregate consideration of $125
million or (y) 125,000 shares of Series 3 Convertible Preferred Shares at
$1,000 per share. The obligations of the Parties to consummate the purchase
contemplated by this Section 5.08 shall also be subject to the same
conditions applicable to the Second Tranche Closing as set forth in Sections
6.03
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and 6.04, except for the condition set forth in Sections 6.03(e) and 6.04(g).
The closing of such purchase shall be completed in accordance with the
provisions of Article II and the mechanics for closing shall otherwise be the
same as for the Second Tranche Closing.
5.09 REPORTING STATUS. In the absence of an acquisition (by
merger or otherwise) of 360networks, until the later of (i) the date which is
one year after the date as of which Alcatel may sell all of the Subordinate
Voting Shares issuable upon conversion of the Alcatel Preferred Shares
without restriction pursuant to Rule 144(k) promulgated under the Securities
Act (or successor thereto) and (ii) the date which is 12 years from the
latest of the First Tranche Closing Date, the Second Tranche Closing Date and
the date on which Alcatel acquires the Series 3 Convertible Preferred (the
"REPORTING PERIOD"), 360networks shall not, without the consent of the
holders of a majority of the Alcatel Preferred Shares, which consent shall
not be unreasonably withheld, fail to file all reports required to be filed
with the United States Securities and Exchange Commission pursuant to the
Exchange Act or with Canadian securities authorities pursuant to Canadian
Securities Laws or terminate its status as an issuer required to file reports
under the Exchange Act or Canadian Securities Laws even if the Exchange Act,
Canadian Securities Laws or the rules and regulations thereunder would
otherwise permit such termination.
5.10 TAX CERTIFICATE. On any acquisition by 360networks of the
Alcatel Preferred Shares, Alcatel shall use commercially reasonable efforts
to obtain a certificate issued pursuant to section 116 of the Income Tax Act
(Canada).
5.11 CANADIAN PROPERTY. 360networks agrees that it will notify
Alcatel at least 60 days prior to the closing date of any transaction that
360networks enters into which will result in (i) the value of the equity
securities of 360networks being derived, directly or indirectly, principally
from immovable property situated in Canada or (ii) the assets of 360networks
consisting principally, directly or indirectly, of such immovable property.
5.12 TAX MATTERS. 360networks will not claim a deduction for
Canadian provincial or federal income Tax purposes of all or any portion of
any amount paid or payable in respect of the Alcatel Preferred Shares.
5.13 USE OF PROCEEDS. 360networks will use the proceeds from the
sale of Alcatel Preferred Shares for general corporate purposes.
5.14 ALCATEL GUARANTEE. On or as soon as practicable after the
First Tranche Closing Date, but in any event within two Business Days after
the First Tranche Closing Date, Alcatel shall deliver to 360networks the
guarantee and legal opinion related to the Pacific Agreement duly executed by
Alcatel and ▇▇▇▇▇▇▇▇▇ & May, respectively, substantially in the forms
attached hereto as Exhibit N and Exhibit O, respectively.
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5.15 FURTHER ASSURANCES. At any time and from time to time after
the Closing Date, 360networks and Alcatel hereby agree to (a) furnish,
execute, acknowledge and deliver upon reasonable request to each other such
further assurances, information, documents, files and records and (b) do all
such further acts and things, all as the other Party may reasonably request
for the purpose of carrying out the intent of this Agreement and the
Ancillary Agreements.
