Document:

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                                                                   EXHIBIT 4.31

                           GENERAL SECURITY AGREEMENT

THIS SECURITY AGREEMENT is made as of the 22th day of April, 2001,

BETWEEN:

          WORLDWIDE FIBER HOLDINGS LTD., an Alberta Corporation,

          1000 - 1066 West Hastings Street
          Vancouver, B.C.  V6E 3X1

          (the "Debtor")

AND:

          360FINANCE LTD., an Alberta Corporation,
          1500 - 1066 West Hastings Street
          Vancouver, B.C.  V6E 3X1

          (the "Secured Party')

1.        SECURITY INTEREST

1.1       For consideration the Debtor does hereby:

     (a)  mortgage, pledge and charge as and by way of a fixed and specific
          mortgage, pledge and charge, and assign and transfer to the Secured
          Party, and grant to the Secured Party a security interest in, all
          the Debtor's right, title and interest in and to all its presently
          owned or held and after acquired or held personal property, of
          whatever nature or kind and wheresoever situate, and all proceeds
          thereof and therefrom including:

          (i)    all equipment, including, without limiting the generality of
                 the foregoing, machinery, tools, fixtures, furniture,
                 furnishings, chattels, motor vehicles and other tangible
                 personal property that is not Inventory, and all parts,
                 components, attachments, accessories, accessions,
                 replacements, substitutions, additions and improvements to
                 any of the foregoing (all of which is hereinafter collectively
                 called the "Equipment");

          (ii)   all inventory, including, without limiting the generality of
                 the foregoing, goods acquired or held for sale or lease or
                 furnished or to be furnished under contracts of rental or
                 service, all raw materials, work in process, finished goods,
                 returned goods, repossessed goods, and all packaging materials,
                 supplies and containers relating to or used or consumed in
                 connection with any of the foregoing (all of which is
                 hereinafter collectively called the "Inventory");

          (iii)  all debts, accounts, claims, demands, monies and choses in
                 action which now are, or which may at any time hereafter be,
                 due or owing to or owned by the Debtor and all books, records,
                 documents, papers and electronically recorded data recording,
                 evidencing or relating to the said debts, accounts, claims,
                 demands, monies and choses in action or any part thereof (all
                 of which is hereinafter collectively called the "Accounts");

          (iv)   all documents of title, chattel paper, instruments, securities
                 and money, and all other goods of the Debtor that are not
                 Equipment, Inventory or Accounts;
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          (v)    all contractual rights, licenses, goodwill, patents,
                 trademarks, trade names, copyrights and other intellectual
                 property of the Debtor, all other choses in action of the
                 Debtor of every kind which now are, or which may at any time
                 hereafter be, due or owing to or owned by the Debtor, and
                 all other intangible property of the Debtor which is not
                 Accounts, chattel paper, instruments, documents of title,
                 securities or money;

          (vi)   without limiting the generality of the foregoing, the personal
                 property described in Schedule A hereto (except for the
                 personal property described in Section 2.2); and

     (b)  charge as and by way of a floating charge, and grant to the Secured
          Party a security interest in and to:

          (i)    all the Debtor's right, title and interest in and to all its
                 presently owned or held and after acquired or held real,
                 immovable and leasehold property and all interests therein,
                 and all easements, right-of-way, privileges, benefits,
                 licenses, improvements and rights whether connected therewith
                 or appurtenant thereto or separately owned or held, including
                 all structures, plant and other fixtures (all which is
                 hereinafter collectively called the "Real Property"); and

          (ii)   all assets and undertaking of the Debtor, of whatsoever
                 nature or kind and wheresoever situate, and all proceeds
                 thereof and therefrom, other than such of its assets and
                 undertakings as are otherwise validly and effectively subject
                 to the charges and security interests in favour of the
                 Secured Party created pursuant to this Clause 1.1.

1.2       The charges, assignments and transfers and security interests
created pursuant to Clause 1.1 are hereinafter collectively called the
"Security Interests", and the property subject to the Security Interests and
all property, assets and undertakings expressed to be charged, assigned or
transferred or secured by any instruments supplemental hereto or in
implementation hereof are hereinafter collectively called the "Collateral".

2.        EXCEPTIONS

2.1       The last 10 days of term created by any lease of property or
agreement therefor are hereby excepted out of any charge or security interest
created by this Security Agreement but the Debtor shall stand possessed of
the reversion thereby remaining upon trust to assign and dispose thereof to
any third party as the Secured Party shall direct.

2.2       Any shares of Urbanlink Holdings Ltd. or WFI Urbanlink Ltd. now
owned or hereafter acquired by the Debtor are hereby excepted out of any
charge or security interest created by this Security Agreement.

3.        ATTACHMENT

3.1       Subject to Clause 3.2, the Debtor acknowledges that the Security
Interests hereby created attach upon the execution of this Security Agreement
(or in the case of any after acquired property, upon the date of acquisition
thereof), that value has been given, and that the Debtor has (or in the case
of any after acquired property, will have upon the date of acquisition)
rights in the Collateral.

3.2       The Security Interests shall not attach to any shares of the
Company that are subject to the terms and conditions of a Lock-Up Agreement
dated April 19, 2000 by the Debtor in favour of Goldman, Sachs & Company, and
others (the "Lock-Up Agreement"), but only to the extent that any such
Security Interest would have

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the effect of causing the Debtor to be in breach of the terms of such Lock-Up
Agreement, provided however that for greater clarity, the Security Interests
shall attach to such shares on the earlier of the time that:

          (i)    the consents thereto of the underwriters and the Company under
                 the Lock-Up Agreement have been obtained, or

          (ii)   the Lock-Up Agreement has terminated.

4.        PROHIBITIONS

          Without the prior written consent of the Secured Party, or except
as otherwise provided herein, the Debtor shall not have power to:

     (a)  create or permit to exist any security interest in, charge,
          encumbrance or lien over, or claim against any of its property,
          assets, or undertakings; or

     (b)  grant, sell, or otherwise assign any of its property, assets or
          undertaking.

5.        OBLIGATIONS SECURED

          This Security Agreement and the Security Interests hereby created
are in addition to and not in substitution for any other security interest
now or hereafter held by the Secured Party from the Debtor or from any other
person whomsoever and shall be general and continuing security for the
payment of all principal and interest payable by the Debtor pursuant to this
Security Agreement, the Promissory Note, and all other agreements
contemplated hereunder, and for the performance of all obligations of the
Debtor to the Secured Party contained in this Security Agreement, the
Promissory Note, and all other agreements contemplated hereunder (all of
which indebtedness, liability and obligations are hereinafter collectively
called the "Obligations").

