The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
JOINT VENTURE AGREEMENT
THIS AGREEMENT, made and entered into as of this 19th
day of September, 1996 by and between PSINet Inc., a
corporation organized and existing under the laws of the
state of New York and having its principal place of business
at 000 Xxxxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 ("PSI"),
and Chatterjee Management Company (doing business as The
Chatterjee Group), a corporation organized and existing
under the laws of the state of Delaware and having its
principal place of business at 000 0xx Xxxxxx, Xxxxx 0000,
Xxx Xxxx, Xxx Xxxx 00000 ("TCG") (together, the "Parties").
WITNESSETH THAT:
WHEREAS, PSI is an Internet service provider offering a
wide range of Internet access services to organizations and
individuals worldwide by means of the PSINet (as defined
below);
WHEREAS, TCG is an experienced investor with European
connections and interests, including, through its Affiliates
(as defined below), investments in the construction of
facilities in Europe over which Internet-access services may
be provided; and
WHEREAS, the Parties desire to establish PSINet
Europe (the "EJV"), a joint venture to be formed by PSI,
together with the TCG Designee (as defined below).
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein, the parties
agree as follows:
Article 1. Definitions
1.1. Terms defined in this Article 1 and elsewhere,
in this Agreement shall have the same meaning throughout
this Agreement. Defined terms may be used in the
singular or the plural. All references to periods of
days are to periods of calendar days.
1.2. "Affiliate" of a Person means any Person which
directly or indirectly controls, is under common control
with, or is controlled by, such Person, where "control"
means the power and ability to direct the management and
policies of the controlled Person through ownership of
voting shares of the controlled Person or by contract or
otherwise. With respect to TCG, the term "Affiliate"
shall include one or more of Xxxxxxxx Xxxxxxxxxx, Xxxxxx
Xxxxx or Xxxxx Fund Management or Affiliates
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
thereof, and any Person for which any such Person acts as
investment advisor or investment manager.
1.3. "Board" means the Board of Directors or a
comparable body of the EJV.
1.4. "Buildout Funding Date" means the date on which
the EJV has identified the initial markets for buildout
of the Network, approved an initial business plan and has
a reasonable business need to have access to the
Software, the Technical Information and the Trademarks.
1.5. "Controlling Interest" means an interest
conferring on the party holding such interest the power
and ability to direct the management and policies of the
controlled enterprise through ownership of voting shares
of the controlled enterprise or by contract or otherwise.
For purposes hereof, no such interest of 5% or less
shall be deemed to be a Controlling Interest.
1.6. "Government Approval" of any action to be taken
by either Party means such approval of or confirmation or
consent to such action, together with such licenses,
permits or other permissions reasonably required for such
action, all as the statutes, decrees, regulations and
rulings of governmental authority (collectively, "Legal
Authority") within the European Union, any sovereign
European country or the United States, as the case may
be, may require to be obtained in connection with said
action from such governmental authority or from political
subdivisions thereof. Whenever any form of "Government
Approval" is used herein, it shall be interpreted and
construed to include the requirement that such approval
be in form and substance acceptable to the Parties.
1.7. "Internet" means the open global network of
interconnected commercial, educational and governmental
computer networks that utilize TCP/IP.
1.8. "Licensed Intellectual Property" means the
Technical Information and the Trademarks.
1.9. "Lien" means, with respect to any property or
asset, any mortgage, lien, pledge, deed of trust, charge,
security interest, encumbrance or other adverse claim of
any kind with respect to such property or asset.
1.10. "On-line Services" means commercial
information services that offer a computer user access
through a modem to a specified slate of information,
entertainment and communications menus. On-line Services
may or may not utilize the PSINet or the Software.
2
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
1.11. "Person" means any individual, corporation,
partnership, firm, joint venture, association, limited
liability company, trust, unincorporated organization or
other entity.
1.12. "POP" means an interlinked group of modems,
routers and other computer equipment referred to as a
"point of presence," located in a particular city or
metropolitan area, that allows a nearby subscriber to
access the Internet through a local telephone call.
1.13. "Protocol" means a formal description of
message formats and the rules two or more machines must
follow to exchange messages.
1.14. "PSINet" means the high-performance computer
network operated by PSI that utilizes an advanced
TCP/IP-based, Asynchronous Transfer Mode, Integrated
Services Digital Network and Switched Multi-megabit Data
Service compatible frame relay network comprised of POPs
that are networked through advanced frame relay
technology to create a network that allows local access
to the Internet in the localities where POPs are located.
1.15. "PSI UK" means PSINet UK Limited, a
corporation organized under the laws of the United
Kingdom.
1.16. "Securityholder" means a holder of equity
interests in the EJV.
1.17. "Software" means any commercially available
end user software marketed by PSI now or in the future
that may be necessary, useful or appropriate for
distribution in connection with the operation of the
Network and any related software products and network
services in Europe, together with all error corrections,
updates, upgrades, enhancements, new versions,
derivatives, add-ons and replacements made commercially
available with respect to such software.
1.18. "TCG Designee" means an Affiliate of TCG that
is managed and controlled by TCG ------------------------
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------------------.
1.19. "TCP/IP" means the Transmission Control
Protocol/Internet Protocol, a compilation of network- and
transport-level Protocols that allow computers with
different architectures and operating system software to
communicate with other computers on the Internet, and any
successor Protocol serving similar functions.
3
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
1.20. "Technical Information" means the proprietary
processes, improvements, trade secrets, designs, data,
plans, specifications, know-how, network or operating
software, operating experience and other information,
whether patented or unpatented, copyrighted or
uncopyrighted that is presently owned or may be developed
by PSI relating to the design, configuration and
technical specifications of the Internet network, which
are necessary, useful or appropriate for the
establishment and operation of the Network in Europe;
provided, however, that the Technical Information shall
not include the Software.
1.21. "Trademarks" means (a) "PSI," "PSINet,"
"InterFrame," "PSILink," "UUPSI" and all other registered
trademarks now owned or subsequently acquired or
developed by PSI that are used in connection with the
marketing, distribution and sale of Internet-access and
related services and (b) "Internet Inside!,"
"InternetWarehouse," "InterTainment," "PSICable,"
"InterRamp," "LAN-dial," "LAN-ISDN," "LAN On Demand,"
"InterMAN," "SecureStream," "Pipeline," "PSIWeb,"
"Internaut," "Instant InterRamp," "PSI IntrAnet" and all
other service marks now owned or subsequently acquired or
developed by PSI that are used in marketing, distributing
and selling Internet-access and related services.
1.22. The following terms are defined in the
Articles or Sections set forth below:
"Appreciated Value" - Section 4.4
"Customers" - Section 2.2(b)
"Disclosing Party" - Section 21.1
"EJV" - Recitals
"Force Majeure" - Section 6.1
"Initial Funding" - Section 4.1
"Investments" - Section 4.5
"Legal Authority" - Section 1.5
"License Agreement" - Section 4.1(a)
"License" - Section 12.2(c)
"LJV" - Section 5.2
4
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
"Measurement Date" - Section 4.4
"Network" - Section 2.2(a)
"NJV" - Section 4.6
"Offer" - Section 6.2
"Offered Securities" - Section 6.2
"PSI Filing" - Section 12.2(a)
"Qualifying IPO" - Section 3.2
"Receiving Party" - Section 21.1
"Registration Rights Agreement" - Section 5.4.