5.16 TAX GROSS-UP. All amounts paid or credited or deemed to be
paid or credited by 360networks under the terms of or with respect to the
Alcatel Preferred Shares on a reorganization of capital described in Section
5.17, liquidation, dissolution or winding up of 360networks shall be paid
free and clear of, and without withholding or deduction for or on account of,
any present or future tax, duty, levy, impost, assessment or other
governmental charge imposed or levied by or on behalf of the Government of
Canada or of any Governmental Entity having power to tax (hereinafter
"Canadian Taxes"), unless 360networks is required to withhold or deduct
Canadian Taxes by law or by the interpretation or administration thereof. If
360networks is so required to withhold or deduct any amount for or on account
of Canadian Taxes from any such amount paid or credited or deemed to be paid
or credited under the terms of or with respect to the Alcatel Preferred
Shares, 360networks shall pay such additional amounts, up to a maximum of
17.647% of such amount ("Additional Amounts") as may be necessary so that the
net amounts received or deemed to be received by the holder of the Alcatel
Preferred Shares (including Additional Amounts) after such withholding,
deduction or payment of Canadian Taxes, shall be equal to the amount such
holder would have received or been deemed to have received if such Canadian
Taxes had not been withheld, deducted or paid. Notwithstanding anything to
the contrary herein contained, no payment will be required to be made to
Alcatel pursuant to this Section 5.16, if and to the extent that Alcatel or
any of its Affiliates or designees who hold the Alcatel Preferred Shares
receives a credit or deduction for Canadian Taxes in computing its income or
tax payable in its country of residence, such that Alcatel's total tax
liability will not have been increased because Canadian Taxes were paid.
5.17 REORGANIZATION OF CAPITAL. If a Fundamental Change is
proposed and 360networks gives notice in accordance with the terms of Exhibits
A, B or C of exercise of its right to convert the Alcatel Preferred Shares in
circumstances where the Fundamental Change Price is less than US$11.82, subject
to adjustment for stock splits, subdivisions, combinations and similar events,
then 360networks may, at its sole option, and if such price is less than the
Trigger Price, then 360networks shall, deliver to Alcatel a notice of a
reorganization of capital as of a specified date (which date shall be on or
prior to the date of conversion specified in the notice of conversion issued by
360networks and is herein referred to as the "Reorganization of Capital Date"),
such notice to be given by 360networks to Alcatel not less than 5 Business Days
prior to the Reorganization of Capital Date and notwithstanding such notice of
exercise, 360networks shall cause to be presented to its shareholders for
approval, if required, and, to the extent within its power, shall cause, and
Alcatel shall cause all shares of 360networks held by it to be voted in favour
of, a reorganization of capital pursuant to section 86 of INCOME TAX
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ACT (Canada), as amended from time to time, pursuant to which Alcatel, on the
Reorganization of Capital Date, shall exchange all of the Alcatel Preferred
Shares owned by Alcatel on the Reorganization of Capital Date, for:
(a) that number of fully paid and non-assessable Subordinate Voting
Shares that is equal to a quotient, the numerator of which is the
Fundamental Change Conversion Value (as defined in Exhibits A, B and C) on
the Reorganization of Capital Date, and the denominator of which is
US$11.82, subject to adjustment for stock splits, subdivisions,
combinations and similar events; plus
(b) such amount payable by wire transfer of immediately available
funds equal to (i) the Fundamental Change Conversion Value on the
Reorganization of Capital Date, minus (ii) the product obtained by
multiplying (x) the number of Subordinate Voting Shares issued pursuant
to clause 5.17(a), by (y) the Fundamental Change Price.
This Section 5.17 shall not apply in the event Alcatel has delivered a notice
of conversion prior to a Reorganization of Capital Date.
ARTICLE VI
CONDITIONS TO CLOSINGS
6.01 CONDITIONS TO OBLIGATIONS OF 360NETWORKS AT FIRST TRANCHE
CLOSING. The obligation of 360networks to issue and sell the First Tranche
Alcatel Preferred Shares and to take the other actions to be taken by
360networks at the First Tranche Closing is subject to the satisfaction, at
or prior to the First Tranche Closing, of each of the following conditions
(any of which may be waived in whole or in part by 360networks in its sole
discretion):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Alcatel set forth in Section 4.08 shall be true and
correct, and each of the other representations and warranties of
Alcatel set forth in this Agreement shall be true and correct in all
material respects, in either case as of the date of this Agreement and
as of the First Tranche Closing, with the same effect as though such
representations and warranties had been made on and as of the First
Tranche Closing, except that such representations and warranties that
are made as of a specific date need only be true as of such date. In
the event there is a Designated Purchaser, the representations and
warranties set forth in Section 4.08 shall be true and correct, and
each of the other representations and warranties set forth in Article
IV shall be true and correct in all material respects, with the same
effect as though such representations and warranties had been made by
the Designated Purchaser with respect to the Designated Purchaser on
and as of the First Tranche Closing Date.