6.        OBLIGATIONS TO REPAY

6.1       The Debtor shall pay to the Secured Party on account of the
Obligations an amount equal to:

     (a)  the Net After-Tax Proceeds of any payments made to the Debtor from
          the Ledcor Limited Partnership ("LLP") including, without
          limitation, any distribution pursuant to section 8.5 (d) (i) of the
          Limited Partnership Agreement of Ledcor Limited Partnership dated
          November 17, 1999, as amended by Amending Agreement No. 1 dated
          March 31, 2000 (the "Partnership Agreement");

     (b)  any payment received by the Debtor on account of the indebtedness
          owed to the Debtor by Gregory B. Maffei ("GBM") pursuant to an
          amended and restated promissory note dated December 22, 1999 and
          amended as of April 22, 2001 (the "GBM Note") in the principal
          amount of US $77,500,000 made by GBM in favour of the Debtor (other
          than payments consisting of the satisfaction of certain put
          obligations of the Debtor, through setting off the GBM Note
          obligations);

     (c)  the Net After-Tax Proceeds received by the Debtor through or
          resulting from the sale or other disposition of any shares or
          securities (including partnership units or other interests),
          including

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          without limitation, resulting from any sale of shares of the
          Company, Urbanlink Holdings Ltd. or WFI Urbanlink Ltd.;

     (d)  the Net After-Tax Proceeds of the exercise price received by the
          Debtor from the holders of options granted by the Debtor to acquire
          Subordinate Voting Shares of the Company.

6.2       All such payments required to be made under this clause shall be made
forthwith after actual receipt of funds by the Debtor and, where the payment
consists of Net After-Tax Proceeds, such payment will be accompanied by the
applicable Tax Calculation Statement.

6.3       Forthwith after actual receipt of funds referred to in clause 6.1 by
the Debtor, the Debtor shall:

     (a)  make all payments required by clause 6.1; and

     (b)  deliver to the Secured Party a Tax Calculation Statement in respect
          thereof.

6.4       No later than four months after the end of each fiscal year of the
Debtor, the Debtor shall:

     (a)  deliver an Annual Reconciliation Statement to the Secured Party; and

     (b)  pay to the Secured Party any Adjustment Amount required thereby to be
          paid by the Debtor to the Secured Party for application to the
          Obligations.

Unless the Secured Party exercises its right in clause 6.5 to audit the
Annual Reconciliation Statement, the Secured Party shall pay to the Debtor
(without set-off) any Adjustment Amount required thereby to be paid by the
Secured Party within 30 days after receipt of the Annual Reconciliation
Statement. If, at any time within 30 days after delivery of an Annual
Reconciliation Statement, the Secured Party disputes any calculation of tax
in the Annual Reconciliation Statement, the Secured Party shall be entitled
to exercise its rights of audit herein and, upon the conclusion of such
audit, the Debtor shall pay to the Secured Party or the Secured Party shall
pay to the Debtor (without set-off), as the case may be, such amount as may
be determined by such audit.

6.5       The Secured Party or its auditors shall be entitled to audit and to
request and receive copies of all documents and financial records as may be
reasonably required to verify the accuracy of any Tax Calculation Statement,
any Annual Reconciliation Statement, or the calculation of the estimated or
actual taxes.

7.        REPRESENTATIONS AND WARRANTIES

7.1       The Debtor represents and warrants that this Security Agreement is
granted in accordance with resolutions of the directors (and of the
shareholders as applicable) of the Debtor, and all other matters and things
have been done and performed so as to authorize and make the execution and
delivery of this Security Agreement, and the performance of the Debtor's
obligations hereunder, legal, valid and binding.

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7.2       The Debtor represents and warrants that the Debtor lawfully owns
and possesses and is the registered holder (as applicable) and beneficial
owner of all presently held Collateral described in the Schedule hereto,
which is a true and complete list of all presently owned or held assets of
the Debtor, and the Debtor has good title thereto, free from all security
interests, charges, encumbrances, liens and claims (including, without
limitation, commitments or options to transfer, sell, or otherwise dispose of
any such assets, except as otherwise disclosed herein), save only the charges
or security interests consented to in writing by the Secured Party or shown
in Schedule A, and the Debtor has good right and lawful authority to grant a
security interest in the Collateral as provided by this Security Agreement.

7.3       The Debtor represents and warrants that except as disclosed in the
Schedule hereto the Debtor has no indebtedness for monies borrowed or
obligations owed, other than indebtedness incurred in the ordinary course of
business for day to day operating expenses.

7.4       The Debtor represents and warrants that there are no outstanding
material orders, notices or similar requirements issued by any government
authority to the Debtor, or of which it is aware that would affect the
perfection or attachment of the Security Interests, or would materially
adversely affect the ability of the Debtor to perform its obligations under
this Security Agreement.

7.5       The Debtor represents and warrants that there are no actions,
suits, judgements, proceedings or claims or, to the best of the knowledge of
Debtor, any investigations, outstanding or pending or threatened against or
affecting the Debtor that would affect the perfection or attachment of the
Security Interests or would materially adversely affect its ability to
perform any of its obligations under this Security Agreement, and the
execution or performance of this Security Agreement by the Debtor will not
give rise to a right on the part of any person that would affect the
perfection or attachment of the Security Interests or materially adversely
affect the ability of the Debtor to perform any of its obligations under this
Security Agreement (other than the Lock-Up Agreement).

7.6       The Vendor represents and warrants that the making of this
Agreement, the performance of and compliance with the terms of this Agreement
by Debtor, and (except in respect of the Lock-Up Agreement) the attachment
and perfection of the Security Interests does not and will not:

     (i)  conflict with or result in a breach of or violate any of the terms,
          conditions or provisions of the constating documents of Debtor;

     (ii) conflict with or result in a breach of or violate any of the terms,
          conditions or provisions of any law, judgement, order, injunction,
          decree, regulation or ruling of any government authority, to which
          Debtor is subject, or constitute or result in a default under any
          agreement, contract or commitment (other than the Lock-Up Agreement)
          to which Debtor is a party or by which its properties or assets
          are bound.

7.7       Except in respect of the Lock-Up Agreement, no consent or approval
which has not been obtained is required from any person in order to effect
the perfection and attachment of the Security Interests to the Collateral now
owned by the Debtor.