"Securities" - Section 6.1
"Selling Securityholder" - Section 6.2
"Services Agreement" - Article 9
"Significant Securityholder" - Section 6.2
"Subsidiary Business" - Section 12.2(c)
"Subsidiary Financial Statements" -
Section 12.2(e)
"Subsidiary Quarterly Financial Statements" -
Section 12.2(e)
"Subsidiary Securities" - Section 12.2(d)
"TCG Designee" - Recitals
"Transfer" - Section 6.1
Article 2. Purpose
2.1. The purpose of this Agreement is to provide for
the establishment, ownership and operation of the EJV by PSI
and the TCG Designee.
5
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
2.2. The purpose of the EJV will be to engage in the
following business activities:
(a) acquiring and importing network components
such as equipment and circuits and building a network in
Europe (the "Network") to constitute a segment of the
PSINet global network;
(b) connecting the Network to the global
PSINet infrastructure so as to support unlimited carriage
of outbound and inbound Internet traffic within a
particular European country, from country to country in
Europe and to the rest of the world for businesses,
schools and other organizations and individuals wishing
to purchase Internet services (collectively,
"Customers"), and operating the Network;
(c) establishing POPs throughout Europe;
(d) providing sales, marketing, customer
support, customer service, and xxxxxxxx and collections
for dialup and circuit-based services to Customers;
(e) selling PSINet services (i) in Europe as
the EJV's primary business area and (ii) outside Europe
to the extent permitted under the Services Agreement (for
example, but not by way of limitation, for the purposes
of selling PSINet services outside Europe to
multinational companies based in Europe) under the terms
and conditions to be set forth in detail in the Services
Agreement;
(f) providing services (including, without
limitation, Internet, intranet, other PVC-based services
and any other services offered from time to time by PSI),
World Wide Web hosting services, network security
services, electronic commerce and all related services to
Customers;
(g) engaging in any other lawful business
activity that is approved in advance by the Board in
accordance with this Agreement; and
(h) engaging in any and all acts, things,
businesses and activities that are related, incidental or
conducive directly or indirectly to the attainment of the
foregoing objectives.
Article 3. The Joint Venture
3.1. As soon as reasonably practicable after the
effective date of this Agreement, PSI and the TCG Designee
shall cooperate to establish the EJV in such jurisdiction
and in such form as they may deem appropriate for the
purposes of the EJV, PSI and the TCG Designee, and in
accordance with such jurisdiction's applicable law.
6
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
3.2. The organizational documents of the EJV shall be
as agreed by PSI and the TCG Designee, and PSI and the TCG
Designee shall cause such documents to be amended from time
to time as may be required to ensure that they at all times
conform with the terms and conditions of this Agreement and
any amendments hereto. The Board shall consist of five
members, with PSI and the TCG Designee each designating two
members and the fifth member being chosen by mutual
agreement of PSI and the TCG Designee. Certain major
actions relating to the EJV and PSI UK, as set forth in
Exhibit A, will not be taken without the approval of the TCG
directors or the TCG Designee, as the case may be,
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3.3. The duration of the EJV shall be perpetual,
subject to the provisions of applicable law, the EJV's
organizational documents and this Agreement.
Article 4. Capitalization of the EJV
4.1. Initial Funding. At the initial capitalization of
the EJV (the "Initial Funding"):
(a) PSI shall contribute ------------------- to
the EJV in exchange for 33.33% of the EJV's initial
equity.
(b) The TCG Designee shall contribute
------------------ to the EJV in exchange for 66.67% of the
EJV's initial equity.
4.2. Initial Buildout Funding. Upon the Buildout
Funding Date:
(a) PSI shall contribute ------------------ to
the EJV. The EJV shall use such contribution, together with
-------------- from the Initial Funding, within 10 days from
the Buildout Funding Date to purchase from PSI a license to
use the Software, Technical Information and Trademarks in
Europe pursuant to a license agreement (the "License
Agreement") containing substantially the terms and
conditions set forth in Exhibit C attached hereto.
(b) The TCG Designee shall contribute
------------------ to the EJV.
7
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
(c) Following the contributions set forth in this
Section 4.2, PSI and TCG will own 37.42% and 62.58%,
respectively, of the equity interests in the EJV.
4.3. PSI UK Call/Put. At the Initial Funding, PSI and
the EJV shall enter into a call/put agreement granting the
EJV the right to purchase from PSI up to 100% of the
outstanding capital stock of PSI UK in exchange for newly
issued equity interests in the EJV. The aggregate amount of
PSI UK's capital stock shall be valued at
-------------------, regardless of the date of exercise.
Such call right may be exercised by the EJV Board from time
to time in whole or in part at any time after the Initial
Funding; provided, however, that the EJV Board will not
exercise such call until the earliest of the following to
occur:
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Pursuant to the call/put agreement, PSI shall also have the
right to put at any time all or any portion of the
outstanding capital stock of PSI UK it then holds to the
EJV, at the same times and on the same terms and conditions;
provided, however, that upon any exercise of such put by
PSI, TCG will have the right to require PSI to put all PSIs
remaining interest in PSI UK to the EJV if TCG, on or prior
to the completion of such put, has made the full amount of
all capital contributions required under Section 4.4. The
equity interests in the EJV held by PSI as a result of the
exercise of the call/put right shall at no time be equal to
or greater than the equity interests in the EJV held by TCG
and its Affiliates without the consent of PSI.
4.4. TCG Designee Capital Contributions. The TCG
Designee, through TCG, hereby irrevocably commits to make
additional capital contributions to the EJV
8
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
in an aggregate amount of up to -------------------, as
determined from time to time by the Board, and as provided
in the annual budgets and plans approved by the Board.
Notwithstanding the foregoing, TCG or the TCG Designee shall
have the right (that is, without any call for capital by the
Board, the EJV or PSI) to accelerate at any time after the
signing of this Agreement any capital contributions to the
EJV (or if the EJV has not yet been organized, payments to
PSI), so long as the aggregate amount of investments made
pursuant to this Agreement (including without limitation
pursuant to Sections 4.1(b), 4.2(b) and this Section 4.4)
does not exceed --------------------. The parties
acknowledge that upon such investment, they will treat those
amounts as invested for all purposes under this Agreement,
including Section 5.3.
4.5. Adjustment to PSI Funding. If the internal rate of
return as of the measurement date (as defined below) on (a)
all the cash flows both to and from TCG and the TCG Designee
from all its investments in the EJV (including, without
limitation, investments made pursuant to Sections 4.1(b),
4.2(b) and 4.4, dividends and transfers of equity interests
in the EJV) (the "Investments") and (b) unrealized equity
appreciation of the equity interest in the EJV held by the
TCG Designee appraised as set forth below (together with the
Investments, the Appreciated Value) does not exceed ---
per annum, PSI will transfer to the TCG Designee sufficient
equity in the EJV to give the TCG Designee a --- internal
rate of return per annum on such investments. The
percentage equity interest in the EJV which the TCG Designee
will receive as a result of this transfer may not exceed the
percentage equity interest in the EJV which the TCG Designee
would have received if (i) PSI UK's operations had
originally been valued at cost ------------------ and (ii)
PSI's contribution of licenses under Section 4.1(a) had been
valued at -----------------. Within 15 days of the earlier
of (i) the sale, transfer or exchange of the TCG Designee's
interests in the EJV in connection with the acquisition
(whether through merger or acquisition of the Securities) by
a third party of the EJV (ii) ----- years from the Initial
Funding and (iii) any dissolution of the EJV (in any such
case, the "measurement date"), the EJV shall engage, at its
expense, an investment banking firm of nationally recognized
standing or another appraiser mutually acceptable to PSI and
the TCG Designee to appraise the fair market value of the
equity interest in the EJV held by the TCG Designee and its
Affiliates as of the measurement date. Such appraisal shall
not take into account any control premium.
