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Exhibit 1.1
NORTEL NETWORKS LIMITED
U.S. $ 1,500,000,000
6.125 % NOTES DUE FEBRUARY 15, 2006
TERMS AND UNDERWRITING AGREEMENT
Nortel Networks Limited
0000 Xxxxx Xxxx, 0000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx
Ladies and Gentlemen:
We (the "Representative") understand that Nortel Networks Limited, a
Canadian corporation (the "Corporation"), proposes to issue and sell to the
underwriters named in Schedule II hereto (the "Underwriters") the principal
amount of its debt securities (the "Debt Securities"), if any, identified in
Schedule I hereto (the "Underwritten Securities").
1. Except as specifically set forth herein, all the provisions
contained in the document constituting Annex A entitled "Nortel Networks Limited
-- Underwriting Agreement Basic Provisions" (the "Underwriting Agreement") are
incorporated herein in their entirety and shall be deemed to be a part of this
Terms Agreement to the same extent as if such provisions had been set forth in
full herein. Terms defined in such document are used herein as therein defined.
The parties hereto agree to the following changes to the Underwriting Agreement:
(a) Section 1(a) is amended to read as follows:
"The Corporation proposes to issue and sell
certain of its debt securities, issuable under an
indenture dated as of December 15, 2000 (as the same
may be amended, supplemented or restated from time to
time, the "Indenture") among the Corporation, Nortel
Networks Capital Corporation and Citibank, N.A., as
trustee (the "Trustee"), and/or certain of its
warrants to purchase debt securities issuable
pursuant to the warrant agreement (the "Warrant
Agreement") identified in the Terms Agreement (as
hereinafter defined) (such debt securities and
warrants being sometimes collectively referred to
herein as the "Securities"), in one or more offerings
on terms determined at the time of such sale. Such
debt securities and warrants may be issued separately
or together in units."
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(b) The following paragraph is added to Section 2:
"(c) Deloitte & Touche LLP are independent
certified public accountants with respect to the
Corporation and its subsidiaries as required by the
Act and the Rules and Regulations. The historical
financial statements (including the related notes and
supporting schedules) of the Corporation contained or
incorporated by reference in the Registration
Statement and the Prospectus comply in all material
respects with the applicable requirements under the
Act and the Exchange Act (except that certain
supporting schedules are omitted); such financial
statements have been prepared in accordance with
accounting principles generally accepted in Canada
and the United States noted therein consistently
applied throughout the periods covered thereby
(except as may be noted therein) and fairly present
the financial position of the Corporation at the
respective dates indicated and the results of its
operations and its cash flows for the respective
periods indicated."
(c) The existing language in Section 3(c) is deleted in
its entirety and the following language is
substituted:
"Each of the Underwriters shall not offer or sell,
directly or indirectly, any Underwritten Securities
(i) in Canada or any province or territory thereof,
or to any individual or company in Canada, in
contravention of the securities laws of Canada or any
province or territory thereof or (ii) in any
jurisdiction in the United States other than to
institutional investors or as otherwise permitted by
state securities or blue sky laws. Each Underwriter
severally agrees that it shall not distribute any
material related to the Underwritten Securities in
Canada in contravention of the securities laws of
Canada or any province or territory thereof."
(d) Section 3(d) is deleted.
(e) The first sentence of Section 8(a) is amended to read
as follows:
"The Corporation shall indemnify and hold
harmless each Underwriter and each person who
controls any Underwriter within the meaning of either
the Act or the Exchange Act from and against any
loss, claim, damage or liability, joint or several,
and any action in respect thereof, to which they or
any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise,
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insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement
or the omission or alleged omission to state therein
a material fact required to be stated therein or
necessary in order to make the statement therein not
misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any
preliminary prospectus consisting of the Basic
Prospectus together with the preliminary prospectus
supplement thereto related to the offering of the
Underwritten Securities that is used prior to the
filing of the Prospectus (the "Preliminary
Prospectus") or the Prospectus or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not
misleading."
(f) The parenthetical in clause (i) of the third sentence
of Section 8(c) is amended to read as follows:
"(it being understood, however, that the
indemnifying party shall bear only the reasonable
fees and disbursements of separate counsel and shall
not be liable for the expenses of more than one
separate counsel (in addition to any local counsel as
shall be reasonably necessary), approved by the
Representative in the case of Section 8(a),
representing the indemnified parties under such
paragraph who are parties to such action)"
(g) The following language is added at the end of Section
8(c):
"No indemnifying party shall be liable for
any settlement of any such action effected without
its written consent (which consent shall not be
unreasonably withheld), but if settled with its
written consent or if there be a final judgment for
the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any
indemnified party from and against any loss or
liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior
written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened
proceeding in respect of which any indemnified party
is or could have been a party and indemnity could
have been sought hereunder by such indemnified party
unless such settlement includes an unconditional
release of such indemnified party from all liability
on claims that are the subject matter of such
proceeding."