8.        COVENANTS OF THE DEBTOR

8.1       The Debtor covenants that at all times while this Security
Agreement remains in effect the Debtor will:

     (a)  defend the title to the Collateral for the benefit of the Secured
          Party against the claims and demands of all persons;

     (b)  fully and effectually maintain and keep maintained the Security
          Interests hereby created valid and effective;

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     (c)  maintain the Collateral in good order and repair;

     (d)  forthwith pay:

          (i)    all security interests, charges, encumbrances, liens and
                 claims which rank or could in any event rank in priority to
                 any Security Interest created by this Security Agreement;

          (ii)   all costs, charges, expenses and legal fees and disbursements
                 (on a solicitor and his own client basis) which may be
                 incurred by the Secured Party in connection with all actions
                 and proceedings taken or required as a result of the
                 occurrence of an Event of Default in order to preserve the
                 Collateral or protect the Secured Party's rights under this
                 Security Agreement, whether or not the Secured Party has
                 exercised any of its remedies under clause 13;

     (e)  at the Secured Party's request at any time and from time to time,
          execute and deliver, or cause to be delivered, such further and other
          documents and instruments, such as specific pledges of securities and
          accompanying stock powers of attorney, and do all acts and things as
          the Secured Party, acting reasonably, requires in order to confirm
          and perfect, and maintain perfection of, the Security Interests
          hereby created;

     (f)  notify the Secured Party promptly of:

          (i)    any change in the information contained herein relating to
                 the Debtor, its business or the Collateral, including
                 without limitation any change of name or address of the
                 Debtor and any change in the present location of any
                 Collateral;

          (ii)   the details of any material acquisition of Collateral;

          (iii)  any material loss or damage to Collateral; and

          (iv)   any material default by GBM in payment or other performance
                 of his obligations to the Debtor;

     (g)  prevent Collateral from being sold, leased, or otherwise disposed of
          except as permitted hereby, or from being or becoming an accession to
          other property not covered by this Security Agreement;

     (h)  carry on and conduct its business in a proper and business-like
          manner, including maintenance of proper books of account and records;

     (i)  permit:

          (A)  the Secured Party and its representatives, at all reasonable
               times, access to the books and records of the Debtor relating to
               that Collateral listed in Schedule A hereto and proceeds thereof
               and to any assets acquired by the Debtor after the date of this
               Security Agreement; and

          (B)  the auditors of the Secured Party, at reasonable times in the
               course of an audit under paragraph 6.5 access to those records
               of the Debtor which are relevant to the audit; and

     (j)  deliver to the Secured Party from time to time promptly upon request
          any documents of title, instruments, securities and chattel paper
          constituting, representing or relating to Collateral.

8.2       The Debtor covenants that at all times while this Security
Agreement remains in effect, without the prior written consent of the Secured
Party, it will not:

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     (a)  declare or pay any dividends;

     (b)  purchase or redeem any of its shares or otherwise reduce its share
          capital;

     (c)  become guarantor of any obligation;

     (d)  become an endorser in respect of any obligation or otherwise become
          liable upon any note or other obligation other than bills of
          exchange deposited to the bank account of the Debtor, or in
          relation to its corporate affairs or the business described in
          subsection 8.2(e); or

     (e)  conduct any business other than as a holding company for the assets
          described in Schedule A and assets acquired after the date hereof;

     (f)  incur any indebtedness for monies borrowed or obligations owed
          other than the liabilities disclosed in the Schedule hereto and
          indebtedness incurred in the ordinary course of business for day to
          day operating expenses;

     (g)  without limiting the generality of any other provision of this
          Security Agreement, make any short sale of, grant any warrants or
          options to purchase, make any other sale of any shares, or any
          securities convertible into, exchangeable for, or that represent
          the right to receive shares, it being the intention to prohibit any
          hedging or other transaction which is designed to or which
          reasonably could be expected to result in a sale or disposition of
          shares by the Debtor or another person, or of any other security
          that includes, relates to or derives any significant part of its
          value from shares held by the Debtor, except as expressly permitted
          herein; or

     (h)  do any acts or things in its capacity as a limited partner of the
          LLP or otherwise that could adversely affect the continued right
          and entitlement of the Debtor to receive distributions from the LLP.

8.3       The Debtor shall deliver or cause to be delivered to the Secured
Party within 60 days of the date of this Security Agreement a copy of the
balance sheet as of April 22, 2001 for each of the Debtor and LLP. The
balance sheet of the Debtor shall verify the ownership by the Debtor of the
assets described in Schedule A. The Debtor shall deliver or cause to be
delivered to the Secured Party, within 120 days after the end of each fiscal
year of the Debtor and LLP, respectively, a copy of the balance sheet for
each of the Debtor and LLP as at the end of its fiscal year. The balance
sheets shall be certified by the Chief Financial Officer of the Debtor and
LLP, respectively, and, at the request and expense of the Secured Party, the
balance sheets shall be audited and accompanied by the report of the auditor
thereon.

8.4       Without limiting the generality of any other provision of this
Security Agreement, the Debtor agrees as follows:

     (a)  To the extent not delivered with this Agreement, the Debtor shall
          forthwith deliver to the Secured Party all share certificates, unit
          certificates, or similar securities and instruments that evidence
          ownership or title to the shares described in paragraphs 1 and 2 of
          Schedule A and the units of the LLP described in paragraph 3 of
          Schedule A.

     (b)  The Debtor shall use all reasonable commercial efforts to obtain
          any consents, authorizations, waivers, and approvals as may be
          required for the attachment of the Security Interests to the shares
          described in paragraphs 1 and 2 of Schedule A, including, without
          limitation, the consents required under the Lock-Up Agreement.

     (c)  Immediately on the earlier of:

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          (i)    such time as the consents thereto of the underwriters and of
                 the Company under the Lock-Up Agreement have for obtained
                 (including, without limitation, a consent in relation to any
                 shares acquired by the Debtor pursuant to any right held by
                 GBM to put such shares to the Debtor); or

          (ii)   the expiry of the term of the Lock-Up Agreement;

                 the Debtor shall forthwith execute and deliver, or cause to be
                 executed and delivered, one or more Pledges of the shares
                 described in paragraphs 1 and 2 of Schedule A, in the form of
                 Schedule B, or such other form as the Secured Party may
                 reasonably require, completed to accurately described such
                 shares together with all certificates for such shares required
                 to be pledged thereby (which are not then in the possession of
                 the Secured Party) and such blank executed and guaranteed
                 stock powers of attorney as the Secured Party may require, and
                 any other shares of the Company held by the Debtor from time
                 to time, including any such shares as are acquired by the
                 Debtor pursuant to any put right held by GBM to put such
                 shares to the Debtor. For greater clarity, if one or more such
                 consents are obtained from the underwriters and the Company in
                 respect of some portion of such shares, the provisions of this
                 paragraph shall separately apply for each such consent.

     (d)  If the Debtor at any time hereafter acquires any shares or
          securities issued by any person, the Debtor shall forthwith notify
          the Secured Party in writing and, if requested by the Secured
          Party, the Debtor shall forthwith execute and delivery, or cause to
          be executed and delivered, one or more pledges of such shares on
          securities in the form attached as Schedule B, or such other form
          as the Secured Party may reasonably require, completed to
          accurately describe such shares or securities, together with all
          certificates for such shares and such blank executed and guaranteed
          stock powers of attorney as the Secured Party may require.