4.6. --------------------------------------------------
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4.7. Valuation of Contributions. Following the capital
contributions described in Sections 4.1 and 4.2, any
contributions to the capital of the EJV by PSI
9
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
or TCG will be valued for the purposes of allocation of
equity interests on the same basis as the contributions set
forth in such sections (i.e., the contribution of the equity
in PSI UK will be valued as set forth in Section 4.3, and
monetary contributions will be treated at face value).
Article 5. Puts and Calls
5.1. PSI EJV Buyout Call. If any Person or group of
Persons acquires all or substantially all the common
stock of PSI, PSI shall have the right to purchase the
TCG Designee's equity interest in the EJV. PSI may
exercise such right upon notice to the TCG at least 15
days and not more than 30 days prior to the closing of
such acquisition. At or prior to the closing of such
acquisition, PSI shall pay the TCG Designee in securities
(or such other consideration as is payable to PSI
shareholders) and/or cash, at the TCG Designee's option,
for such equity interest in an amount equal to (a) the
price paid per share by the acquiring Person or group for
the PSI common stock, divided by the volume-weighted
average trading price per share of the PSI common stock,
as shown on the Bloombergs historical price screen,
during the 30-day period beginning 40 days prior to
announcement of such acquisition, multiplied by (b) the
appraised fair market value of the TCG Designee's equity
interest in the EJV, as determined in accordance with
Section 4.4; provided that the aggregate value of the
consideration paid to the TCG Designee shall be at least
equal to the sum of the Appreciated Value and a -------
per annum return thereon, based on a minimum of ----
-------from the Initial Funding (regardless of when such
acquisition actually occurs).
5.2. PSI LJV Control Option. The Parties agree to
implement as soon as practicable a structure that would
allow PSI the right to a call on the majority interest in
any of the local joint venture ("LJV") companies which
may be acquired by the EJV as part of the pan-European
Network; provided, however, that such structure is tax
neutral to the EJV and the TCG Designee and its
Affiliates. Any such call would be subject to a similar
call back, valued at PSI's cost basis in the LJV, prior
to a change of control in the EJV, including an
acquisition or an initial public offering.
5.3. TCG Downside Put. TCG or the TCG Designee
shall have the right to require PSI to issue to TCG or
the TCG Designee in exchange for the Investments a number
of shares of PSI common stock calculated by dividing the
amount of the Investments by the closing price of PSI
common stock on the trading day immediately preceding the
date of this Agreement. TCG or the TCG Designee, as the
case may be, may exercise such right at any time upon
written notice to PSI, except (a)between the Initial
Funding and October 1, 1997 and (b)after the
organizational meeting relating to a proposed initial
public offering of equity interests in the EJV and prior
to the earlier of a decision of the Board not to proceed
with such an offering or
10
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
consummation of such an offering; provided, however, that
notwithstanding such exceptions and anything else
contained in this Agreement (including, without
limitation, any notice of exercise by PSI of the purchase
rights described in Section 5.1), the TCG Designee may
exercise such right (i) at any time immediately prior to
the closing of the acquisition of all or substantially
all the assets or common stock of PSI or (b) upon any
material adverse change in the EJV or its business. The
closing of the exchange of TCG's or the TCG Designees and
its Affiliates' equity interests in the EJV for PSI
common stock shall take place within 10 days of delivery
of written notice to PSI of TCG's or the TCG Designees
exercise of its put right under this Section 5.3.
5.4. Registration Rights. PSI and TCG will enter
into a registration rights agreement (the "Registration
Rights Agreement") substantially in the form attached as
Exhibit D hereto.
5.5. Reservation of Shares. PSI shall at all times
have reserved a sufficient number of shares of its common
stock to satisfy its obligations under this Agreement.
Article 6. Transfer of Shares
6.1. Restrictions on Transfer. Except as otherwise
specifically set forth herein, no Securityholder may
sell, assign, transfer, pledge, hypothecate, mortgage,
encumber or dispose of (collectively, "Transfer") all or
any part of any securities of the EJV (collectively, the
"Securities") unless such Securityholder has complied
with the provisions of this Article 6; provided, however,
that TCG may transfer any such securities to any of its
Affiliates.
6.2. Right of First Offer. If a Securityholder (a
"Selling Securityholder") desires to Transfer any or all
of its Securities (the "Offered Securities"), it shall
first make a written offer to sell the Offered Securities
(the "Offer") to all Securityholders (other than the
Selling Securityholder) then holding more than 5% of the
equity securities of the EJV (a "Significant
Securityholder"). A statement attached to the Offer
shall set forth a full disclosure of the Offer, including
(a)a statement of intention to Transfer, (b)the number of
Offered Securities, and (c)the terms and conditions of
the proposed Transfer, including the purchase price for
the Offered Securities.
6.3. Election to Purchase; Closing. Within 30 days
after delivery of the Offer, the Significant
Securityholders may elect to purchase, at the price and
on the terms specified in the Offer, the Offered
Securities by giving written notice to the Selling
Securityholder. The closing of such purchase shall occur
on a date mutually acceptable to the parties thereto
within 30 days after such acceptance. At such
11
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
closing, the Significant Securityholders having elected
to purchase shall pay the Selling Securityholder the
purchase price as specified in accordance with Section
6.2(c), and the Selling Securityholder shall
simultaneously deliver the certificates representing the
Securities being transferred and all other evidence of
transfer as may reasonably be requested by the purchasing
Securityholder.
6.4. Transfer to Third Parties. If any of the
Offered Securities remain unpurchased following the time
periods specified above, the Selling Securityholder may
Transfer such remaining Offered Securities to any third
party; provided, however, that the other Party shall have
first consented to the transfer to such third party,
which consent shall not be unreasonably withheld. Such
transfer shall be made only in strict accordance with the
terms set forth in the Offer and shall be completed
within 90 days following the expiration of the time
provided for the purchase of the Offered Securities by
the purchasing Securityholders, after which time any such
Transfer shall again become subject to all the
restrictions of this Agreement and the organization
documents of the EJV. The transferee shall agree in
writing to be bound by the terms of this Agreement.
6.5. Ineffective Transfers. No Transfer of any
right, title or interest in any of the Securities shall
be effective, and the EJV shall not record or recognize
any such Transfer, until there has been compliance with
the provisions of this Agreement and the organization
documents of the EJV. If no Offer is made as herein
required, the EJV and the Securityholders may
nevertheless exercise their rights hereunder as to the
Offered Securities, and they may do so at any time, even
after the purported Transfer of the Securities.
6.6. Termination. The restrictions contained in this
Article 6 shall terminate upon consummation of a
Qualifying IPO.
6.7. Legends. During the term of this Article 6,
each certificate representing interests in the EJV shall
bear the following or similar legend:
"Transfer of the interests represented by this
certificate is restricted pursuant to the Joint
Venture Agreement dated September __, 1996,
between PSINet Inc. and The Chatterjee Management
Company, a copy of which is on file at the
principal office of the Company in __________."
