LETTER AGREEMENT
September 27, 1999
Worldwide Fiber Inc.
1520 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Worldwide Fiber (F.O.T.S.) No.3, Ltd.
1520 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
Dear Sirs/Mesdames:
Re: Transfer for Fiber from Ledcor to WFI
Reference is made to the Amended and Restated Share Purchase Agreement
dated as of September 7, 1999 (the "Share Purchase Agreement") between Ledcor
Industries Limited ("LIL"), Ledcor Industries Inc.("LII", and together with LIL,
"Ledcor") and Worldwide Fiber Inc. ("WFI") and the Asset Purchase Agreement
dated as of September 27, 1999 (the "Asset Purchase Agreement") between LIL, LII
and Worldwide Fiber (F.O.T.S.) No. 3, Ltd. ("Newco").
For the purposes of this letter agreement, all other capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Share
Purchase Agreement.
Ledcor, Newco and WFI have agreed to amend certain items of the Share
Purchase Agreement and the Asset Purchase Agreement in order to take advantage
of certain tax planning and other opportunities not contemplated in the
agreements and to confirm the parties understanding with respect to access to
the Marine Strands (as defined herein).
In connection with the foregoing, Ledcor, Newco and WFI have agreed as
follows:
1. With respect to the Share Purchase Agreement, the parties hereto agree
as follows:
(a) LIL and LII hereby authorize and direct WFI to issue 4,500,000 WFI
Shares to LIL on the Share Closing, rather than to the Sellers as
stated in Section 3.1;
(b) the representation of Ledcor contained in Section 4.1(f) is hereby
amended to read as follows:
-2-
"(f) Status of Newco Shares. Subsequent to the Roll-In Transaction and
immediately prior to the Share Closing the Newco Shares shall be
issued in the name of Ledcor Industries Limited as the registered
and beneficial owner thereof with good and marketable title
thereto, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances or other claims
whatsoever, other than rights in favour of the Purchaser pursuant
to this Share Purchase Agreement; each of the Sellers has the
right, power and authority to enter into this Agreement and
Ledcor Industries Limited has the right, power and authority to
sell all the Newco Shares on the Share Closing, and the delivery
of such Newco Shares by Ledcor Industries Limited to the
Purchaser pursuant to the provisions hereof will transfer to the
Purchaser valid title thereto, free and clear of all
Encumbrances."
2. With respect to the Asset Purchase Agreement, the parties hereto agree
as follows:
(a) The Purchase Price shall be allocated as agreed between Newco, LIL and
LII, within 20 days of the date hereof :
The value of the assumed commitment in the Build Agreements to supply
12 fiber strands between Portland and Los Angeles to fONOROLA (the
"Portland-Los Angeles Build Obligation") shall be US$30,000,000.
Ledcor and Newco, in filing their respective Canadian and United
States income tax returns, will use the allocations of the Purchase
Price and the value of the Portland-Los Angeles Build Operation as set
forth above.
(b) LIL and Newco will each execute a GST closely related corporation
election under the Excise Tax Act (Canada) with respect to the sale
and purchase of the Fiber Assets.
(c) LIL and Newco will, if requested in writing by either LIL or Newco,
each execute an election under section 22 of the Income Tax Act
(Canada) as to the sale of any accounts receivable of LIL purchased
under the Asset Purchase Agreement, will designate therein the
applicable portion of the Purchase Price as the consideration paid by
Newco there-
-3-
for and will each file such election with Revenue Canada forthwith
after the Closing Date.
(d) LIL and LII hereby authorize and direct Newco to issue one (1) share
certificate representing 000 Xxxxx Xxxxxx Shares to LIL rather than to
Ledcor as stated in Section 4.