     (e)  The Debtor covenants and agrees with the Secured Party that:

          (i)    at the request of the Secured Party upon the occurrence of
                 an Event of Default, the Debtor will, at its own expense,
                 execute all such transfers and documents as may be
                 reasonably required, with all such powers of sale and other
                 necessary powers as may be expedient for vesting in the name
                 of the Secured Party, all of the Units, and will use all
                 reasonable efforts to cause the register of members of the
                 LLP to be endorsed to show the Secured Party as the owner of
                 the Units;

          (ii)   the Secured Party shall not be bound under any circumstances
                 to realize upon any of the Units or allow any Units to be
                 sold, and shall not be responsible for any loss occasioned
                 by any sale of any collateral or by the retention of or
                 refusal to sell the same, nor shall the Secured Party be
                 obliged to collect or see to the payment of interest or
                 dividends thereon, but all such interest or dividends, if an
                 when received by the Debtor shall be forthwith paid to the
                 Secured Party.

     (f)  In addition to the rights and remedies of the Secured Party under
          clause 13, the Debtor agrees with the Secured Party that upon the
          occurrence of an Event of Default, which is not waived by the Secured
          Party, upon giving five days written notice to the Debtor:

          (i)    the Secured Party may forthwith, without any further demand,
                 and without any advertisement or any other formality, all of
                 which are hereby waived, sell the Units or any of them on
                 any recognized exchange dealing in such Units or by public
                 or private sale as fully and effectually as if the Secured
                 Party were the absolute owner thereof;

          (ii)   the Secured Party or any officer thereof, as the attorney
                 irrevocable of the Debtor, may transfer all or any of the
                 Units and may fill in all blanks in any transfers of stocks,
                 bonds or debentures or any power of attorney or other
                 documents delivered to it;

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          (iii)  the Secured Party shall be entitled to vote upon the Units
                 at any meeting whether special or general at which the
                 holder of the Units is entitled to vote, and is also hereby
                 authorized to give and grant to such person or persons as it
                 may deem best power to vote upon the Units.

9.        INSURANCE

9.1       The Debtor covenants that at all times while this Security Agreement
is in effect the Debtor shall:

     (a)  maintain or cause to be maintained insurance on the Collateral with
          an insurer, of kinds, for amounts and payable to such person or
          persons, all as the Secured Party may require, and in particular
          maintain insurance on the Collateral to the full insurable value
          against loss or damage by fire including extended coverage
          endorsement and in the case of motor vehicles, maintain insurance
          against theft;

     (b)  cause the insurance policy or policies required hereunder to be
          assigned to the Secured Party and have as part thereof a standard
          mortgage clause or a mortgage endorsement, as appropriate; and

     (c)  pay any premium in connection with such insurance, and deliver all
          such policies to the Secured Party, if it so requires.

9.2       If proceeds of any insurance required hereunder become payable, the
Secured Party may, in its absolute discretion apply such proceeds to such
part or parts of the Obligations as the Secured Party may see fit or the
Secured Party may release any such insurance proceeds to the Debtor for the
purpose of repairing, replacing or rebuilding, but any release of insurance
proceeds to the Debtor shall not operate as a payment on account of the
Obligations or in any way affect this Security Agreement.

9.3       The Debtor will forthwith, on the happening of loss or damage to
the Collateral, notify the Secured Party thereof and furnish to the Secured
Party at the Debtor's expense any necessary proof and do any necessary act to
enable the Secured Party to obtain payment of the insurance proceeds, but
nothing herein contained shall limit the Secured Party's right to submit to
the insurer a proof of loss on its own behalf.

9.4       The Debtor hereby authorizes and directs the insurer under any
policy of insurance required hereunder to include the name of the Secured
Party as a loss payee on any cheque or draft which may be issued with respect
to a claim under and by virtue of such insurance, and the production by the
Secured Party to any insurer of a certified copy of this Security Agreement
shall be its full and complete authority for so doing.

9.5       If the Debtor fails to maintain insurance as required by Clause
8.1, the Secured Party may, but shall not be obliged to, maintain or effect
such insurance coverage, or so much thereof as the Secured Party considers
necessary for its protection.

10.       PERFORMANCE OF OBLIGATIONS

          If the Debtor fails to perform its obligations hereunder, the
Secured Party may, but shall not be obliged to, perform any or all of such
obligations without prejudice to any other rights and remedies of the Secured
Party hereunder, and any payments made and any costs, charges, expenses and
legal fees and disbursements (on a solicitor and his own client basis)
incurred in connection therewith shall be payable by the Debtor to the
Secured Party forthwith with interest until paid at the highest rate borne by
any of the Obligations.

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11.       RESTRICTIONS ON SALE OR DISPOSAL OF COLLATERAL

11.1      Except as herein provided, without the prior written consent of the
Secured Party the Debtor will not:

     (a)  sell, lease or otherwise dispose of the Collateral or any other
          property, asset or undertaking;

     (b)  release, surrender or abandon possession of the Collateral; or

     (c)  move or transfer the Collateral from the jurisdictions in which the
          Security Interests hereby created have been perfected.

11.2      Provided that no Event of Default has occurred and is continuing,
the Debtor may at any time without the consent of the Secured Party:

     (a)  dispose of:

          (i)    up to 25,289,117 Subordinate Voting Shares of the Company,
                 by way of gift to charity and certain employees and
                 associates, or by granting options relating thereto, or by
                 transferring them to a wholly owned subsidiary of the Debtor
                 in accordance with clause 11.4; and

          (ii)   shares of the Company to Urbanlink Holdings Ltd. or WFI
                 Urbanlink Ltd. pursuant to existing contractual obligations
                 of the Debtor;

     (b)  sell any other shares of the Company, or shares of Urbanlink Holdings
          Ltd., or WFI Urbanlink Ltd., provided that the Debtor complies with
           paragraph 6.1(c) and (d), as the case may be;

provided however that:

     (c)  any consideration consisting of cash or cash equivalents received
          for such disposition or sale shall be paid to the Secured Party to
          the extent required by clause 6.1;

     (d)  any consideration not consisting of cash or cash equivalents shall
          be subject to the Security Interests (except as provided in
          clause 2.2 and clause 3.2).

11.3      Subject to clause 11.4, the Debtor shall be entitled to a partial
discharge of this Security Agreement in respect of any disposition permitted
by paragraph 11.2 (a) without any partial payment on account of the
Obligations. The Debtor shall not be entitled to a partial discharge of this
Security Agreement in respect of the sale of the shares permitted by
paragraph 11.2 (b) until the Secured Party has received the payment required
by paragraphs 6.1(c) or (d), as the case may be, and has perfected the
Security Interests described in paragraph 11.2(d).