Article 7. Meetings and Resolutions of Securityholders
The Board shall decide the time and place for convening
all meetings of the Securityholders, except where the law of
the jurisdiction of organization of the EJV
12
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
provides otherwise, and notice thereof shall be given as set
forth in the EJV's organization documents.
Article 8. Basic Corporate and Operating Policies
8.1. The Parties agree to vote their shares and to
cause their representatives to effectuate the policies
set forth below during the term of this Agreement.
8.2. The books and records of the EJV and PSI UK
shall be maintained in accordance with U.S. and U.K.
generally accepted accounting principles, respectively,
and shall accurately reflect the EJV's financial
position. Such records and supporting documents shall be
available for inspection by the Parties, or their
designees, at all reasonable times. Each of the EJV and
PSI UK shall send an English version of its quarterly and
annual audited (solely as to the EJV) financial
statements to the Parties as soon as practicable after
such financial statements become available (and in no
event more than 45 days after the end of the quarter and
90 days after the year end). The EJV and PSI UK shall
also send the Parties monthly unaudited financial reports
in English.
8.3. The EJV's fiscal year shall begin on the first
day of January and end on the last day of December of
each year; provided, however, that the first fiscal year
shall begin on the date on which the EJV is incorporated
and shall end on the last day of December immediately
following.
8.4. Only directors who are not employees of the
Parties (e.g., independent directors or directors serving
in a management capacity with the EJV) will be
compensated by the EJV; provided, however, that all
directors may be reimbursed for such travel and other
expenses as may reasonably be incurred by them in
performing their duties to the EJV.
8.5. After an initial start-up phase, the EJV shall
be operated as a stand-alone company with its own
administrative, technical, sales, marketing and
engineering staff and professional management working on
a full-time basis.
Article 9. Services Agreement
PSI will provide resources to the EJV pursuant to a
Services Agreement (the "Services Agreement") to be
entered into with the EJV at the Initial Funding
containing substantially the terms and conditions set
forth in Exhibit B attached hereto. The Parties may
provide the EJV with additional assistance on a
transitional basis as requested by the Board.
13
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
Article 10. Noncompete
Except as specifically agreed to in writing by the
Parties, PSI agrees, and will cause its Affiliates, and TCG
agrees, and will cause the Affiliates that it Controls, not
to compete with, or own directly or indirectly a Controlling
Interest in any Person that competes with, the
Internet-related activities of the EJV in Europe (except for
those countries in which the Board determines not to pursue
doing business) during the term of this Agreement and for a
period of two years from the earlier of (i)the expiration or
termination hereof and (ii)the divestiture by such party of
its entire interest in the EJV. Notwithstanding the
foregoing, TCG and its Affiliates may own equity interests
in any such competitor so long as no employees of either TCG
or any of its Affiliates are also employees of such
competitor; provided that this sentence will not diminish
any fiduciary obligation that TCG or its Affiliates may have
to the EJV under applicable law. For purposes of this
Article 10, "Affiliate" shall not include the EJV, PSI UK
or, solely with respect to business in the Netherlands, the
NJV.
Article 11. Conditions to Investment
The obligations of the Parties and the EJV to proceed
with any investment under Sections 4.1, 4.2 or 4.3 pursuant
to this Agreement are subject to the satisfaction on or
prior to the date of such investment of all the following
conditions, any one or more of which may be waived in whole
or in part by the Party entitled to the benefit of such
conditions:
(a) The representations and warranties contained
in Article 12 shall have been true and accurate as of the
date of signing of this Agreement and shall be true and
accurate in all material respects on and as of the date of
such investment with the same effect as though made on and
as of such date, except for such changes, if any, as may be
agreed to in writing by the Parties.
(b) Each of the Parties shall have obtained all
Government Approvals required to be obtained by it for or in
connection with the transactions contemplated hereby, and
all consents and approvals, if any, of third parties, and no
such Government Approval or third-party approval shall have
been withdrawn or suspended.
(c) On the date of such investment, there shall
be no effective injunction, writ, restraining order or any
other order of any nature issued by a court or Legal
Authority of competent jurisdiction directing that any of
the transactions provided for in this Agreement or any of
the agreements contemplated by this Agreement not be
consummated as herein or therein provided.
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filed separately with the Securities and Exchange Commission
(d) On the date of such investment, there shall
be no action or proceeding pending or threatened by or
before any court or other judicial, administrative or
regulatory body to restrain or prohibit the transactions
contemplated by this Agreement or any of the agreements
contemplated by this Agreement.
(e) Since the date of execution of this
Agreement, there shall not have occurred as of the date of
such investment any material adverse change in the ownership
of the Licensed Intellectual Property, or any material
adverse change in the key personnel responsible for the
engineering, design and construction of the Network.
(f) Each Party shall have executed and delivered
or caused to be executed and delivered any agreements or
instruments required by this Agreement (including, without
limitation, the Registration Rights Agreement, the License
Agreement and the Services Agreement) or appropriate in
order to consummate the transactions contemplated hereby, in
each case on terms substantially consistent with those set
forth in this Agreement, and such agreements shall remain in
effect.
Article 12. Representations and Warranties
12.1. Each Party hereto represents and warrants to
the other Party as follows: (a)it is duly organized and
validly existing under the laws of its place of
incorporation; (b)it has full corporate power and
authority and has taken all corporate action necessary to
enter into and perform this Agreement; (c)the execution
and performance by it of its obligations hereunder will
not constitute a breach of, or conflict with, any other
material agreement or arrangement, whether written or
oral, by which it is bound; (d)to the best of its
knowledge, it has complied in all material respects with
all laws, regulations, orders, judgments or decrees of
any domestic or foreign court or Legal Authority
applicable to it; (e)no representation or warranty made
in this Agreement, or in any exhibit, schedule,
certificate, list or other instrument furnished or to be
furnished pursuant to this Agreement, or in connection
with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in
order to make the statements contained herein or therein
not false or misleading; and (f)this Agreement is its
legal, valid and binding obligation, enforceable in
accordance with the terms and conditions hereof (subject
to applicable laws of bankruptcy and moratorium); and
(g)no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee in connection with
this Agreement or the transactions contemplated hereby
based on arrangements made by it or on its behalf.
12.2. PSI represents and warrants as follows:
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filed separately with the Securities and Exchange Commission
(a) PSI Filings; No Material Adverse Change. No
filing by PSI with the U.S. Securities and Exchange
Commission (a "PSI Filing"), contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the
statements contained herein or therein not false or
misleading as of the respective dates thereof, and there has
been no material adverse change to the business, results of
operations, financial condition or prospects of PSI since
the date of the most recent PSI Filing prior to the date
hereof.
(b) Organization, Good Standing, Etc. of PSI UK.
(i)PSI UK is a corporation duly organized and validly
existing under the laws of the United Kingdom; (ii)PSI UK
has full corporate power and authority and has taken all
corporate action necessary to own and operate its properties
and carry on its intended business; (iii)the execution and
performance by PSI of its obligations hereunder will not
constitute a breach of, or conflict with, any other material
agreement or arrangement, whether written or oral, by which
PSI or the PSI UK is bound; and (iv)to the best of PSI's
knowledge, PSI UK has complied in all material respects with
all laws, regulations, orders, judgments or decrees of any
domestic or foreign court or Legal Authority applicable to
it if the failure to comply would have a material adverse
effect on the current or planned business of PSI UK.