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(h) Clause (i) of Section 9 is amended to read as
follows:
"(i) trading in securities generally on the
New York Stock Exchange, Inc. shall have been
suspended or limited or minimum prices shall have
been established on such exchange by order of the
Commission or such exchange or trading in any
securities of the Corporation or trading in the
common shares of Nortel Networks Corporation, in each
case on the New York Stock Exchange Inc., shall have
been suspended (a "Nortel Suspension"), it being
understood that any such suspension resulting from
one or more trading imbalances shall not be deemed a
Nortel Suspension for purpose of this Section 9;"
(i) Clause (iii) of Section 9 is amended to read as
follows:
"(iii) there shall have occurred any
outbreak or material escalation of hostilities, a
declaration by the United States of a national
emergency or war, or a material adverse change in
general economic, political or financial conditions
in the United States or elsewhere the effect of which
on the financial markets of the United States, in the
case of this clause (iii), is such as to make it, in
the reasonable judgment of the Representative after
consultation with the Corporation, impracticable to
market the Underwritten Securities."
(j) The following three paragraphs are added to Section
10(c):
"(x) The statements set forth under the
heading "Description of the Notes" in the Prospectus
Supplement and the heading "Description of the Debt
Securities" in the Basic Prospectus, insofar as such
statements purport to summarize certain provisions of
the Debt Securities, provide a fair summary of such
provisions."
"(xi) The statements made in the Prospectus
Supplement under the heading "United States Federal
Income Tax Considerations", insofar as such
statements purport to summarize certain federal
income tax laws of the United States, constitute,
subject to the qualifications and limitations stated
therein, a fair summary of the principal U.S. federal
income tax consequences of an investment in the Debt
Securities."
"(xii) The statements made in the Prospectus
Supplement and the Basic Prospectus under the heading
"Certain Canadian
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Federal Income Tax Considerations", insofar as such
statements purport to summarize certain federal
income tax laws of Canada, constitute, subject to the
qualifications and limitations stated therein, a fair
summary of the principal Canadian federal income tax
consequences of an investment in the Debt Securities."
2. Subject to the terms and conditions set forth herein or incorporated
by reference herein, the Underwriters offer to purchase, severally and not
jointly, at the respective purchase price set forth in Schedule I hereto, the
principal amount of the Underwritten Debt Securities set forth opposite their
respective names in Schedule II hereto.
3. The Corporation acknowledges that the information in the third and
fifth paragraphs under the heading "Underwriting" in the Prospectus Supplement
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus Supplement, and we, as the
Representative, confirm that such statements are correct.
4. If the firm or firms identified as Underwriters include only the
firm or firms identified as the Representative, then the terms Underwriters and
Representative shall each be deemed to refer to such firm or firms.
5. Please accept this offer no later than 1 P.M. on February 1, 2001,
by signing a copy of this Terms Agreement in the space set forth below and
returning the signed copy to us or by sending us a written acceptance in the
following form:
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"We hereby accept your offer, set forth in the Terms Agreement, dated
February 1, 2001, to purchase the Underwritten Securities on the terms set forth
therein."
Very truly yours,
CHASE SECURITIES INC.
XXXXXXX XXXXX XXXXXX INC.
By Chase Securities Inc.
By /s/ Xxxxx X. Xxxxx
---------------------
Acting severally and on
behalf of itself and the
several Underwriters
Accepted:
NORTEL NETWORKS LIMITED
By /s/ Xxxxx X. Xxxx
---------------------
Title: Chief Financial Officer
By /s/ Xxxxxxxxx X. Xxxxxxxxx
---------------------
Title: Treasurer
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SCHEDULE I TO TERMS AGREEMENT
Description of Debt Securities:
Title: 6.125% Notes due February 15, 2006
Principal amount (including currency or composite currency): U.S.
$1,500,000,000
Price to Public: 99.619% of the principal amount
Proceeds to the Corporation: 99.269% of the principal amount
Underwriting Discount: .35% of the principal amount
Sinking fund provisions: Not applicable
Redemption provisions: The notes are redeemable, at any
time at the Corporation's option, at
a redemption price equal to the
principal amount thereof plus
accrued and unpaid interest and a
make-whole premium, as more fully
described on page S-9 of the
Prospectus Supplement.
Indenture: Indenture, dated as of December 15,
2000, among the Corporation, Nortel
Networks Capital Corporation and
Citibank, N.A., as trustee, as the
same may be amended, supplemented or
restated from time to time.
Closing Location: Cleary, Gottlieb, Xxxxx & Xxxxxxxx,
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Closing Date: February 8, 2001 (T + 5)
Other provisions: The provisions for defeasance in
Article Thirteen of the Indenture
will apply to the notes.