11.4      Any permitted transfer of Subordinate Voting Shares of the Company
to a wholly owned subsidiary of the Debtor is subject to continuing Security
Interests in such shares, and is conditional upon such subsidiary giving a
guarantee to the Secured Party of the Obligations, a security agreement in
substantially the form of this Security Agreement, with such changes thereto
as the Secured Party may reasonably require, and an undertaking that it will
not carry on any business or activity other than the holding and disposing of
such Subordinate Voting Shares as permitted by clause 11.2. The Debtor shall
cause such subsidiary to remain a wholly owned subsidiary, and the subsidiary
ceasing to be a wholly owned subsidiary or breaching the above undertaking
will be an event of default under the general security agreement to be
granted by such subsidiary.

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<PAGE>

12.     DEFAULT

12.1      The Debtor shall be in default under this Security Agreement,
unless waived by the Secured Party, in any of the following events, each of
which is an "Event of Default":

     (a)  the Debtor makes default in payment when due of any indebtedness or
          liability of the Debtor to the Secured Party under the Promissory
          Note or this Security Agreement; or

     (b)  the Debtor is in breach of any term, condition, obligation or
          covenant to the Secured Party, or any representation or warranty to
          the Secured Party is untrue, whether contained in this Security
          Agreement, the Promissory Note, or any other agreement delivered by
          the Debtor in connection with the transactions to which the
          Promissory Note and this Security Agreement relate, and such breach
          is not cured within 10 days following notice thereof given by the
          Secured Party to the Debtor; or

     (c)  the Debtor declares itself to be insolvent or admits in writing its
          inability to pay its debts generally as they become due, or makes
          an assignment for the benefit of its creditors, is declared
          bankrupt, makes a proposal or otherwise takes advantage of
          provisions for relief under the Bankruptcy and Insolvency Act, the
          Companies' Creditors Arrangement Act or similar legislation in any
          jurisdiction; or

     (d)  a receiver, receiver and manager or receiver manager of all or any
          material part of the Collateral is appointed; or

     (e)  an order is made or an effective resolution is passed for winding
          up the Debtor; or

     (f)  any breach by LLP of its covenants to the Secured Party pursuant to
          a Covenant and Consent of Ledcor Limited Partnership dated April
          22, 2001 given by LLP and by 929845 Alberta Ltd., as general
          partner for and on behalf of LLP in favour of the Secured Party; or

     (g)  the Debtor creates or permits to exist any security interest in,
          charge, encumbrance, lien on or claim against any of the
          Collateral; or

     (h)  the holder of any other security interest, charge, encumbrance or
          lien on or claim against any of the Collateral does anything to
          enforce or realize on such security interest, charge, encumbrance,
          lien or claim.

12.2      For the purposes of Section 203 of the LAND TITLE ACT (B.C.), the
floating charge created by this Security Agreement over Real Property shall
become a fixed charge upon the earliest of the occupancy or and Event of
Default described in paragraphs 12.1(c), (d) or (e), or the Bank taking any
action pursuant to clause 13 to enforce and realize the Security Interests
created by this Security Agreement.

13.       ENFORCEMENT

13.1      Upon the happening of an Event of Default the Secured Party may
declare any or all of the Obligations to become immediately due and payable
and the security hereby constituted will immediately become enforceable. To
enforce and realize on the Security Interests created by this Security
Agreement the Secured Party may take any action permitted by law or in
equity, as it may deem expedient, and in particular and without limiting the
generality of the foregoing, the Secured Party may do any of the following:

     (a)  appoint by instrument a receiver, receiver and manager or receiver
          manager (the person so appointed being hereinafter called the
          "Receiver") of the Collateral, with or without bond as the

                                      -11-
<PAGE>

          Secured Party may determine, and from time to time in its absolute
          discretion remove such Receiver and appoint another in its stead;

     (b)  enter upon any premises of the Debtor and take possession of the
          Collateral with power to exclude the Debtor, its agents and its
          servants therefrom, without becoming liable as a mortgagee in
          possession;

     (c)  preserve, protect and maintain the Collateral and make such
          replacements thereof and repairs and additions thereto as the
          Secured Party may deem advisable;

     (d)  sell, lease or otherwise dispose of all or any part of the
          Collateral, whether by public or private sale or lease or
          otherwise, in such manner, at such price as can be reasonably
          obtained therefor and on such terms as to credit and with such
          conditions of sale and stipulations as to title or conveyance or
          evidence of title or otherwise as to the Secured Party may seem
          reasonable, provided that if any sale, lease or other disposition
          is on credit the Debtor will not be entitled to be credited with
          the proceeds of such sale, lease or other disposition until the
          monies therefor are actually received; and

     (e)  exercise all of the rights and remedies of a secured party under the
          Act.

13.2      A Receiver appointed pursuant to this Security Agreement shall be
the agent of the Debtor and not of the Secured Party and, to the extent
permitted by law or to such lesser extent permitted by its appointment, shall
have all the powers of the Secured Party hereunder, and in addition shall
have power to carry on the business of the Debtor and for such purpose from
time to time to borrow money either secured or unsecured, and if secured by a
security interest on any Collateral, such security interest may rank before
or pari passu with or behind any of the Security Interests created by this
Security Agreement, and if it does not so specify such security interest
shall rank in priority to the Security Interests created by this Security
Agreement.

13.3      Subject to the claims, if any, of the creditors of the Debtor
ranking in priority to this Security Agreement, all amounts realized from the
disposition of Collateral pursuant to this Security Agreement will be applied
as the Secured Party, in its absolute discretion, may direct as follows:

     (a)  in payment of all costs, charges and expenses (including legal fees
          and disbursements on a solicitor and his own client basis) incurred
          by the Secured Party in connection with or incidental to:

          (i)    the exercise by the Secured Party of all or any of the powers
                 granted to it pursuant to this Security Agreement by reason
                 of the occurrence of an Event of Default; and

          (ii)   the appointment of the Receiver and the exercise by the
                 Receiver of all or any of the powers granted to it pursuant to
                 this Security Agreement, including the Receiver's reasonable
                 remuneration and all outgoings properly payable by the
                 Receiver;

     (b)  in or toward payment to the Secured Party of all principal and other
          monies (except interest) due in respect of the Obligations;

     (c)  in or toward payment to the Secured Party of all interest remaining
          unpaid in respect of the Obligations.

          Subject to applicable law and the claims, if any, of other
creditors of the Debtor, any surplus will be paid to the Debtor.