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(b) COVENANTS. All of the covenants, agreements and undertakings
and obligations that Alcatel is required to perform or comply with
pursuant to this Agreement at or prior to the First Tranche Closing shall
have been duly performed in all material respects and substantially
complied with.
(c) ANCILLARY AGREEMENTS. Alcatel shall have delivered to
360networks a duly executed copy of the Technology Cooperation Agreement
and the Pacific Agreement.
(d) OFFICER'S CERTIFICATE. Alcatel and, if there is a Designated
Purchaser, the Designated Purchaser shall have delivered to 360networks a
certificate, dated as of the First Tranche Closing Date and signed by a
senior executive officer of Alcatel or the Designated Purchaser, as the
case may be, representing that the conditions referred to in clauses (a)
and (b) of this Section 6.01 have been satisfied.
(e) NO LAW OR ORDER. No Law or Order that was enacted after the
date hereof shall be in effect which prohibits, restrains or otherwise
makes illegal any of the transactions contemplated herein or in the
Ancillary Agreements. The transactions contemplated herein and in the
Ancillary Agreements shall not have been enjoined and no Governmental
Entity shall be seeking such an injunction.
(f) OPINIONS OF COUNSEL. 360networks shall have received an
opinion, dated as of the First Tranche Closing Date, from U.S. counsel
for Alcatel, substantially in the form attached as Exhibit H and an
opinion, dated as of the First Tranche Closing Date, from the General
Counsel of Alcatel, in form and substance reasonably satisfactory to
360networks and its counsel as to due organization, authorization,
execution and delivery of this Agreement and the Ancillary Agreements
and to the effect that the execution, delivery and performance of this
Agreement and the Ancillary Agreements do not violate French law.
6.02 CONDITIONS TO OBLIGATIONS OF ALCATEL AT FIRST TRANCHE
CLOSING. The obligation of Alcatel to purchase the First Tranche Alcatel
Preferred Shares and to take the other actions to be taken by Alcatel at the
First Tranche Closing is subject to the satisfaction, at or prior to the
First Tranche Closing, of each of the following conditions (any of which may
be waived in whole or in part by Alcatel in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of 360networks set forth in this Agreement that contain a
Material Adverse Effect qualifier shall be true and correct, and all
other representations and warranties of 360networks set forth in this
Agreement shall be true and correct in all material respects, in either
case as of the date of this Agreement and as of the First Tranche Closing,
with the same effect as though such representations and warranties had been
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made on and as of the First Tranche Closing, except that such
representations and warranties that are made as of a specific date need
only be true as of such date.
(b) COVENANTS. All of the covenants, agreements and undertakings
and obligations that 360networks is required to perform or comply with
pursuant to this Agreement at or prior to the First Tranche Closing shall
have been duly performed in all material respects and substantially
complied with.
(c) ANCILLARY AGREEMENTS. 360networks shall have delivered to
Alcatel duly executed copies of the Registration Rights Agreement, the
Technology Cooperation Agreement and the Pacific Agreement.
(d) OFFICER'S CERTIFICATE. 360networks shall have delivered to
Alcatel a certificate, dated as of the First Tranche Closing Date and
signed by a senior executive officer of 360networks, representing that
the conditions referred to in clauses (a) and (b) of this Section 6.02
have been satisfied and certifying the Articles and bylaws of 360networks.
(e) BOARD RESOLUTIONS. Alcatel shall have received copies of the
resolutions of the Board of Directors of 360networks, authorizing the
execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the Technology Cooperation Agreement, and the Pacific
Agreement, and authorizing the Series 1 Convertible Preferred, the
Series 2 Convertible Preferred and the Series 3 Convertible Preferred and
a secretary's certificate certifying that such resolutions were duly
adopted and are in full force and effect.