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SCHEDULE II TO TERMS AGREEMENT
Principal Amount
of Underwritten
Debt Securities
to be Purchased
(if any)
Underwriter
Chase Securities Inc. . . . . . . . . . . . . . $562,500,000
Xxxxxxx Xxxxx Xxxxxx Inc. . . . . . . . . $562,500,000
Xxxxxxx, Sachs & Co. . . . . . . . . . . . . . . $105,000,000
ABN AMRO Incorporated . . . . . . . . . . . $45,000,000
Bear, Xxxxxxx & Co. Inc. . . . . . . . . . . . . $45,000,000
Credit Suisse First Boston
Corporation . . . . . . . . . . . . . . . . . . . $45,000,000
Deutsche Banc Alex. Xxxxx Inc. . . . . . . . . . $45,000,000
XX Xxxxx Securities Corporation . . . . . . . . $45,000,000
TD Securities (USA) Inc. . . . . . . . . . . . . $45,000,000
--------------
Total $1,500,000,000
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ANNEX A TO TERMS AGREEMENT
NORTEL NETWORKS LIMITED
UNDERWRITING AGREEMENT BASIC PROVISIONS
1. INTRODUCTION
(a) The Corporation proposes to issue and sell certain of its debt
securities, issuable under an indenture dated as of December 15, 2000
(the "Indenture") among the Corporation, Nortel Networks Capital
Corporation and Citibank, N.A., as trustee (the "Trustee"), and/or
certain of its warrants to purchase debt securities issuable pursuant
to the warrant agreement (the "Warrant Agreement") identified in the
Terms Agreement (as hereinafter defined) (such debt securities and
warrants being sometimes collectively referred to herein as the
"Securities"), in one or more offerings on terms determined at the time
of sale. Such debt securities and warrants may be issued separately or
together in units.
(b) The terms with respect to the purchase of the Securities from the
Corporation by the several underwriters (the "Underwriters") listed in
the applicable terms agreement entered into between the Representative
(defined below), on behalf of such Underwriters, and the Corporation
(the "Terms Agreement"), to which these Underwriting Agreement Basic
Provisions constitute Annex A, are set forth in the Terms Agreement,
which together with the provisions hereof incorporated therein by
reference, is sometimes herein referred to as the "Agreement". The
Securities to be purchased in any such offering are hereinafter
referred to as the "Underwritten Securities", and any firm or firms
acting as representatives of such Underwriters are herein referred to
as the "Representatives". Terms defined in the Terms Agreement are used
herein as therein defined.
2. REGISTRATION STATEMENT AND COMPLIANCE WITH APPLICABLE LAW
The Corporation represents and warrants to and agrees with each
Underwriter that:
(a) A registration statement on Form S-3 with respect to the Securities has
been prepared by the Corporation and Nortel Networks Capital
Corporation in conformity with the requirements of the Securities Act
of 1933 (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, has been filed with the Commission and has
become effective. As used in this Agreement: (i) "Registration
Statement" means such registration statement (including all documents
incorporated therein by reference), as amended at the date of the Terms
Agreement; (ii) "Basic Prospectus" means the prospectus (including all
documents incorporated therein by reference) included in the
Registration Statement; and (iii) "Prospectus" means the Basic
Prospectus, together with any amendments or supplements thereto
(including in each case all documents incorporated therein by
reference) specifically related to the Underwritten Securities, as
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. The
Annex A - 1
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Commission has not issued any order preventing or suspending the use of
the Prospectus and, to the Corporation's knowledge, no proceedings for
such purpose are pending before or threatened by the Commission.
(b) The Registration Statement, as amended, as of the time it became
effective and as of the date of the Terms Agreement and the Prospectus
complied and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document filed with the Commission after the date as of which this
representation is being made) will comply, in all material respects, at
all times during the period specified in Section 7(c) hereof and on the
Delivery Date, with the provisions of the Act, the Rules and
Regulations, the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules and regulations of the Commission thereunder; and the
Indenture, including any amendments and supplements thereto pursuant to
which the Underwritten Debt Securities will be issued, as of the time
the Registration Statement became effective and as of the date of the
Terms Agreement complies, and will comply during the period specified
in Section 7(c) and on the Delivery Date (as hereinafter defined), with
the requirements of the Trust Indenture Act of 1939 (the "Trust
Indenture Act") and the rules and regulations of the Commission
thereunder. The Registration Statement, as of the time it became
effective and as of the date of the Terms Agreement, did not and will
not at any time during the period specified in Section 7(c) hereof and
on the Delivery Date, contain an 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 not misleading; and the
Prospectus, as amended or supplemented as of the date of the Terms
Agreement and at the time the Registration Statement became effective,
did not and will not, at any time during the period specified in
Section 7(c) and on the Delivery Date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Corporation makes no
representation or warranty as to: (i) that part of the Registration
Statement that constitutes the Statement of Eligibility and
Qualification under the Trust Indenture Act (Form T-1) of the Trustee;
or (ii) information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Corporation through the
Representative by or on behalf of any Underwriter specifically for use
in connection with the preparation thereof.
3. PURCHASE OF THE UNDERWRITTEN SECURITIES
(a) The obligation of the Underwriters to purchase, and the Corporation to
sell, the Underwritten Securities is evidenced by a Terms Agreement
delivered at the time the Corporation determines to sell the
Underwritten Securities. The Terms Agreement specifies the firm or
firms that will be the Underwriters, the principal amount or number of
the Underwritten Securities to be purchased by each Underwriter, the
purchase price or prices to be paid by the Underwriters for the
Underwritten Securities, the public offering price or prices, if any,
of the Underwritten Securities, and the Underwriters' compensation
therefor and any terms of the Underwritten Securities not already
specified in the Indenture or the Warrant Agreement, as the case may
be. The Terms Agreement
Annex A - 2
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specifies any details of the terms of the offering which should be
reflected in the supplement to the Basic Prospectus related to the
offering of the Underwritten Securities.
(b) It is understood that, in making this Agreement, the Underwriters are
contracting severally and not jointly, and that their several
agreements to purchase the Underwritten Securities on the basis of the
agreements and representations herein contained shall be several and
not joint and shall apply only to the respective principal amounts or
number of the Underwritten Securities to be purchased by them as
provided herein.