                                      -12-
<PAGE>

14.       DEFICIENCY

          If the amounts realized from the disposition of the Collateral are
not sufficient to pay the Obligations in full the Debtor will immediately pay
to the Secured Party the amount of such deficiency.

15.       LIABILITY OF SECURED PARTY

          The Secured Party shall not be responsible or liable for any debts
contracted by it, for damages to persons or property or for salaries or
non-fulfillment of contracts during any period when the Secured Party shall
manage the Collateral upon entry, as herein provided, nor shall the Secured
Party be liable to account as mortgagee in possession or for anything except
actual receipts or be liable for any loss on realization or for any default
or omission for which a mortgagee in possession may be liable. The Secured
Party shall not be bound to do, observe or perform or to see to the
observance or performance by the Debtor of any obligations or covenants
imposed upon the Debtor nor shall the Secured Party, in the case of
securities, instruments or chattel paper, be obliged to preserve rights
against other persons, nor shall the Secured Party be obliged to keep any of
the Collateral identifiable. The Debtor hereby waives any applicable
provision of law permitted to be waived by it which imposes higher or greater
obligations upon the Secured Party than aforesaid.

16.       APPOINTMENT OF ATTORNEY

          The Debtor hereby irrevocably appoints the Secured Party or the
Receiver, as the case may be, with full power of substitution, to be the
attorney of the Debtor for and in the name of the Debtor to sign, endorse or
execute under seal or otherwise any deeds, documents, transfers, cheques,
instruments, demands, assignments, assurances or consents that the Debtor is
obliged to sign, endorse or execute and generally to use the name of the
Debtor and to do all things as may be necessary or incidental to the exercise
of all or any of the powers conferred on the Secured Party or the Receiver,
as the case may be, pursuant to this Security Agreement.

17.       ACCOUNTS

          Notwithstanding any other provision of this Security Agreement,
while an Event of Default is continuing the Secured Party may collect,
realize, sell or otherwise deal with the Accounts or any part thereof in such
manner, upon such terms and conditions and at such time or times as it may
deem appropriate. Prior to the occurrence of an Event of Default the Debtor
shall be entitled to collect, receive and deal with Accounts and proceeds
thereof in the ordinary course of business, except as provided in clause 4(a).

18.       APPROPRIATION OF PAYMENTS

          Any and all payments made in respect of the Obligations from time
to time and monies realized from any security interests held therefor
(including monies collected in accordance with or realized on any enforcement
of this Security Agreement) may be applied to such part or parts of the
Obligations as the Secured Party may see fit, and the Secured Party may at
all times and from time to time change any appropriation as the Secured Party
may see fit.

19.       LIABILITY TO ADVANCE

          None of the preparation, execution, perfection and registration of
this Security Agreement or the advance of any monies shall bind the Secured
Party to make any advance or loan or further advance or loan, or renew any
note or extend any time for payment of any indebtedness or liability of the
Debtor to the Secured Party.

                                      -13-
<PAGE>

20.       WAIVER

          The Secured Party may from time to time and at any time waive in
whole or in part any right, benefit or default under any clause of this
Security Agreement but any such waiver of any right, benefit or default on
any occasion shall be deemed not to be a waiver of any such right, benefit or
default thereafter, or of any other right, benefit or default, as the case
may be. No waiver shall be effective unless it is in writing.

21.       NOTICE

          Any notice, direction, request or other communication required or
contemplated by any provision of this Security Agreement will be given in
writing and will be given by delivering or faxing the same to the parties as
follows:

     (a)  To 360finance at:

          360finance ltd.
          Suite 1500 - 1066 West Hastings Street
          Vancouver, BC   V6E 3X1

          Attention:        Secretary
          Fax No.:          (604) 648-7747

     (b)  To WFHL at:

          Worldwide Fiber Holdings Ltd.
          Suite 1000 - 1066 West Hastings Street
          Vancouver, BC   V6E 3X1

          Attention:        Vice President, Finance
          Fax No.:          (604) 681-5372

Any such notice, direction, request or other communication will be deemed to
have been given or made on the date on which it was delivered or, in the case
of fax, on the next business day after receipt of transmission. Any party may
change its fax number or address for service from time to time by written
notice in accordance with this clause.

22.       EXTENSIONS

          The Secured Party may grant extensions of time and other
indulgences, take and give up security, accept compositions, compound,
compromise, settle, grant releases and discharges, refrain from perfecting or
maintaining perfection of security interests, and otherwise deal with the
Debtor, account debtors of the Debtor, sureties and others and with
Collateral and other security interests as the Secured Party may see fit
without prejudice to the liability of the Debtor or the Secured Party's right
to hold and realize on the Security Interests created by this Security
Agreement.

23.       NO MERGER

          This Security Agreement shall not operate so as to create any
merger or discharge of any of the Obligations, or of any assignment,
transfer, guarantee, lien, contract, promissory note, bill of exchange or
security interest of any form held or which may hereafter be held by the
Secured Party from the Debtor or from any other person whomsoever. The taking
of a judgment with respect to any of the Obligations will not operate as a
merger of any of the covenants contained in this Security Agreement.

                                      -14-
<PAGE>

24.       RIGHTS CUMULATIVE

          All rights and remedies of the Secured Party set out in this
Security Agreement, and in any other security agreement held by the Secured
Party from the Debtor or any other person whomsoever to secure payment and
performance of the Obligations, are cumulative and no right or remedy
contained herein or therein is intended to be exclusive but each is in
addition to every other right or remedy contained herein or therein or in any
future security agreement, or now or hereafter existing at law, in equity or
by statute, or pursuant to any other agreement between the Debtor and the
Secured Party that may be in effect from time to time.

25.       ASSIGNMENT

          The Secured Party may, without further notice to the Debtor, at any
time assign, transfer or grant a security interest in this Security Agreement
and the Security Interests created hereby. The Debtor expressly agrees that
the assignee, transferee or secured party, as the case may be, shall have all
of the Secured Party's rights and remedies under this Security Agreement and,
subject to the equities between the parties, the Debtor will pay the
Obligations to the assignee, transferee or secured party, as the case may be,
as the Obligations become due.

26.       SATISFACTION AND DISCHARGE

          Any partial payment or satisfaction of the Obligations or any
ceasing by the Debtor to be indebted to the Secured Party shall be deemed not
to be a redemption or discharge of this Security Agreement. The Debtor shall
be entitled to partial discharges of this Security Agreement as provided in
Clause 11.3, and from time to time to a full release and discharge of this
Security Agreement upon full payment and satisfaction of all Obligations, and
upon written request by the Debtor. Upon the Debtor becoming entitled to any
partial or total discharge, the Secured Party shall deliver to the Debtor any
instruments or securities in the possession of the Secured Party which are
the subject matter of the partial or total discharge, but only to the extent
that the same are so discharged.