(c) Licenses, Permits, Authorizations, Etc. of
PSI UK. PSI UK has received all currently required
governmental approvals, authorizations, consents, licenses,
orders, registrations and permits of all agencies, whether
local or national (the "Licenses"), in each case necessary
for the conduct of its (the "Subsidiary Business"), if the
failure to obtain any such License would have a material
adverse effect on the current or planned business of PSI UK.
(d) Capitalization of PSI UK. As of the date
hereof, PSI UK has authorized capital stock of 1,000
ordinary shares, of which 2 shares are issued and
outstanding. All outstanding ordinary shares of PSI UK have
been duly authorized and validly issued, are fully paid and
nonassessable (except any assessment that is required by the
laws of the United Kingdom and is not material), and are
owned by PSI. Except as described in this Section 12.2(d),
there are no outstanding (i)shares of capital stock or
voting securities of PSI UK, (ii)securities of PSI UK
convertible into or exchangeable for shares of capital stock
or voting securities of PSI UK or (iii)options or other
rights to acquire from PSI UK, or other obligation of PSI UK
to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting
securities of PSI UK (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of PSI
or any of its Affiliates to acquire any Subsidiary
Securities.
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filed separately with the Securities and Exchange Commission
(e) Financial Statements of PSI UK. PSI has
previously delivered to TCG financial statements of PSI UK
for the fiscal year ended December 31, 1995 (the "Subsidiary
Financial Statements"). The Subsidiary Financial Statements
are accurate and present fairly in all material respects the
financial position and results of operations of PSI UK as of
December 31, 1995 in accordance with U.K. generally applied
accounting principles consistently applied.
PSI has furnished to TCG quarterly financial
statements of PSI UK for the quarter ended June 30, 1996
(the "Subsidiary Quarterly Financial Statements"). The
Subsidiary Quarterly Financial Statements are accurate and
present fairly in all material respects the financial
position of PSI UK as of June 30, 1996 in accordance with
U.K. generally accepted accounting principles consistently
applied.
Since December 31, 1995, except as contemplated by
this Agreement, the Subsidiary Business has been conducted
in the ordinary course consistent with past practices and
there has not been any event, occurrence, development or
state of circumstances or facts relating to PSI UK that has
had or could reasonably be expected to have a material
adverse effect on the Subsidiary Business.
(f) No Undisclosed Material Liabilities of PSI
UK. There are no liabilities of PSI UK of any kind
whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances that
could reasonably be expected to result in such a liability,
other than liabilities provided for in the Subsidiary
Financial Statements and other than liabilities that,
individually or in the aggregate, will not have a material
adverse effect on PSI UK.
(g) Contracts of PSI UK. PSI shall have made
available for the review of TCG prior to the Initial Funding
true and complete originals or photocopies of all material
contracts, oral or written, to which PSI UK is a party,
including, without limitation, all agreements, contracts or
understandings between PSI and PSI UK. All such contracts
are valid and in full force and effect, PSI UK has performed
all material obligations imposed on it thereunder, and there
are not, under any of such contracts, any defaults or events
of default on the part of PSI UK or, to the knowledge of
PSI, any other party thereto that would materially adversely
affect the business, assets or financial condition of PSI
UK, or that could reasonably be expected to materially
adversely affect the business prospects of PSI UK. PSI UK
has not received notice, and PSI is not otherwise aware,
that any party to any such material contract intends to
cancel, terminate or refuse to renew such material contract
or to exercise or decline to exercise any option or right
thereunder.
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filed separately with the Securities and Exchange Commission
(h) Claims and Legal Proceedings Against PSI UK.
There are no material claims, actions, suits, arbitrations,
proceedings or investigations pending or, to the knowledge
of PSI, threatened against PSI or PSI UK with respect to the
Subsidiary Business before or by any Legal Authority or
other Person. There are no outstanding or unsatisfied
judgments, orders, decrees or stipulations to which PSI or
PSI UK is a party that involve the transactions contemplated
herein or that would individually or in the aggregate have a
material adverse effect on the business, assets or financial
condition of PSI UK or that could reasonably be expected to
have a material adverse effect on the business prospects of
PSI UK.
(i) Patents, Trademarks, Etc. PSI UK owns or has all
necessary licenses or rights within its jurisdiction to use:
(i) all trademarks, trade names, copyrights,
patents, patent applications, technology and other
intellectual property rights now used by PSI UK and
(ii) all formulae, franchises, processes,
techniques and manufacturing know-how and all trademarks,
trade names, copyrights, patents, patent applications,
technology and other intellectual property rights used in
connection with services now being or intended to be offered
and sold by PSI UK.
Article 13. Term and Termination
13.1. This Agreement shall continue in effect until
terminated pursuant to this Article 13 or by mutual
agreement of the Parties.
13.2. This Agreement shall be terminable forthwith upon
the sending of notice in writing upon the occurrence of one
or more of the following events:
(a) by either Party, if any required Government
Approval has not been obtained within six months of the date
hereof or if any subsequent enactment of law or regulation
or any subsequent act of a Legal Authority in the European
Union or the United States shall, in the reasonable opinion
of the adversely affected Party, (i) make performance of
this Agreement impossible or unreasonably expensive or
unreasonably difficult for said Party, (ii) alter the rights
and obligations of the Parties from those agreed and
contemplated by this Agreement, or (iii) interfere with the
benefits contemplated herein to be received by such Party;
(b) by either Party, if the other Party commits a
material breach of any of its obligations under this
Agreement, which shall not have been remedied within 60 days
from the giving of written notice requiring such breach to
be remedied;
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(c) by either Party, if the other Party becomes
incapable, for a period of 60 days of performing any of its
obligations under this Agreement because of Force Majeure
(as defined below);
(d) by either Party, if the other Party commences
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or similar official
of it or of any substantial part of its property, or shall
consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(e) by either Party, if the other Party has an
involuntary case or other proceeding commenced against it
seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other
proceeding remains undismissed and unstayed for a period of
90 days; or an order for relief is entered against such
Party under applicable bankruptcy laws as now or hereafter
in effect;
(f) by either Party, if the other Party is unable
to pay its debts as they become due, has explicitly or
implicitly suspended payment of any debts as they become due
(except debts contested in good faith), or if the creditors
of such Party have taken over its management;
(g) by any Party, in the event of a material
breach of the License Agreement or the Services Agreement by
the other Party, and the continuance thereof after the lapse
of all relevant cure periods; or
(h) by TCG, if PSI UK experiences any of the
events described in Section 13.2(d), (e) or (f) while under
the control of PSI or its Affiliates (other than the EJV).
13.3. If this Agreement is terminated pursuant to
Section 13.2, then the License Agreement and the Services
Agreement shall terminate at the option of the EJV.
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filed separately with the Securities and Exchange Commission
Article 14. Consequences of Termination
14.1. Termination of this Agreement shall be without
prejudice to the accrued rights and liabilities of the
Parties at the date of termination, unless waived in writing
by mutual agreement of the Parties.
14.2. Upon termination of the License Agreement, each
Party shall (at the request of the other Party) take all
steps necessary to ensure that the name of the EJV is
immediately changed so that it no longer contains any
reference to any trade name, trademark, service name or
service xxxx then owned by the other Party or any of its
Affiliates (other than the EJV).