(c) Each of the Underwriters shall not offer or sell, directly or
indirectly, any Underwritten Securities in (i) Canada or any province
or territory thereof in contravention of the securities laws of Canada
or any province or territory thereof or (ii) any jurisdiction in the
United States other than to institutional investors or as otherwise
permitted by state securities or blue sky laws.
(d) Each Underwriter shall send to any dealer who purchases from it any of
the Underwritten Securities a notice stating in substance that, by
purchasing such Underwritten Securities, such dealer represents that it
has not offered or sold and shall not offer or sell, directly or
indirectly, any of such Underwritten Securities in Canada or to, or for
the benefit of, any resident of Canada in contravention of the
securities laws of Canada or any province or territory thereof and that
it shall deliver to any other dealer to whom it sells any of such
Underwritten Securities a notice containing substantially the same
statement as is contained in this sentence. It also undertakes not to
distribute any offering material related to the Underwritten Securities
in Canada. Each Underwriter and any dealer who purchases from it any of
the Underwritten Securities may be required to furnish a certificate
stating that it, or any such dealer, has complied with the restrictions
set forth in this paragraph.
4. DELIVERY OF THE UNDERWRITTEN SECURITIES
The Corporation shall not be obligated to deliver any Underwritten
Securities except upon payment for all Underwritten Securities to be
purchased pursuant to this Agreement as hereinafter provided.
5. DEFAULT IN PERFORMANCE BY UNDERWRITER
(a) If any Underwriter defaults in the performance of its obligations under
this Agreement, the remaining non-defaulting Underwriters shall be
obligated severally to purchase the Underwritten Securities which the
defaulting Underwriter agreed but failed to purchase in the respective
proportions which the principal amount or number, as the case may be,
of Underwritten Securities set forth in the applicable column in
Schedule II to the Terms Agreement to be purchased by each remaining
non-defaulting Underwriter set forth in such column bears to the
aggregate principal amount or number, as the case may be, of
Underwritten Securities set forth in such column to be purchased by all
the remaining non-defaulting Underwriters; provided that the remaining
non-defaulting Underwriters shall not be obligated to purchase,
respectively, any Underwritten Debt Securities, Underwritten Warrants
or Underwritten Units that constitute Underwritten Securities if
Annex A - 3
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the aggregate principal amount or number, as the case may be, of,
respectively, such Underwritten Debt Securities, Underwritten Warrants
or Underwritten Units which the defaulting Underwriter or Underwriters
agreed but failed to purchase exceeds 10% of the total principal amount
or number, as the case may be, of, respectively, such Underwritten Debt
Securities, Underwritten Warrants or Underwritten Units. If the
foregoing maximum is exceeded, the remaining non-defaulting
Underwriters, or other underwriters satisfactory to the Representative,
shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the Underwritten
Securities.
(b) If the remaining non-defaulting Underwriters or other underwriters
satisfactory to the Representative do not elect pursuant to the last
sentence of the above paragraph to purchase the aggregate principal
amount or number of Underwritten Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase that exceeds
10% of the total principal amount or number, as the case may be, of
such Underwritten Debt Securities, Underwritten Warrants or
Underwritten Units, this Agreement with respect to such Underwritten
Debt Securities, Underwritten Warrants or Underwritten Units, as the
case may be, shall terminate without liability on the part of any
non-defaulting Underwriter or the Corporation.
(c) Nothing contained in this Section 5 shall relieve a defaulting
Underwriter of any liability it may have to the Corporation and any
non-defaulting Underwriter for damages caused by its default. If other
underwriters are obligated or agree to purchase the Underwritten
Securities of a defaulting Underwriter, either the Representative or
the Corporation may postpone the Delivery Date for up to seven full
business days in order to effect any changes that in the opinion of
counsel for the Corporation or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
6. UNDERWRITTEN SECURITIES
(a) Unless otherwise agreed, delivery of and payment for the Underwritten
Securities shall be made at such location as may be agreed upon by the
Representative and the Corporation (as set forth in Schedule I to the
Terms Agreement) at 9:30 A.M., local time New York City, on the third
business day following the date of the Terms Agreement, or at such
other time and date as shall be agreed upon. This date and time are
sometimes referred to as the "Delivery Date".
(b) On the Delivery Date, the Corporation shall deliver the Underwritten
Securities to the Representative for the account of each Underwriter
against payment to or upon the order of the Corporation of the purchase
price by wire transfer to an account specified by the Corporation or
other financial instrument payable in same day funds upon terms and
conditions agreed to between the Corporation and the Representative.
(c) When delivered, the Underwritten Securities shall be in such form and
in such permitted denominations as the Representative shall request in
writing not less than two full business days prior to the Delivery
Date. For the purpose of expediting the checking and
Annex A - 4
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packaging of the Underwritten Securities, the Corporation shall make
the Underwritten Securities available for inspection by the
Representative in New York City not later than 2:00 P.M., local time
New York City, on the business day prior to the Delivery Date, or at
such other place and time as the parties may agree.