27.       CURRENCY INDEMNITY

27.1      If:

     (a)  any amount payable under, or in connection with any matter relating
          to or arising out of the Obligations, the Promissory Note or this
          Security Agreement is received by the Secured Party in a currency
          (herein called the "Payment Currency") other than that agreed to be
          payable hereunder or thereunder (the "Agreed Currency"), whether
          voluntarily or pursuant to an order, judgment or decision of any
          court, tribunal, arbitration panel or administrative agency or as a
          result of any bankruptcy, receivership, liquidation or other
          insolvency type proceedings or otherwise; and

     (b)  the amount so produced by converting the Payment Currency so
          received into the Agreed Currency is less than the relevant amount
          of the Agreed Currency;

     then:

     (c)  the amount so received shall constitute a discharge of the
          liability of the Debtor under or in connection with this Security
          Agreement and the Promissory Note only to the extent of the amount
          received following the conversion described in paragraph (b) above;
          and

     (d)  the Debtor shall indemnify and save the Secured Party harmless from
          and against such deficiency and any loss or damage arising as a
          result thereof.

                                      -15-
<PAGE>

Any conversion pursuant to this Clause 27.1 shall be made at such prevailing
rate of exchange on the date the Payment Currency is received by the Secured
Party and in such market as is determined by the Secured Party as being the
most appropriate for such conversion. The Debtor shall in addition pay the
reasonable costs of such conversion.

27.2      The indemnity set out in Clause 27.1:

     (a)  is an obligation of the Debtor which is separate and independent
          from all other obligations of the Debtor under this Security
          Agreement and Promissory Note;

     (b)  gives rise to a separate and independent cause of action and is
          secured by any other security granted by the Debtor to the Secured
          Party;

     (c)  applies irrespective of any indulgence granted by or on behalf of
          the Secured Party; and

     (d)  continues in full force and effect notwithstanding, and does not
          merge with, any order, judgment or decision of any court, tribunal,
          arbitration panel or administrative agency or as a result of any
          bankruptcy, receivership, liquidation or other insolvency type
          proceeding or otherwise as to any amount due under this Security
          Agreement and Promissory Note in connection therewith.

28.       ENUREMENT

          This Security Agreement shall enure to the benefit of the Secured
Party and its successors and assigns, and shall be binding upon the successors
and permitted assigns of the Debtor.

29.       INTERPRETATION

29.1      In this Security Agreement:

     (a)  "the Act" means the Personal Property Security Act (British
          Columbia) and all regulations thereunder, as amended from time to
          time;

     (b)  "Adjustment Amount" means any amount required to be adjusted
          between the parties as a result of the Annual Reconciliation
          Statement indicating a difference between tax actually paid by the
          Debtor and that deducted from proceeds in calculating Net After-Tax
          Proceeds over any given fiscal period.

     (c)  "Annual Reconciliation Statement" means a statement to be provided
          by a "Certifying Officer" no later than four months after the end of
          each fiscal year of the Debtor setting forth the tax payable by the
          Debtor for the preceding fiscal year itemized as to all transactions
          triggering repayment obligations under section 6, reconciled to all
          previous Tax Calculation Statements provided to the Secured Party,
          accompanied by a copy of the tax return(s) that the Debtor has filed
          (or will file within the applicable filing period) and identifying
          any amounts which are to be adjusted between the parties because the
          Tax Calculation Statement accompanying any repayment understated or
          overstated the tax payable by the Debtor.

     (d)  "Collateral" has the meaning set out in Clause 1 hereof and any
          reference to Collateral shall, unless the context otherwise
          requires, be deemed to be a reference to Collateral as a whole or
          any part thereof;

     (e)  "Company" means 360networks inc.;

                                      -16-
<PAGE>

     (f)  "Net After-Tax Proceeds" means gross proceeds of a sale,
          distribution or other transaction, net of commissions and sales
          related fees including professional and filing fees and expenses
          incurred by the Debtor in connection with the sale, distribution or
          other transaction giving rise to the proceeds, and LESS the taxes
          (if any) estimated by the Debtor, acting reasonably and in good
          faith, to be payable by the Debtor in connection with such sale,
          distribution, or other transaction.

     (g)  "Promissory Note" means that certain promissory note dated April
          20, 2001 in the principal amount of US $82,305,000 made by the
          Debtor in favour of the Secured Party.

     (h)  "Tax Calculation Statement" means a statement certified by either
          (1) the Chief Financial Officer of the Debtor who is a Chartered
          Accountant in good standing, or (2) an accounting firm of national
          standing, (the "Certifying Officer") setting out the proceeds
          received by the Debtor and a statement of the selling commissions
          or fees and at statement of the calculation of the taxes in
          connection with the sale, distribution or other transaction giving
          rise to such proceeds.

     (i)  "Units" means the units in the LLP described in paragraph 3 of
          Schedule A, and any additional units in the LLP from time to time
          acquired or held by the Debtor.

29.2      Words and expressions used herein that have been defined in the Act
shall be interpreted in accordance with their respective meanings given in
the Act unless otherwise defined herein or unless the context otherwise
requires.

29.3      The invalidity or unenforceability of the whole or any part of any
clause of this Security Agreement shall not affect the validity or
enforceability of any other clause or the remainder of such clause.

29.4      The headings of the clauses of this Security Agreement have been
inserted for reference only and do not define, limit, alter or enlarge the
meaning of any provision of this Security Agreement.

29.5      This Security Agreement shall be governed by the laws of British
          Columbia.

30.       COPY OF AGREEMENT AND FINANCING STATEMENT

          The Debtor hereby:

     (a)  acknowledges receiving a copy of this Security Agreement; and

     (b)  waives all rights to receive from the Secured Party a copy of any
          financing statement or financing change statement filed, or any
          verification statement received, at any time in respect of this
          Security Agreement.

31.       RECOURSE

          The Secured Party shall have recourse under this Security Agreement
and the Promissory Note to, and only to, that Collateral listed in Schedule A
hereto (which WFHL has represented and warranted are all of the assets of
WFHL as at the date of this Security Agreement) and proceeds thereof and to
any assets acquired by the Debtor after the date of this Agreement.

32.       ADDITIONAL PROVISIONS

32.1      All rights and remedies of the Secured Party under this Security
Agreement shall be exercised in accordance with all applicable laws and
regulatory requirements.

                                      -17-
<PAGE>

32.2      The Secured Party acknowledges that the shares of the Company are
subject to the trust agreement made as of April 18, 2000 among the Debtor,
GBM, the Company and Montreal Trust Company of Canada. The Secured Party will
not take any action that would cause any Multiple Voting Shares of the
Company to be converted to Subordinate Voting Shares of the Company.