(f) NO LAW OR ORDER. No Law or Order that was enacted after the
date hereof shall be in effect which prohibits, restrains or otherwise
makes illegal any of the transactions contemplated herein, including the
purchase of the Alcatel Preferred Shares or the Subordinate Voting Shares
into which such shares are convertible. The transactions contemplated
herein and in the Ancillary Agreements shall not have been enjoined, and
no Governmental Entity shall be seeking such an injunction.
(g) CONSENTS AND APPROVALS. The consents and approvals listed in
Schedule 3.08 required to be obtained by 360networks prior to the First
Tranche Closing shall have been obtained and shall be in full force and
effect without imposing upon Alcatel any material condition, restriction
or required undertaking, and a copy of each shall have been delivered to
Alcatel.
(h) OPINIONS OF COUNSEL. Alcatel shall have received opinions,
dated as of the First Tranche Closing Date, from counsel for 360networks,
substantially in the forms attached as Exhibits I, J, K, L and M.
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(i) ALCATEL DIRECTOR. WFH shall have consented in writing (in the
form attached as Exhibit G) to the election of the Director to be
designated by Alcatel as a nominee of WFH pursuant to Section 5.04(a) and
shall have agreed to continue to vote for Alcatel's nominee for as long as
Alcatel is entitled to nominate a Director pursuant to Section 5.04(a).
(j) LISTING OF SHARES. The Subordinate Voting Shares into which
the First Tranche Alcatel Preferred Shares are convertible shall be listed
on the Principal Markets.
(k) CERTIFICATE OF REGISTRATION FROM REGISTRAR OF JOINT STOCK
COMPANIES. Alcatel shall have received a Certificate of Registration of
360networks dated a recent date from the Registrar of Joint Stock
Companies.
6.03 CONDITIONS TO OBLIGATIONS OF 360NETWORKS AT SECOND TRANCHE
CLOSING. The obligation of 360networks to issue and sell the Second Tranche
Alcatel Preferred Shares and to take the other actions to be taken by
360networks at the Second Tranche Closing is subject to the satisfaction, at
or prior to the Second Tranche Closing, of each of the following conditions
(any of which may be waived in whole or in part by 360networks in its sole
discretion):
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Alcatel set forth in Section 4.08 shall be true and correct,
and each of the other representations and warranties of Alcatel set forth
in this Agreement shall be true and correct in all material respects, in
either case as of the date of this Agreement and as of the Second Tranche
Closing, with the same effect as though such representations and
warranties had been made on and as of the Second Tranche Closing, except
that such representations and warranties that are made as of a specific
date need only be true as of such date. In the event there is a
Designated Purchaser, the representations and warranties set forth in
Section 4.08 shall be true and correct, and each of the other
representations and warranties set forth in Article IV shall be true and
correct in all material respects, with the same effect as though such
representations and warranties had been made by the Designated Purchaser
with respect to the Designated Purchaser on and as of the Second Tranche
Closing Date.
(b) COVENANTS. All of the covenants, agreements and undertakings
and obligations that Alcatel is required to perform or comply with
pursuant to this Agreement at or prior to the Second Tranche Closing shall
have been duly performed in all material respects and substantially
complied with.
(c) OFFICER'S CERTIFICATE. Alcatel and, if there is a Designated
Purchaser, the Designated Purchaser shall have delivered to 360networks a
certificate, dated as of the Second Tranche Closing Date and signed by a
senior executive officer of Alcatel
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or the Designated Purchaser, as the case may be, representing that the
conditions referred to in clauses (a) and (b) of this Section 6.03 have
been satisfied.
(d) NO LAW OR ORDER. No Law or Order that was enacted after the
date hereof shall be in effect which prohibits, restrains or otherwise
makes illegal any of the transactions contemplated herein. The
transactions contemplated herein shall not have been enjoined and no
Governmental Entity shall be seeking such an injunction.
(e) ATLANTIC OR FIBER PAIR AGREEMENT. The Atlantic Agreement or
the Fiber Pair Agreement shall have been entered into by the parties
thereto.