7. OBLIGATIONS OF THE CORPORATION
(a) The Corporation shall furnish promptly to the Representative and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed and a copy of each amendment thereto (in
each case together with all exhibits filed therewith) filed prior to or
on the date of the Terms Agreement or related to or covering the
Underwritten Securities, and a copy of the Prospectus filed with the
Commission.
(b) The Corporation shall deliver promptly to the Representative, without
charge, such number of the following documents as the Representative
may reasonably request: (i) conformed copies of the Registration
Statement (excluding exhibits other than the Indenture, the Warrant
Agreement and this Agreement); (ii) the Prospectus; and (iii) any
documents incorporated by reference in the Prospectus; and the
Corporation authorizes the Underwriters and all dealers to whom any
Underwritten Securities may be offered or sold by the Underwriters to
use such documents during the period referred to in Section 7(c) in
connection with the sale of the Underwritten Securities in accordance
with the applicable provisions of the Act and the Rules and
Regulations; provided that the Corporation shall be deemed to have
complied with the requirements of clause (iii) of this paragraph with
respect to any document filed electronically with the Commission.
(c) During such period following the date of the Terms Agreement, as in the
opinion of counsel for the Underwriters, a prospectus is required by
law to be delivered, but not in any event longer than 40 days from and
including the date of the Terms Agreement, the Corporation shall
furnish copies of: (i) any amendment to the Registration Statement;
(ii) the Prospectus or any amendment or supplement thereto; or (iii)
any document incorporated by reference in any of the foregoing or any
amendment or supplement to any such incorporated document to the
Representative and to counsel for the Underwriters prior to filing any
of such items with the Commission and shall not file any such item to
which the Representative shall reasonably object; provided that despite
any such objection but after consultation with the Representative,
including the furnishing to the Representative of drafts thereof, the
Corporation may file any report or statement which in the opinion of
its counsel it is required to file pursuant to the Exchange Act.
(d) The Corporation shall advise the Representative promptly: (i) when any
post-effective amendment to the Registration Statement related to or
covering the Underwritten Securities becomes effective; (ii) of any
request by the Commission for an amendment or supplement (insofar as
the amendment or supplement relates to or covers the Underwritten
Securities) to the Registration Statement, to the Prospectus, to any
document incorporated by reference in any of the foregoing or for any
additional information related to the Registration Statement (insofar
as such information relates to or covers the Underwritten Securities);
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or any order
Annex A - 5
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directed to the Prospectus or any document incorporated therein by
reference or the initiation of any stop order proceeding or of any
challenge to the accuracy or adequacy of any document incorporated by
reference in the Prospectus; and (iv) of receipt by the Corporation of
any notification with respect to the suspension of the qualification of
the Underwritten Securities for sale in any jurisdiction or the
initiation of any proceeding for that purpose. If at any time during
the period referred to in Section 7(c) when the Prospectus related to
the Underwritten Securities is required to be delivered under the Act,
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of material fact or omit
to state a material fact necessary in order to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act, the Rules and Regulations, the
Exchange Act or the rules and regulations of the Commission thereunder,
the Corporation shall promptly prepare and file with the Commission,
subject to Section 7(c), an amendment or supplement that will correct
such statement or omission or an amendment or supplement which will
effect such compliance.
(e) If, during the period referred to Section 7(c), the Commission shall
issue a stop order suspending the effectiveness of the Registration
Statement, the Corporation shall make every reasonable effort to obtain
the lifting of that order at the earliest possible time.
(f) As soon as practicable, or in accordance with Rule 158 of the Rules and
Regulations, the Corporation shall make generally available to its
security holders and to the Representative an earnings statement (which
need not be audited) of the Corporation and its consolidated
subsidiaries, that will satisfy the provisions of Section 11(a) of the
Act and Rule 158 thereunder.
(g) The Corporation shall make every reasonable effort to arrange for the
qualification of the Underwritten Securities for sale under the laws of
such jurisdictions (other than jurisdictions outside the United States)
as the Representative may reasonably designate and the Corporation
shall pay all expenses (including reasonable fees and disbursements of
counsel) in connection with such qualifications, to maintain such
qualifications in effect during the period referred to in Section 7(c)
and to arrange for the determination of the legality of the
Underwritten Securities for purchase by institutional investors;
provided, however, that the Corporation shall not be required to
qualify to do business in any jurisdiction where it is not so qualified
at the date of the Terms Agreement or to take any action that would
subject it to general or unlimited service of process or to the
imposition of any taxes based on, or measured by, all or any part of
the income of the Corporation, in any jurisdiction where it is not at
such date so subject.
(h) If the sale of the Underwritten Securities provided for herein is not
consummated because any condition to the obligations of the
Underwriters set forth in Section 10 hereof is not satisfied or because
of any refusal, inability or failure on the part of the Corporation to
comply with any provision hereof other than by reason of a default by
any of the Underwriters, the Corporation shall reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket
expenses (including the reasonable fees and
Annex A - 6
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disbursements of counsel for the Underwriters) that shall have been
incurred by them in connection with the proposed purchase and sale of
the Underwritten Securities.