14.3. If this Agreement is terminated by a Party in
accordance with Section 13.2, the terminating Party shall
have the right to require the other Party to join with the
terminating Party to cause the liquidation or winding up of
the EJV.
Article 15. Nature and Survival of Representations;
Indemnification
15.1. All representations, warranties and covenants made
by the Parties in this Agreement and in any exhibit,
schedule, certificate, list or other instrument delivered in
connection with the transactions contemplated hereby shall
survive the Initial Funding and any investigation at any
time made or any knowledge received by or on behalf of a
Party (unless, with respect to a material breach of a
representation under Article 12, such Party had, as of the
date of this Agreement, actual knowledge of such material
breach and all necessary information to conclude that such
material breach existed and, Section 15.2 will not apply to
the extent of any claims in connection with such a material
breach); provided, however, that in the case of a claim for
indemnification arising under only Section 15.2(a), no Party
shall have any liability unless it receives notice on or
before the first anniversary of the date of the Initial
Funding asserting a claim with respect thereto and
specifying the factual basis of such claim in reasonable
detail, to the extent known.
15.2. Each Party shall indemnify and hold harmless the
other and the EJV against all damage, loss, liability,
diminution of value or expense, including, without
limitation, reasonable attorneys' fees and costs relating
thereto, suffered or incurred by the other Party or the EJV
arising from or in connection with:
(a) any misrepresentation or breach of
representation or warranty by the indemnifying Party of any
representation or warranty set forth in this Agreement or in
any exhibit, schedule, certificate, list or other instrument
delivered pursuant hereto;
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(b) any breach or nonfulfillment by the
indemnifying Party of any covenant, agreement or other
obligation set forth in this Agreement or in any exhibit,
schedule, certificate, list or other instrument delivered
pursuant hereto; and
(c) any claim, lawsuit or proceeding that arises
out of, or is attributable or relates to, the business
conducted by the indemnifying Party on or prior to the
Initial Funding.
15.3. Each Party shall indemnify and hold harmless
the other from and against all loss, liability, damage or
expense (including reasonable attorneys' fees) in connection
with any claim by any Person for brokers' or finders' fees
or commissions or similar payments and related expenses
based on any agreement or understanding alleged to have been
made with respect to the transactions contemplated hereby by
such Person with the indemnifying Party.
15.4. PSI shall indemnify TCG and its Affiliates and
representatives against any liabilities or expenses arising
out of any claim or action instituted by or on behalf of any
shareholder of PSI with respect to the transactions
contemplated by this Agreement, except to the extent arising
out of a breach by TCG of this Agreement or due to its bad
faith, gross negligence or willful misconduct.
15.5. The Party seeking indemnification shall notify the
Party against whom indemnification is sought promptly of any
claim by any third party coming to its attention that may
result in any liability hereunder on the other Party's part,
and the indemnifying Party shall be entitled at its own
expense to conduct the defense of any such third-party claim
with counsel of its own choosing, subject to approval by the
Party seeking indemnification which approval shall not be
unreasonably withheld, and shall be entitled to participate
in such defense with counsel of its own choosing and at its
own expense; provided, however, that control of the defense
will remain with counsel for the indemnifying Party if the
indemnifying Party has acknowledged unequivocally in writing
its obligation to indemnify the other Party in regard to the
claims to be defended against. Failure to give notice as
provided herein shall not relieve the indemnifying Party of
its obligations hereunder, except to the extent that the
defense of any claim is prejudiced by such failure to give
notice. The indemnifying Party shall have the right to
compromise or settle for money damages only any claim giving
rise to an obligation for indemnification hereunder; any
claim compromised or settled by the indemnified Party shall
not be subject to indemnification hereunder.
21
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filed separately with the Securities and Exchange Commission
Article 16. Force Majeure
16.1. The failure or delay of either Party hereto
to perform any obligation under this Agreement solely by
reason of acts of God, acts of government (except as
otherwise enumerated herein), riots, wars, embargoes,
strikes, lockouts, accidents in transportation, port
congestion or other causes beyond its control ("Force
Majeure") shall not be deemed to be a breach of this
Agreement; provided, however, that the Party so prevented
from complying herewith shall have used reasonable diligence
to avoid such event of Force Majeure and mitigate its
effects, and shall continue to take all actions within its
power to comply as fully as possible with the terms of this
Agreement.
16.2. Except where the nature of the event shall
prevent it from doing so, the Party suffering such Force
Majeure shall notify the other Party in writing within 14
days after the occurrence of such event of Force Majeure
and shall in every instance, to the extent reasonable and
lawful under the circumstances, use its best efforts to
remove or remedy such cause with all reasonable dispatch.
Article 17. Disclaimer of Agency and Partnership
This Agreement shall not be deemed to constitute any
Party the agent or partner of the other Party, nor shall it
constitute the EJV an agent of either Party, and no Party
shall have the right to bind the other.
Article 18. Dispute Resolution and Governing Law
18.1. If any controversy or claim arises out of or
relates to this Agreement or with respect to an alleged
breach of the terms hereof, the Parties shall seek to solve
the matter amicably through discussions between themselves.
The Parties shall attempt to resolve all controversies,
claims or breaches at the operational level, and in the
event a resolution cannot be reached, such controversy,
claim or breach will be referred progressively to higher
levels within each Party, to their respective boards of
directors, and finally to the chairpersons of PSI and TCG.
If the Parties fail to resolve such controversy, claim or
breach within thirty (30) days by amicable arrangement and
compromise, either Party may seek arbitration as set forth
below.
18.2. Any controversy or claim arising out of or in
relation to this Agreement, or breach of this Agreement,
shall be finally settled by arbitration in London, England.
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(a) The arbitration shall be conducted in the
English language before a single arbitrator in accordance
with the Rules of Arbitration and Conciliation of the
International Chamber of Commerce then in effect.
(b) The Parties shall appoint the arbitrator by
mutual agreement. If the parties cannot agree on the
appointment of the arbitrator within thirty (30) days after
receipt of a demand for arbitration, the arbitrator shall be
appointed by the International Chamber of Commerce.
(c) All arbitration rulings and awards shall be
final and binding on the parties and shall be enforceable in
accordance with the convention on the Recognition and
Enforcement of Foreign Arbitral Awards.
(d) Notwithstanding any other provision of this
Agreement, either party shall be entitled to seek
preliminary injunctive relief from any court of competent
jurisdiction pending the final decision or award of the
arbitrators..
18.3. The validity, performance, construction and
effect of this Agreement shall be governed by the laws of
the state of New York, without regard to principles of
conflicts of law.
Article 19. Amendment; Assignment
No modification or alteration of any term or condition
of this Agreement will be valid unless in writing signed by
each Party. This Agreement and each and every covenant,
term and condition hereof shall be binding upon and inure to
the benefit of the Parties and their successors and
permitted assigns. Subject to Article 6, neither Party
shall directly or indirectly assign its rights or delegate
its obligations hereunder without the prior written consent
of the other Party; provided, however, that PSI may assign
its rights but not its obligations hereunder to any wholly
owned subsidiary of PSI reasonably acceptable to TCG, and
either Party may assign its rights and delegate its
obligations hereunder to any of its Affiliates, with the
consent of the other Party (which consent will not
unreasonably be withheld) in each case so long as such
transferee agrees to be bound by the terms and conditions of
this Agreement and any related agreements, including but not
limited to the License Agreement and the Services Agreement.