(e) Section 1.1(c) is hereby amended to read as follows:
"(c) "Assumed Contracts" means those agreements which are specified in
Exhibit 2 to this Agreement together with the Build Agreements;"
(f) Notwithstanding the definition of Fiber Assets as found in Section
1.1(h) of the Asset Purchase Agreement, neither the Fiber Assets nor
the Purchased Strands (including for the purposes of the Assignment
and Assumption Agreements) shall include the fiber optic strands which
are part of an underwater cable in the marine build identified in
Exhibit 1 to the Asset Purchase Agreement as
"Vancouver-Victoria-Seattle (Marine)" (the "Marine Strands") or any
Underlying Rights for the Marine Strands. As a result, the reference
to the Marine Strands in Exhibit 1 to the Asset Purchase Agreement is
hereby deleted. The parties further agree that Section 2 is hereby
amended to read as follows:
"2. Purchase and Sale
On Closing Ledcor shall transfer to Newco the Fiber Assets free
and clear of all liens, charges and encumbrances save for the
Permitted Encumbrances and grant indefeasible rights of use ("IRU's")
to Newco in respect of the submarine strands (the "Marine Strands")
that connect the terrestrial portions of the fiber optic network from
Vancouver, B.C. to Victoria, B.C. to Seattle, Washington which
terrestrial strands are identified on Exhibit 1 attached hereto and
Newco shall purchase such Fiber Assets and IRU's for an aggregate
purchase price of $75,000,000 (U.S.) in accordance with the terms and
conditions set out in this Purchase Agreement."
(g) With respect to Section 10.1(a), (i) LIL shall execute and deliver a
Xxxx of Sale for the Purchased Strands (as such term is amended by
paragraph (e) above) located in Canada as identified by the parties in
a schedule attached to such Xxxx of Sale; and (ii) LII and LIL shall
execute
-4-
and deliver a Xxxx of Sale for the Purchased Strands (as such term is
amended by paragraph (e) above) located in the United States as
identified by the parties in a schedule attached to such Xxxx of Sale.
(h) With respect to Section 10.1(a), (i) LIL shall execute and deliver an
Assignment and Assumption Agreement for the Assumed Contracts relating
to the Fiber Assets (as such term is amended by paragraph (e) above)
in Canada as identified by the parties in a schedule attached to such
Assignment and Assumption Agreement; and (ii) LII shall execute and
deliver an Assignment and Assumption Agreement for the Assumed
Contracts relating to the Fiber Assets (as such term is amended by
paragraph (e) above) in the United States as identified by the parties
in a schedule attached to such Assignment and Assumption Agreement.
(i) The certificates referred to in Section 10.1(c) and Section 10.2(c)
are not required to be delivered as the Asset Purchase Agreement is
dated the day of Closing.
(j) On Closing, (i) LIL shall execute and deliver an IRU with respect to
the Marine Strands located in Canada as identified by the parties in a
schedule attached to such IRU; and (ii) LII and LIL shall execute and
deliver an IRU with respect to the Marine Strands located in the
United States as identified by the parties in a schedule attached to
such IRU. Such IRU's shall provide for the ultimate transfer of the
Marine Strands to Newco, an option to acquire the Marine Strands at
any time subject to certain indemnification obligations of Newco, and
the granting of a collateral security interest in the Marine Strands
only to secure such option rights. As required by Section 7.1(b) of
the Share Purchase Agreement, WFI hereby consents to the granting of
such security interest and related registrations. If requested by
Newco, acting reasonably, LIL and LII shall grant a separate security
agreement, in a form acceptable to LIL and LII, acting reasonably, to
Newco to grant a security interest in the assets described in the
IRU's as being the collateral, and shall execute and deliver such
additional documents, instruments and other assurances as may be
reasonably requested by Newco, in forms acceptable to LIL and LII,
acting reasonably.
(k) Notwithstanding Section 9, Ledcor shall cause the tangible Fiber
Assets to be adequately insured up to day on which WFI obtains
insurance policies (the "Replacement Policies") with respect to the
tangible Fiber Assets. WFI agrees to obtain the Replacement Policies
as soon as rea-
-5-
sonably practicable after Closing but in no event later than 90 days
after Closing after which time Ledcor may cancel its policies (the
"Policies") as they relate to the tangible Fiber Assets. WFI agrees to
reimburse Ledcor for any premiums incurred by Ledcor under the
Policies allocated to the tangible Fiber Assets for the period
following Closing until WFI obtains the Replacement Policies or Ledcor
cancels the Policies in accordance herewith, which ever is earlier.