8. INDEMNIFICATION
(a) The Corporation shall indemnify and hold harmless each Underwriter and
each person who controls any Underwriter within the meaning of either
the Act or the Exchange Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to
which they or any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus consisting of the
Basic Prospectus together with the preliminary prospectus supplement
thereto related to the offering of the Underwritten Securities that is
used prior to the filing of the Prospectus (the "Preliminary
Prospectus") or the Prospectus or arises out of, or is based upon, the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The Corporation shall reimburse each indemnified party
for any reasonable legal and other expenses reasonably incurred by such
indemnified party in investigating or defending against any such loss,
claim, damage, liability or action; provided that the Corporation shall
not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission:
(i) made in the Registration Statement, the Preliminary Prospectus or
the Prospectus in reliance upon and in conformity with written
information furnished to the Corporation through the Representative by
or on behalf of any Underwriter for use in connection with the
preparation thereof; or (ii) contained in that part of the Registration
Statement constituting the Statement of Eligibility and Qualification
under the Trust Indenture Act (Form T-1) of the Trustee; provided
further, that the Corporation shall not be liable for the amount of any
settlement of any claim made without its consent, which consent will
not be unreasonably withheld; and provided further, that as to any
Preliminary Prospectus, this indemnity shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on
account of any loss, claim, damage, liability or action arising from
the sale of Underwritten Securities to any person by that Underwriter
if that Underwriter failed to send or give a copy of the Prospectus, as
the same may be amended or supplemented (for purposes of this
paragraph, the "Final Prospectus"), to that person within the time
required by the Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in the Final
Prospectus, unless such failure resulted from non-compliance by the
Corporation with Section 7(b). For purposes of the final proviso to the
immediately preceding sentence, the term Final Prospectus shall not be
deemed to include the documents incorporated therein by reference, and
no Underwriter shall be obligated to send or give any supplement or
amendment to any document incorporated by reference in any Preliminary
Prospectus or the Final Prospectus to any person other than a person to
whom such Underwriter has delivered such incorporated documents in
response to a written or oral request therefor. The
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foregoing indemnity is in addition to and not in limitation or
duplication of any liability or right that the Corporation may
otherwise have to an Underwriter or any person who controls an
Underwriter.
(b) Each Underwriter shall indemnify and hold harmless the Corporation,
each of its directors, each of its officers who signed the Registration
Statement and any person who controls the Corporation within the
meaning of the Act or the Exchange Act, to the same extent (including,
without limitation, the reimbursement of expenses) as the foregoing
indemnity from the Corporation to each Underwriter as set forth in the
above paragraph, but only with reference to written information
furnished to the Corporation through the Representative by or on behalf
of that Underwriter for use in connection with the preparation of the
documents referred to in the foregoing indemnity. The foregoing
indemnity is in addition to and not in limitation or duplication of any
liability that any Underwriter may otherwise have to the Corporation or
any of its directors, officers or controlling persons.
(c) Promptly after receipt by an indemnified party under Sections 8(a) or
(b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under either such paragraph, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an
indemnified party otherwise than under this Section 8. If any action
shall be brought against an indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein, and, to the extent that it
may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any
such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there are likely to be substantial legal defenses available to it and
the other indemnified parties which are different from and additional
to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assert such
legal defenses and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party shall not be
liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless: (i) the indemnified party
shall have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the immediately
preceding sentence (it being understood, however, that the indemnifying
party shall bear only the reasonable fees and disbursements of separate
counsel and shall not be liable for the expenses of more than one
separate counsel, approved by the Representative in the case of Section
8(a), representing the indemnified parties under such paragraph who are
parties to such action); (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice
of commencement
Annex A - 8
17
of the action; or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) To provide for just and equitable contribution in circumstances in
which the indemnification provided for in Sections 8(a) or (b) is due
in accordance with its terms but is for any reason other than as
specified in Section 8(a) held by a court to be unavailable on the
grounds of policy or otherwise, the Corporation and the Underwriters
shall contribute to the aggregate losses, claims, damages and
liabilities (including reasonable legal or other expenses reasonably
incurred in connection with investigating or defending same) to which
the Corporation and one or more of the Underwriters may be subject in
such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount
related to the relevant Underwritten Securities bears to the sum of
such discount and the purchase price of the relevant Underwritten
Securities specified in Schedule I to the Terms Agreement and the
Corporation is responsible for the balance; provided, however, that:
(i) in no case shall any Underwriter (except as may be provided in any
applicable agreement among underwriters) be responsible for any amount
in excess of the underwriting discount applicable to the Underwritten
Securities purchased by such Underwriter hereunder; and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this paragraph are several in
proportion to their respective underwriting percentages and not joint.
For purposes of this Section 8, each person who controls an Underwriter
within the meaning of the Act or the Exchange Act shall without
duplication have the same rights to contribution as such Underwriter,
and each person who controls the Corporation within the meaning of the
Act or the Exchange Act, each officer of the Corporation who shall have
signed the Registration Statement and each director of the Corporation
shall have the same rights to contribution as the Corporation, subject
in each case to clauses (i) and (ii) of this paragraph. Any party
entitled to contribution shall, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another
party or parties under this paragraph, notify such party or parties
from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may
have otherwise than under this paragraph.