32.3      The Secured Party acknowledges that the Security Interests over the
GBM Note and the Secured Party's rights in respect of the GBM Note are
subject to the rights of set-off and cancellation contained in the Master
Agreement dated April 22, 2001 among GBM, the Debtor and the Company (the
"Master Agreement") and that nothing in this Agreement shall limit or affect

     (a)  GBM's right to reduce the amount due under the GBM Note in accordance
          with Section 10 of the Master Agreement; or

     (b)  the right of the Debtor (or its assignee) to discharge amounts owed
          to GBM under the GBM Put (as defined in the Master Agreement) up to
          the full amount due under the GBM Note, by cancelling the amount
          owed by GBM under the GBM Note.

33.       COUNTERPARTS

          This Security Agreement may be executed in any number of
counterparts with the same effect as if both parties had signed the same
document. Both of these counterparts will for all purposes constitute one
agreement, notwithstanding that both parties are not signatories to the same
counterpart. A faxed copy or photocopy of this Agreement executed by the
parties in counterpart shall constitute a properly executed, delivered and
binding agreement.

                      (The next page is the signature page)

                                      -18-
<PAGE>

          IN WITNESS WHEREOF the Debtor and Secured Party have executed this
Security Agreement this 22nd day of April, 2001.

WORLDWIDE FIBER HOLDINGS LTD.              360finance ltd.

Per: Signed_____________________           Per: Signed______________________

                                      -19-<PAGE>

                                                                    EXHIBIT 4.33

================================================================================

                       PREFERRED SHARE PURCHASE AGREEMENT

                                 BY AND BETWEEN

                                360NETWORKS INC.

                                       AND

                                     ALCATEL

                                   DATED AS OF

                                OCTOBER 31, 2000

================================================================================
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>   <C>                                                                  <C>
                                                                           Page
                                                                           ----
                                    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

                                      -i-
<PAGE>

                                                                           Page
                                                                           ----

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

                                      -ii-
<PAGE>

                                                                           Page
                                                                           ----

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

                                     -iii-
<PAGE>

                                                                           Page
                                                                           ----

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, Wills & Murphy
EXHIBIT J      Form of Opinion of Stewart McKelvey Stirling Scales
EXHIBIT K      Form of Opinion of Cahill Gordon & Reindel
EXHIBIT L      Form of Opinion of Osler, Hoskin & Harcourt
EXHIBIT M      Form of Opinion of Sullivan & Cromwell
EXHIBIT N      Form of Alcatel Guarantee
EXHIBIT O      Form of Opinion of Slaughter & May

</TABLE>

                                      -iv-
<PAGE>

                       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.
<PAGE>

     "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.

                                     -2-
<PAGE>

     "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.

                                     -3-
<PAGE>

     "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.

                                     -4-
<PAGE>

     "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

                                     -5-
<PAGE>

     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.

                                     -6-
<PAGE>

     "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.

                                     -7-
<PAGE>

     "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.

                                     -8-
<PAGE>

     "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.

                                     -9-
<PAGE>

     "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

                                     -10-
<PAGE>

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, Wills & Murphy

Exhibit J     Form of Opinion of Stewart McKelvey Stirling Scales

Exhibit K     Form of Opinion of Cahill Gordon & Reindel

Exhibit L     Form of Opinion of Osler, Hoskin & Harcourt

Exhibit M     Form of Opinion of Sullivan & Cromwell

Exhibit N     Form of Alcatel Guarantee

Exhibit O     Form of Opinion of Slaughter & 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

                                     -11-
<PAGE>

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 Cahill Gordon & Reindel,
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

                                     -12-
<PAGE>

          (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,

                                     -13-
<PAGE>

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

                                     -14-
<PAGE>

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:

<TABLE>
<CAPTION>
                Class or Series                      Number                Number
                   of Shares                       Authorized              Issued
                ---------------                    ----------              ------
    <S>                                          <C>                       <C>
               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")
</TABLE>

<TABLE>
                                                                                           Number
                                                                                        Outstanding
                                                 Number               Number           (as at October
             Common Shares                     Authorized             Issued             20, 2000)
             -------------                     ----------             ------           --------------
    <S>                                      <C>                    <C>                <C>
       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")
</TABLE>

          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-

                                     -15-
<PAGE>

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

                                     -16-
<PAGE>

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

                                     -17-
<PAGE>

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 Ledom (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-
<PAGE>

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 Ledom, 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

                                     -19-
<PAGE>

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

                                     -20-
<PAGE>

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.

                                     -21-
<PAGE>

          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
Donaldson, Lufkin & Jenrette, 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.

                                     -22-
<PAGE>

("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

                                      -23-
<PAGE>

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 Cayer 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 Cayer
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.

                                      -24-
<PAGE>

                                   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.

                                      -25-
<PAGE>

          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 J.P. Morgan  as an advisor
to Alcatel and Alcatel will be responsible for all fees payable to J.P.
Morgan.

          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

                                      -26-
<PAGE>

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

                                      -27-
<PAGE>

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

                                      -28-
<PAGE>

                (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

                                      -29-
<PAGE>

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 Slaughter & May, respectively, substantially in the forms
attached hereto as Exhibit N and Exhibit O, respectively.

                                      -30-
<PAGE>

          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

                                     -31-
<PAGE>

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.

                                     -32-
<PAGE>

          (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

                                     -33-
<PAGE>

     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.

                                     -34-
<PAGE>

          (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

                                     -35-
<PAGE>

     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

                                     -36-
<PAGE>

     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.

                                     -37-
<PAGE>

          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

                                     -38-
<PAGE>

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.

                                     -39-
<PAGE>

          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.
                1500-1066 West Hastings Street
                Vancouver, British Columbia V6E 3X1
                Attention: General Counsel
                Fax: (604) 648-7477

          with a copy to:

                Cahill Gordon & Reindel
                80 Pine Street
                New York, New York  10005
                Attention: Roger Andrus, Esq.
                Fax: (212) 269-5420

                                     -40-
<PAGE>

          if to Alcatel, to:

                Alcatel
                54, Rue la Boetie
                75008 Paris, France
                Attention: Mr. Samir Naessany
                Fax: 33 (0)1 4076 5921

          with a copy to:

                Alcatel
                54, Rue la Boetie
                75008 Paris, France
                Attention: Mr. Scott Ashby
                Fax: 33 (0)1 4076 5921

                Proskauer Rose LLP
                1585 Broadway
                New York, New York  10036
                Attention: Stanley Komaroff, Esq.
                Fax: (212) 969-2900

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

                                     -41-
<PAGE>

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.

                                     -42-
<PAGE>

          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:

                                     -43-

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