(l) As required by Exhibit 4 of the Asset Purchase Agreement, WFI confirms
that it has consented to the terms of the restrictions on transfer of
the Newco Common Shares which are contained in the constating
documents of Newco, copies of which WFI acknowledges having received
and reviewed.
3. Pursuant to the terms of the Asset Purchase Agreement, (a) LIL hereby
transfers to Newco any and all beneficial interests it holds in the land in
Rocky Inlet (Ontario) and Pefferlaw (Ontario), and (b) LII and LIL hereby
transfer to Newco any and all beneficial interests held by them in the land at
Point Xxxxxxx (State of Washington) and Whidbey Island (State of Washington),
for the purposes of installing certain communications shelters forming part of
the Fiber Assets. Each of LII and LIL covenants to execute and deliver such
additional conveyances, transfers and other assurances as may be reasonably
required by Newco after Closing to transfer any and all legal interest in such
land to Newco.
4. Ledcor undertakes and agrees with Newco that all warranties and
guarantees from material suppliers, equipment makers or subcontractors are
hereby extended to include Newco as a beneficiary thereof (as may be permitted
by such underlying agreements) to the extent of Newco's interest in the Fiber
Assets.
5. Newco further agrees that in order to assist LIL and LII to preserve any
remedy, right or defence which LIL or LII could have sought, asserted or claimed
as a party to an Assumed Contract, Newco shall comply with any reasonable
request made by LIL or LII in the furtherance of the seeking of such a remedy,
assertion of such a right or claiming of such a defence and, at LIL's or LII's,
as the case may be, expense, Newco shall cooperate with LIL or LII in the
enforcement of such a remedy or right. Notwithstanding the foregoing, Newco
shall not be obligated to perform any act which would materially prejudice
Newco.
6. Except as amended hereby, the parties confirm and agree that the Share
Purchase Agreement and the Asset Purchase Agreement continue in full force and
effect.
7. This letter agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia and the laws of Canada
applicable therein.
-6-
8. This letter agreement, the Share Purchase Agreement and the Asset
Purchase Agreement, along with the other agreements and documents referred to
herein and therein, constitute the entire agreement between the parties with
respect to the subject matter hereof. If there is any conflict or inconsistency
between the provisions of this letter agreement and the provisions of the Share
Purchase Agreement and the Asset Purchase Agreement, the rights and obligations
of the parties shall be governed by the provisions of this letter agreement. No
amendment or variation of this letter agreement shall be valid or binding unless
set forth in writing duly executed by the parties hereto.
9. Save as specifically provided in the Share Purchase Agreement with
respect to Newco designating affiliates who may acquire all or some of the Fiber
Assets, neither party may assign their rights or obligations pursuant to this
letter agreement without the prior written consent of the other, not to be
unreasonably withheld or delayed. This letter agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective
administrators, successors and permitted assigns.
10. From time to time subsequent to the date hereof the parties shall
execute and deliver such additional conveyances, transfers and other assurances
as may be reasonably required to carry out the intent and effect of this letter
agreement.
11. This letter agreement and any amendment, supplement, restatement or
termination of any provision of this letter agreement may be executed and
delivered in any number of counterparts, each of which when executed and
delivered is an original but all of which taken together constitute one and the
same instrument.
12. This letter agreement may be executed by facsimile and the facsimile
execution pages will be binding upon the executing party to the same extent as
the original executed pages. The executing party covenants to provide originals
of the facsimile execution pages for insertion into the original letter
agreement in place of the facsimile pages.
If you are in agreement with the terms and conditions contained herein, it
would be appreciated if you would execute a copy of this letter agreement in the
space provided below and return a copy to us.
Yours very truly,
LEDCOR INDUSTRIES LIMITED
Per:
-------------------------------------
LEDCOR INDUSTRIES INC.
Per:
-------------------------------------
-7-
Each of the undersigned accepts the terms and conditions set forth above
and agrees to act in accordance with the terms of this letter agreement with
effect from the date noted below.
Dated this 27th day of September, 1999.
WORLDWIDE FIBER INC.
Per:
-------------------------------------
WORLDWIDE FIBER (F.O.T.S.) NO. 3, LTD.
Per:
-------------------------------------