9. TERMINATION OF UNDERWRITERS' OBLIGATIONS
The obligations of the Underwriters under this Agreement may be
terminated by the Representative, in its absolute discretion, by notice
given to and received by the Corporation prior to the delivery of and
payment for the Underwritten Securities, if, during the period
beginning on the date of the Terms Agreement to and including the
Delivery Date: (i) trading in securities generally on the New York
Stock Exchange, Inc. shall have been suspended or limited or minimum
prices shall have been established on such Exchange by order of the
Commission or any other governmental authority; (ii) a
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18
banking moratorium is declared by either United States federal or New
York State authorities; or (iii) there shall have occurred any outbreak
or material escalation of hostilities the effect of which on the
financial markets of the United States is such as to make it, in the
reasonable judgment of the Representative, impracticable to market the
Underwritten Securities.
10. ADDITIONAL CONDITIONS TO THE RESPECTIVE OBLIGATIONS OF THE UNDERWRITERS
(a) The respective obligations of the Underwriters under this Agreement
with respect to the Underwritten Securities are subject to the accuracy
in all material respects on the date of the Terms Agreement and on the
Delivery Date of the representations and warranties of the Corporation
contained herein, to performance by the Corporation in all material
respects of its obligations hereunder, and to each of the following
additional terms and conditions applicable to the Underwritten
Securities.
(b) At or before the Delivery Date, no stop order suspending the
effectiveness of the Registration Statement or any order directed to
any document incorporated by reference in the Prospectus shall have
been issued and remain in effect and no proceeding for that purpose
shall be pending or, to the knowledge of the Corporation or the
Representative, threatened by the Commission.
(c) The Corporation shall have furnished to the Representative, on the
Delivery Date, the opinion of Xxxxxxxx X. XxXxxx, Chief Legal Officer
of the Corporation ("Counsel"), dated the Delivery Date, to the effect
that:
(i) the Corporation has been duly incorporated and is a validly
existing corporation under the laws of Canada, with corporate
power and authority to conduct its business as currently
conducted and described in the Prospectus;
(ii) the execution and delivery of the Indenture have been duly
authorized, the Indenture has been executed and delivered by
the Corporation and is qualified under the Trust Indenture Act
and, assuming the requisite corporate capacity and powers of,
and the due authorization, execution and delivery by Nortel
Networks Capital Corporation and the Trustee, constitutes a
valid and binding agreement of the Corporation enforceable in
accordance with its terms;
(iii) the issue, execution and delivery of the Underwritten
Securities have been duly authorized in accordance with the
Indenture and the Underwritten Securities have been duly
executed and delivered by the Corporation and, assuming
authentication by the Trustee, constitute valid and binding
obligations of the Corporation enforceable in accordance with
their terms;
(iv) the execution and delivery of the Warrant Agreement have been
duly authorized, the Warrant Agreement has been executed and
delivered by the Corporation and, assuming the requisite
corporate capacity and powers of, and the due authorization,
execution and delivery by the warrant agent named in the
Warrant Agreement, constitutes a valid and binding agreement
of the Corporation enforceable in accordance with its terms;
Annex A - 10
19
(v) the execution and delivery of this Agreement have been duly
authorized and the Agreement has been duly executed and
delivered by the Corporation;
(vi) the issue and sale of the Underwritten Securities to the
Underwriters pursuant to this Agreement and the consummation
of the other transactions herein contemplated (x) do not
require (except for the exemption orders of the Director under
the Canada Business Corporations Act pursuant to Section 82(3)
of that Act and of the Commission des valeurs mobilieres du
Quebec pursuant to Section 12 of the Securities Act (Quebec),
which orders were granted, and the sending of the Prospectus
to the Director under the Canada Business Corporations Act
pursuant to Section 193 thereunder, which was effected) the
consent, approval or authorization of or filing or
registration with, any governmental body or regulatory
authority in Canada, and (y) do not conflict with or
constitute a breach of or default under the constating
documents or bylaws of the Corporation;
(vii) the Registration Statement is effective under the Act and, to
the best of Counsel's knowledge, no stop order with respect
thereto has been issued, or proceeding for that purpose has
been instituted or threatened, by the Commission;
(viii) to the best of Counsel's knowledge, no order directed to any
document incorporated by reference in the Prospectus has been
issued and remains in effect, or is threatened to be issued,
by the Commission; and
(ix) to the best of Counsel's knowledge, other than as disclosed in
the Prospectus, neither the Corporation nor any of its
subsidiaries is involved in any litigation, arbitration or
legal proceedings which are material to the Corporation and
its subsidiaries taken as a whole nor is there any such
litigation, arbitration or legal proceedings pending or
threatened.
The opinions expressed above will be subject to those
assumptions and qualifications reasonably satisfactory to such Counsel
including without limitation, with respect to the opinions expressed in
Sections 10(c)(ii), (iii) and (iv) above that:
(v) enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium, or other laws
affecting the enforcement of creditors' rights generally;
(w) equitable remedies, including the remedies of specific
performance and injunction, may only be granted at the
discretion of a court of competent jurisdiction;
(x) the Currency Act (Canada) precludes the courts in Canada from
awarding a judgment for an amount expressed in a currency
other than Canadian dollars;
(y) any requirement that interest, as defined in Section 347 of
the Criminal Code (Canada), be paid by the Corporation at an
effective annual rate in excess of 60 percent is not
enforceable, and such requirement may not be severable from
the remainder of the document in which it is contained; and
Annex A - 11
20
(z) no opinion is expressed with respect to the enforceability of
any provisions relating to indemnity and contribution.