Article 20. Costs
The Parties shall each pay their own legal and other
costs incurred in documenting and executing this
Agreement---------------------------------------------------
------------------------------------------------------------
-----------
23
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filed separately with the Securities and Exchange Commission
---------------------------------------------- The EJV
will reimburse each Party for any legal fees and expenses
incurred in preparing the documentation, registrations and
formation of the EJV.
Article 21. Confidentiality
21.1. Except as otherwise agreed by the Parties in
writing, the Parties agree that, at all times during the
term of this Agreement and for a two-year period following
termination or expiration hereof, the Party receiving
information (the "Receiving Party") shall keep completely
confidential, shall not publish or otherwise disclose and
shall not use, directly or indirectly, for any purpose any
information furnished to it by the other Party (the
"Disclosing Party") pursuant to this Agreement or otherwise
relating to any transaction contemplated hereby, except to
the extent that the Receiving Party can establish by
competent proof that such information
(a) was already known to the Receiving Party,
other than under an obligation of confidentiality, at the
time of disclosure by the Disclosing Party;
(b) was part of the public domain at the time of
its disclosure by the Disclosing Party;
(c) became part of the public domain after its
disclosure by the Disclosing Party, other than through any
act or omission of the Receiving Party in breach of this
Agreement;
(d) was disclosed to the Receiving Party by a
third party who had no obligation not to disclose such
information to others; or
(e) has been disclosed by the Disclosing Party to
any third party without an obligation not to disclose such
information to others.
21.2. Each Party may disclose the others Party's
information to the extent that such disclosure is reasonably
necessary in filing or prosecuting patent applications,
pursuing or defending litigation, or complying with
applicable law or governmental or stock exchange
regulations; provided, however, that, if a Receiving Party
intends to make any such disclosure, it shall give
reasonable advance written notice to the Disclosing Party of
such intention. Furthermore, nothing in this Article 21
shall be construed to preclude either Party from disclosing
such information to third parties as may be necessary in
connection with the transactions contemplated by this
Agreement; provided, however, that the Receiving Party shall
in each case obtain from the proposed third-party recipient
a written confidentiality undertaking containing
confidentiality obligations no less onerous than those set
forth in this Article 21.
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filed separately with the Securities and Exchange Commission
Article 22. Notices
22.1 All written notices, requests, demands and other
communications under this Agreement or in connection
herewith shall be given by letter (delivered by hand, by air
courier, or by registered airmail) or by facsimile or e-mail
transmission confirmed by such a letter, and addressed to
the respective Parties as follows:
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filed separately with the Securities and Exchange Commission
To TCG or the TCG Designee:
Chatterjee Management Company
000 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: W. Xxxxx Xxxx
Internet e-mail address: xxx@xxxxx.xxx
Facsimile No.: 000-000-0000
with copies to: Chatterjee Management Company
000 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and: Xxxxx Fund Management
000 0xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx, Esq.
Facsimile No.: 000-000-0000
and: Xxxxxxx Coie
One Bellevue Center, Suite 1800
000 - 000xx Xxxxxx X.X.
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Internet e-mail address:
xxxxx@xxxxxxxxxxx.xxx
Facsimile No.: (000) 000-0000
To PSI: PSINet, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000 XXX
Attention: Xxxxxxx X. Xxxxxxxx
Internet e-mail address: xxx@xxx.xxx
Facsimile No: 000-000-0000
with a copy to: PSINet, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000 XXX
Attention: Xxxxx Xxxxxx, Esq.
Internet e-mail address: xxxxxx@xxx.xxx
Facsimile No.: 000-000-0000
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22.2. A Party may change its notice information at
any time by written notice to the other Party.
Article 23. Press Releases
Each Party shall not, and shall cause their Affiliates
not to, make publicly available any press release,
promotional material or similar public statement naming or
otherwise identifying the other Party or any of its
Affiliates without such other Partys prior consent, which
consent will not unreasonably be withheld. Each Party and
any of their respective Affiliates shall provide the other
Party, as early as reasonably practicable, drafts of all
press releases that include references to such other Party
or any of its Affiliates, and shall consider and use
reasonable efforts to incorporate into all such press
releases any comments provided by such other Party in a
reasonably timely manner.
Article 24. No Waiver
The waiver by a Party of a breach or a failure to
assert a breach by the other Party of any covenant,
obligation or provision in this Agreement (contained or
implied) does not operate as a waiver of another or
continuing breach or failure to assert a breach by the other
Party of the same or any other covenant, obligation or
provision in this Agreement contained or implied.
Article 25. Severance
If any one or more of the provisions contained in this
Agreement shall be invalid, illegal or unenforceable in any
respect under any applicable law, then the validity,
legality and enforceability of the remaining provisions
contained in this Agreement shall not in any way be affected
or impaired, and in such case, the parties agree to use
their best efforts to achieve the purpose of the invalid
provision by a new, legally valid provision.
Article 26. Counterparts
This Agreement may be executed in two counterparts,
each of which shall be deemed an original.
Article 27. Government Approval
27.1. TCG shall provide reasonable cooperation
(e.g., furnishing reasonable background or contact
information) with the efforts of PSI or the EJV to obtain
any Government Approval.
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27.2. TCG shall provide reasonable cooperation (e.g.,
furnishing reasonable background or contact information)
with the efforts of PSI and the EJV in obtaining, after the
date of the Initial Funding, any further Government Approval
of this Agreement or of any amendment hereto as required
under the laws or regulations of any jurisdiction in which
the EJV shall desire to conduct business.
Article 28. Further Assurances
Each Party shall duly execute and deliver, or cause to
be duly executed and delivered, such further instruments and
do, or cause to be done, such further acts and things,
including, without limitation, the filing of such
assignments, agreements, documents and instruments, as may
be necessary or as the other Party may reasonably request in
connection with this Agreement or to carry out more
effectively the provisions and purposes hereof, or to better
assure and confirm to such other Party its rights and
remedies under this Agreement.
Article 29. Entire Agreement
This Agreement supersedes all previous representations,
understandings or agreements, oral or written, between the
Parties with respect to the subject matter hereof, and,
together with the agreements and documents attached hereto
as exhibits, contains the entire understanding of the
Parties as to the terms and conditions of their
relationship.
28
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by a representative thereunto
duly authorized as of the date first set forth above.
PSINET INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President and General Counsel
CHATTERJEE MANAGEMENT COMPANY
By /s/ Xxxxx Xxxx
--------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
29
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
Exhibit A
DECISIONS REQUIRING THE CONSENT OF THE TCG
DIRECTORS OR THE TCG DESIGNEE
[Shareholder vs. Director Consent to Be
Determined by Local Law]
RELATING TO THE EJV:
Approval of and changes to the annual business
plan, annual budgets and appropriate disbursement
milestones for each country.
Approval of any expenditures for operations or any
disposition of assets in excess of ----------------
(individually or in the aggregate) that are not included in
an approved budget.
Approval of any business activities that are outside
the scope of the approved business plan and the Intended
Business. Intended Business means the Internet- and
intranet-connectivity services and Software business
described in (i)the PSI presentation to TCG in September
1996, (ii)PSI's public filings with the SEC and (iii)all
business activities of PSI in the United States, in each
case as such businesses may be reasonably expanded or
enhanced in the ordinary course of business.