6.04 CONDITIONS TO OBLIGATIONS OF ALCATEL AT SECOND TRANCHE
CLOSING. The obligation of Alcatel to purchase the Second Tranche Alcatel
Preferred Shares and to take the other actions to be taken by Alcatel at the
Second Tranche Closing is subject to the satisfaction, at or prior to the
Second Tranche Closing, of each of the following conditions (any of which may
be waived in whole or in part by Alcatel in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of 360networks set forth in Sections 3.01, 3.02, 3.03,
3.04, 3.05, 3.06, 3.07, 3.08, 3.11, 3.12, 3.13, 3.16, 3.19, 3.20,
3.22(b), 3.23, 3.24, 3.26, 3.28 and 3.29, to the extent they are qualified
by Material Adverse Effect, shall be true and correct, and, to the extent
they are not qualified by Material Adverse Effect, shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Second Tranche Closing, with the same effect as
though such representations and warranties had been made on and as of the
Second Tranche Closing.
(b) COVENANTS. All of the covenants, agreements and undertakings
and obligations that 360networks is required to perform or comply with
pursuant to this Agreement at or prior to the Second Tranche Closing
shall have been duly performed in all material respects and substantially
complied with.
(c) OFFICER'S CERTIFICATE. 360networks shall have delivered to
Alcatel a certificate, dated as of the Second Tranche Closing Date and
signed by a senior executive officer of 360networks, representing that the
conditions referred to in clauses (a) and (b) of this Section 6.04 have
been satisfied and certifying the Articles and bylaws of 360networks.
(d) NO LAW OR ORDER. No Law or Order that was enacted after the
date hereof shall be in effect which prohibits, restrains or otherwise
makes illegal any of the transactions contemplated herein. The
transactions contemplated herein shall not have been enjoined and no
Governmental Entity shall be seeking such an injunction.
(e) CONSENTS AND APPROVALS. The consents and approvals listed in
Schedule 3.08 required to be obtained by 360networks prior to the Second
Tranche Closing
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shall have been obtained and shall be in full force and effect without
imposing upon Alcatel any material condition, restriction or required
undertaking, and a copy of each shall have been delivered to Alcatel.
(f) OPINIONS OF COUNSEL. Alcatel shall have received opinions,
dated as of the Second Tranche Closing Date, from counsel for 360networks,
substantially in the forms attached as Exhibits J and L.
(g) ATLANTIC OR FIBER PAIR AGREEMENT. The Atlantic Agreement or
the Fiber Pair Agreement shall have been entered into by the parties
thereto.
(h) PURCHASE ORDERS. The Purchase Order Condition shall have been
satisfied.
(i) MATERIAL ADVERSE CHANGE. Since the First Tranche Closing,
there shall have been no Material Adverse Change and no event or
occurrence reasonably likely to result in a Material Adverse Change.
(j) LISTING OF SHARES. The Subordinate Voting Shares into which
the First Tranche Alcatel Preferred Shares and the Second Tranche Alcatel
Preferred Shares are convertible shall be listed on the Principal Markets.
(k) CERTIFICATE OF REGISTRATION FROM REGISTRAR OF JOINT STOCK
COMPANIES. Alcatel shall have received a Certificate of Registration of
360networks dated a recent date from the Registrar of Joint Stock
Companies.
ARTICLE VII
INDEMNIFICATION
7.01 INDEMNIFICATION BY 360NETWORKS. 360networks agrees to
indemnify Alcatel and its officers, directors, employees, stockholders and
Affiliates and agrees to hold it and them harmless from any and all damages,
losses, claims, liabilities and expenses, including reasonable fees and
disbursements of counsel ("LOSSES"), incurred or suffered by Alcatel or any
of its officers, directors, employees, stockholders or Affiliates arising out
of any of the following: (a) any misrepresentation or any breach of any
representation or warranty made by 360networks pursuant to this Agreement or
the Ancillary Agreements and (b) any breach of or failure by 360networks to
perform any covenant or obligation of 360networks set out in this Agreement
or the Ancillary Agreements. Notwithstanding the foregoing, 360networks shall
not be liable for consequential damages.