(d) Counsel, in rendering his opinion, may rely as to matters of fact, to
the extent he deems proper, on certificates of responsible officers of
the Corporation and its subsidiaries or public officials. He may also
rely upon legal opinions provided to him. In addition, he may rely upon
determinations of responsible officers of the Corporation with respect
to the verification, characterization and quantification of various
assets and liabilities. Furthermore, he may assume without independent
investigation: (i) the authenticity of any document or instrument
submitted to him as an original, the conformity to the authentic
original of any document or instrument submitted to him as a certified,
conformed or photographic copy and the genuineness of all signatures on
such originals or copies; and (ii) with respect to parties to an
agreement, other than the Corporation, the due execution and delivery,
pursuant to due authorization, of such agreement and that such
agreement constitutes a legal, valid and binding agreement of all such
parties.
(e) In addition, Counsel shall advise by letter, based on his participation
in the preparation of the Registration Statement and Prospectus (but
without independent check or verification of the contents thereof
except as specified therein), that:
(i) the Registration Statement, as of its effective date, and the
Prospectus, as of its date and the date of the supplement to
the Basic Prospectus (in each case, except for the documents
incorporated by reference therein, the financial statements
and other financial and statistical data included or
incorporated by reference therein and the information included
therein under the caption "Plan of Distribution" or
"Underwriting", as to which Counsel need express no view),
appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the Rules
and Regulations; and
(ii) no information has come to Counsel's attention that causes him
to believe that the Registration Statement (except the
financial statements and other financial and statistical data
included or incorporated by reference therein and the
information included therein under the caption "Plan of
Distribution" or "Underwriting", as to which Counsel need
express no view), at the time it became effective, or on the
date of such opinion contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (except as aforesaid)
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(f) The Corporation shall have furnished to the Representative, as of the
date of the Terms Agreement and on the Delivery Date, a letter of
Deloitte & Touche LLP or another internationally recognized firm of
chartered accountants or certified public accountants, addressed to the
Underwriters and dated the Delivery Date, of the type described in the
Canadian Institute of Chartered Accountants Handbook, Section 7100, or
in the American Institute of Certified Public Accountants' Statement on
Auditing Standards No.
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21
72 and covering such specified financial statement items as may be
agreed between the Corporation and the Representative.
(g) The Representative shall have received, on the Delivery Date, from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Underwriters,
such opinion or opinions, dated the Delivery Date, with respect to the
issuance and sale of the Underwritten Securities, the Indenture, the
Warrant Agreement, the Registration Statement, the Prospectus and other
related matters as the Representative may reasonably require, and the
Corporation shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Corporation shall have furnished to the Representative, on the
Delivery Date, a certificate of the Corporation, signed by any two of
the President and Chief Executive Officer, the Chief Operating Officer,
the Chief Financial Officer, or any one of the aforesaid officers
together with any one of the Corporate Secretary, the Controller, the
Treasurer, any Assistant Controller, any Assistant Secretary or any
Assistant Treasurer, dated the Delivery Date, to the effect that the
signers of such certificate have examined the Registration Statement,
the Prospectus and this Agreement and that:
(i) the representations and warranties of the Corporation in this
Agreement are true and correct in all material respects on and
as of the Delivery Date with the same effect as if made on the
Delivery Date and the Corporation has complied in all material
respects with all the agreements and satisfied in all material
respects all the conditions on its part to be performed or
satisfied at or prior to the Delivery Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and remains in effect and no
proceedings for that purpose are pending or, to the knowledge
of each such person, threatened by the Commission, and no
order directed to any document incorporated by reference in
the Prospectus has been issued and remains in effect or, to
the knowledge of each such person, is threatened to be issued
by the Commission; and
(iii) since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse
change in the condition (financial or other), earnings,
business or properties of the Corporation and its
subsidiaries, taken as a whole, except as set forth in or
contemplated in the Prospectus.
(i) During the period commencing the date of the Terms Agreement and
terminating the Delivery Date, no downgrading shall have occurred in
the rating of the Corporation's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the Act and no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating
of any of the Corporation's debt securities.
Annex A - 13
22
11. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
The respective agreements, representations, warranties,
indemnities and other statements of the Corporation or its officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Corporation or any of the officers, directors or controlling
persons referred to in Section 8 hereof, and will survive delivery of and
payment for the Underwritten Securities for a period of two years after such
delivery.
12. NOTICES
All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Underwriters, will be mailed, delivered or
sent by electronic transfer including telex or facsimile and confirmed to the
Representative first named in the Terms Agreement, or, if sent to the
Corporation, will be mailed, delivered or sent by electronic transfer including
telex or facsimile and confirmed to it at Nortel Networks Limited, 0000 Xxxxx
Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0, Attention: Corporate
Secretary, (facsimile number (000) 000-0000).
13. SUCCESSORS
This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 8 hereof, and no other
person shall have any right or obligation hereunder.
14. COUNTERPARTS
This Agreement may be executed 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.
15. APPLICABLE LAW
This Agreement will be governed by and construed in accordance
with the laws of the Province of Ontario, Canada, except that Sections 2, 7 and
8 will be governed by and construed in accordance with the laws of the State of
New York, United States.
Annex A - 14