Merger, sale or disposition of all or substantially
all of the EJV's assets.
Any acquisition of another company or business
(whether through merger, asset purchase, acquisition of
stock or otherwise).
Issuance of any equity or debt securities, any
securities convertible into equity or debt securities, or
any warrants or options in respect of such securities other
than pro rata issuances of equity securities to the
original Securityholders in excess of a pool of equity
securities approved by the Board, including the TCG
Directors, for employee incentive compensation.
Any indebtedness or guarantee of any amount in excess
of ---------------- (individually or in the aggregate) by
the EJV not provided for in an approved annual budget, or
the creation of any material Lien over the whole or any
part of the assets of the EJV.
A-1
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
Appointment, termination or replacement of the EJV's
Chief Executive Officer, President, General Manager, Chief
Operating Officer, Chief Technical Officer or other
individuals with comparable management responsibilities.
Appointment, termination or replacement of the auditor
of the EJV.
Amendment of the EJV's organization documents.
Termination or amendment of the License Agreement or
the Services Agreement.
Transactions between the EJV and the Securityholders
or their Affiliates.
Initiation or settlement of legal actions or
arbitration proceedings, unless the relief sought or to be
agreed upon is a monetary remedy of less than
----------------.
Payment of any dividend or other form of distribution
by the EJV in cash or otherwise.
Making any loan or forgiving any debt or claim other
than in the ordinary course of business.
The winding-up of the EJV or the appointment of an
examiner.
A-2
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
RELATING TO PSI UK:
1. Approval of any material business activities that
are significantly outside the scope of the Intended
Business.
2. Merger, sale or disposition of all or
substantially all of PSI UK's assets.
3. Issuance by PSI UK of any equity or debt
securities, any securities convertible into equity or debt
securities, or any warrants or options in respect of such
securities other than (i) common stock issued to PSI or
(ii) from a pool of equity securities approved by TCG for
employee incentive compensation.
4. Any material indebtedness or guarantee by PSI UK
not provided for in an approved annual budget or the
creation of any Lien over the whole or any part of the
assets of PSI UK.
5. Amendment to PSI UK's organizational documents.
6. Transactions between PSI UK and PSI or any of its
Affiliates in excess of --------------- in the aggregate.
7. Payment of any dividend or other form of
distribution (other than payments for services under
------------ in the aggregate or approved under item 6,
above) by PSI UK, in cash or otherwise, except, to the
extent permissible, in connection with incentive
compensation plans approved by TCG (except PSI UKs
repayment of loans from PSI to PSI UK that have been
disclosed to TCG as of the date of this Agreement).
8. Making any material loan or forgiving any
material debt or claim, other than in the ordinary course
of business.
9. The winding-up of PSI UK or the appointment of an
examiner.
A-3
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
Exhibit B
TERMS OF SERVICES AGREEMENT
Prior to the Initial Funding, PSI will enter into and
the Parties will cause the EJV to enter into a written
services agreement in a form approved by the Parties (the
"Services Agreement"), the key terms of which are set forth
in the draft Business Services Agreement attached hereto as
Exhibit B-1, modified as set forth below:
1. During the term of the Services Agreement,
PSI will provide to the EJV such services as are reasonably
requested by the EJV to fully design, deploy and operate
the network, when and as reasonably requested by the EJV.
PSI represents that the services to be provided by PSI are
all the material items required for the EJV to commence and
operate business in Europe in a manner consistent with the
Intended Business and PSIs other operations.
2. The Services Agreement will include, to the
reasonable satisfaction of the EJV, (a) a listing of PSI
personnel that the parties anticipate will be required for
the performance of the services during the first year of
the term of the Services Agreement and (b) a resource
allocation plan under which PSI furnishes to the EJV a
reasonable commitment regarding the personnel and other
resources that PSI will make available to the EJV under the
Services Agreement; provided that in no event will PSI
place the performance of the services at a priority or
resource allocation that is lower than the priority and
resource allocation for other PSI operations.
3. In providing the services under the Services
Agreement, PSI shall be entitled to use its own personnel
and equipment, or, where it considers it necessary, PSI may
hire, rent or purchase personnel or equipment of third
parties or employ on a temporary or continuing basis
third-party engineers, computer programmers, consultants
and others on such terms as it deems appropriate and
advisable; provided, however, that PSI shall (except in the
matters of a minor nature) first obtain the consent of the
EJV.
4. In general, the parties anticipate that PSI
will have primary responsibility for the design,
configuration and technical management of the Network. PSI
shall consult with the EJV prior to making any material
decisions on the design, configuration and technical
management of the Network, and shall not unreasonably
reject any advice or recommendations made by the EJV with
respect to such design, configuration and technical
management; provided, however, that PSI shall not be
required to take any action that would adversely affect the
global operation of the PSI
B-1
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
Net. In all matters arising under the Services Agreement,
PSI shall conform to and carry out policy decisions and
directions and observe overall guidelines as the Board (or
its designees) may from time to time make or lay down.
5. PSI will commence, perform and complete its
obligations under this Agreement in accordance with the
schedules set forth in implementation plans agreed upon
from time to time by the Parties. PSI will perform with
diligence any obligation under the Services Agreement for
which no schedule is agreed upon by the Parties.
6. PSI will submit to the EJV, upon request but
not less frequently than once each month, written reports
regarding the status of the services, which reports shall
describe, among other things, (a)the progress in
developing, installing, implementing and supporting the
Network, (b)delays encountered or anticipated by PSI with
respect to such services and the action being taken to
recover from such delays; (c)recommendations or proposals
for revision of the then-current implementation plan; and
(d)other matters pertaining to the development,
installation, implementation and support of the Network.
If any services depend upon any hardware, software,
services or other items to be provided by the EJV or
others, PSI will promptly notify the EJV of any defects,
deficiencies or other aspect of any such item that render
it unsuitable for performance of the services in accordance
with the Services Agreement.
7. PSI will prepare and deliver to the EJV a
complete set of all documentation or similar materials
required for the EJV to effectively inspect, test, use,
operate, maintain and service the System.
8. In lieu of the "PSI Net Fees" payable under
the draft Business Services Agreement, the EJV will pay PSI
for the services at
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B-2
The symbol "--" indicates that a confidential portion has been omitted and
filed separately with the Securities and Exchange Commission
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9. The relationship of PSI to the EJV under the
Services Agreement shall be that of independent contractor,
and the Services Agreement shall not create or constitute
any form of joint venture, partnership, agent/principal or
other relationship between PSI and the EJV.
10. Invoices for the services and other
transactions between PSI and the EJV may be audited by an
auditor normally retained by the EJV.
11. Neither party to the Services Agreement
shall be entitled to terminate the Services Agreement in
the absence of a material breach of the Services Agreement
or this Agreement by the other party thereto.
12. The provisions in the draft Business
Services Agreement regarding Trans-Border Sales will be
reviewed and, to the extent appropriate, modified to
reflect a reasonable allocation with respect to any sales
or services in which the EJV or any subsidiaries of the EJV
or LJVs are both the host and sales office.
13. The Services Agreement shall contain such
other representations, warranties, covenants (including,
but not limited to, covenants by PSI relating to
exclusivity and noncompetition in Europe),
indemnifications, confidentiality provisions, agreements
and conditions as are customary in a transaction of this
type.
B-3