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7.02 INDEMNIFICATION BY ALCATEL. Alcatel agrees to indemnify
360networks and its officers, directors, employees, stockholders and
Affiliates and agrees to hold it and them harmless from any and all Losses
incurred or suffered by 360networks or any of its officers, directors,
employees, stockholders or Affiliates arising out of any of the following:
(a) any misrepresentation or any breach of any representation or warranty
made by Alcatel pursuant to this Agreement or the Ancillary Agreements and
(b) any breach of or failure by Alcatel to perform any covenant or obligation
of Alcatel set out in this Agreement or the Ancillary Agreements.
Notwithstanding the foregoing, Alcatel shall not be liable for consequential
damages.
7.03 INDEMNITY LIMITS. No claim may be made under Section 7.01(a)
or Section 7.02(a) for any Loss until Losses in the aggregate total at least
US$15,000,000 (the "THRESHOLD"), in which event the indemnified party will be
entitled to make a claim against the indemnifying party only for the Losses
that exceed the Threshold. The aggregate liability of 360networks under
Section 7.01(a) is limited to the aggregate Conversion Value (as defined in
Exhibits A, B and C) of the Alcatel Preferred Shares at the time the claim is
made. Indemnification claims shall be reduced, by and to the extent, that an
indemnitee shall actually receive proceeds under insurance policies, or
similar arrangements specifically as a result of, and in compensation for,
the subject matter of an indemnification claim by such indemnitee.
7.04 SOLE REMEDY. The provisions of this Article VII shall
constitute the sole remedy for the Losses arising out of this Agreement,
except for the remedy of specific performance and other equitable remedies.
7.05 THIRD-PARTY CLAIMS. Except as otherwise provided in this
Agreement, the following procedures shall be applicable with respect to
indemnification pursuant to this Article VII relating to or arising out of
claims or actions by third parties. Promptly after receipt by the party
seeking indemnification hereunder (hereinafter the "INDEMNITEE") of notice of
the commencement of any action or the assertion of any claim or liability by
a third party (whether by legal process or otherwise), against which claim or
liability a party under Section 7.01 or 7.02 (hereinafter the "INDEMNITOR")
is, or may be, required under this Agreement to indemnify such indemnitee,
the indemnitee will, if a claim thereon is to be, or may be, made against the
indemnitor pursuant to this Article VII, promptly notify the indemnitor in
writing of the commencement or assertion thereof and give the indemnitor a
copy of such claim, process and all legal pleadings and other written
evidence thereof. Failure of the indemnitee to give such notice promptly
shall not relieve the indemnitor from any liability which it may have on
account of this indemnification or otherwise, except to the extent that the
indemnitor is materially prejudiced thereby. The indemnitor shall have, in
all instances, the right to participate in the defense of such action with
counsel of reputable standing. The indemnitor shall have the right to assume
the defense of such action. The indemnitor shall have 10 days, after receipt
of notice of such claim, process, legal proceeding and other written notice,
to assume defense thereof. If the indemnitor does assume such defense, it
will, within such 10 days, so notify the indemnitee. If the indemnitor does
not assume such defense and so
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notify the indemnitee, then the indemnitee shall assume such defense, subject
to the participation of the indemnitor, as provided in this Section 7.05, and
the indemnitee's reasonable fees and expenses (including reasonable fees and
expenses of counsel) in connection with such defense will be borne by the
indemnitor. Prior to paying any claim against which an indemnitor is, or may
be, obligated under this Agreement to indemnify an indemnitee, the indemnitee
must first supply the indemnitor with a copy of a final court judgment or
decree holding the indemnitee liable on such claim or failing such judgment
or decree, must first receive the written approval of the terms and
conditions of such settlement from the indemnitor, which shall not be
unreasonably withheld. No indemnitor shall, without the written consent of
the indemnitee, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification may be sought hereunder (whether or
not the indemnitee is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnitee from all liability arising out of such action or
claim, (B) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnitee, and (C)
would not result in an order, injunction or other equitable remedy in respect
of the indemnitee or its business. An indemnitee shall have the right to
employ its own counsel in any case, but the fees and expenses of such counsel
shall be at the expense of the indemnitee, unless (x) the employment of such
counsel shall have been authorized in writing by the indemnitor in connection
with the defense of such action or claim or (y) the indemnitor shall not have
assumed the defense, or shall be barred from assuming the defense, of such
action or claim pursuant to this Section 7.05, or (z) such indemnitee shall
have reasonably concluded based upon the legal advice of counsel that there
may be defenses available to it which are contrary to, or inconsistent with,
those available to the indemnitor, in any of which events such fees and
expenses of not more than one counsel in each jurisdiction for the
indemnified parties shall be borne by the indemnitor.
ARTICLE VIII
MISCELLANEOUS
8.01 TERMINATION. Either Party shall be entitled to terminate
this Agreement by providing written notice to the other Party if the First
Tranche Closing has failed to occur on or prior to December 31, 2000 and such
failure is not the result of a breach by the Party providing such notice of
its obligations hereunder.
8.02 ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits hereto and the other agreements referred to herein or otherwise
entered into by the Parties hereto on the date hereof constitutes the full
and entire understanding and agreement between the Parties with respect to
the subject matter hereof and supersedes all prior written and oral
agreements, representations or discussions between the Parties.
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8.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE (OTHER THAN SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), EXCEPT FOR
MATTERS THAT BY THEIR NATURE ARE GOVERNED BY NOVA SCOTIA LAW.
8.04 JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
be brought in any U.S. Federal court or New York court sitting in the Borough
of Manhattan in the City of New York, and each of the Parties hereby consents
to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such
suit, action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient
form. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that
service of process on such Party in the manner provided in this Section 8.04
shall be deemed effective service of process on such Party.
8.05 NOTICES. All notices, requests and other communications to
any Party hereunder shall be in writing (including facsimile transmission)
and shall be given as follows:
if to 360networks, to:
360networks inc.
▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Alcatel, to:
Alcatel
▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: Mr. Samir Naessany
Fax: ▇▇ (▇)▇ ▇▇▇▇ ▇▇▇▇
with a copy to:
Alcatel
▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇ (▇)▇ ▇▇▇▇ ▇▇▇▇
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as such Party may hereafter
specify for the purpose by notice to the other parties hereto. All such
notices, requests and other communications shall be deemed received on the
date of receipt by the recipient thereof if received prior to 5 p.m. on a
Business Day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
8.06 SURVIVAL. The representations and warranties contained
herein and in any certificate or other writing delivered pursuant hereto
shall survive the execution and delivery hereof for a period of two years;
PROVIDED that (i) the representations and warranties set forth in Sections
3.13 and 3.21 shall survive until expiration of the applicable statute of
limitations, (ii) the representations and warranties set forth in Sections
3.11(b) and (c) shall survive for a period of five years and (iii) the
representations and warranties set forth in Sections 3.01, 3.02, 3.03(i),
3.04, 3.05 and 3.06 shall survive indefinitely.
8.07 AMENDMENTS; NO WAIVERS. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each Party to this Agreement
or, in the case of a waiver, by each Party against whom the waiver is to be
effective. No failure or delay by any Party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of
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any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
8.08 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective legal successors and permitted assigns. No provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Person other than the Parties hereto and
their respective legal successors and permitted assigns. No party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other Party hereto; PROVIDED, HOWEVER,
that Alcatel may designate one of its Affiliates to be the purchaser of the
Alcatel Preferred Shares (the "DESIGNATED PURCHASER") or assign this
Agreement to any of its Affiliates without prior consent, PROVIDED that, in
either case, Alcatel shall not be released from its obligations hereunder.
8.09 DESCRIPTIVE HEADINGS; CONSTRUCTION. The descriptive headings
herein are inserted for convenience of reference only and are not intended to
be a part of, or to affect the meaning, construction or interpretation of,
this Agreement.
8.10 LANGUAGE. This Agreement is written only in the English
language. Any translations of this Agreement into any other language shall be
only for the convenience of a Party and shall in no way affect the
interpretation or enforcement of any of the provisions of this Agreement.
8.11 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Preferred
Share Purchase Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
360NETWORKS INC.
By: Signed
--------------------------------
Name:
Title:
360NETWORKS INC.
By: Signed
--------------------------------
Name:
Title:
ALCATEL
By: Signed
--------------------------------
Name:
Title:
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