EXHIBIT 99.1
CANADIAN GUARANTEE AND SECURITY AGREEMENT
dated as of
[FIRST DAY OF THE COLLATERAL PERIOD]
among
NORTEL NETWORKS LIMITED,
the SUBSIDIARY GUARANTORS party hereto,
and
JPMORGAN CHASE BANK,
as Collateral Agent
EXHIBIT 99.1
TABLE OF CONTENTS
PAGE
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SECTION 1. DEFINITIONS..........................................................................2
SECTION 2. GUARANTEES..........................................................................17
SECTION 3. GRANT OF TRANSACTION LIENS..........................................................20
SECTION 4. GENERAL REPRESENTATIONS WARRANTIES AND COVENANTS....................................23
SECTION 5. ADDITIONAL COVENANTS................................................................27
SECTION 6. RECORDABLE INTELLECTUAL PROPERTY....................................................29
SECTION 7. SECURITIES AND OTHER INVESTMENTS....................................................30
SECTION 8. CASH COLLATERAL ACCOUNTS............................................................32
SECTION 9. OPERATION OF CASH COLLATERAL ACCOUNTS; CARE AND USE OF COLLATERAL...................33
SECTION 10. TRANSFER OF RECORD OWNERSHIP.......................................................34
SECTION 11. RIGHT TO VOTE SECURITIES...........................................................34
SECTION 12. CERTAIN CASH DISTRIBUTIONS.........................................................35
SECTION 13. REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT.......................35
SECTION 14. APPLICATION OF PROCEEDS............................................................38
SECTION 15. FEES AND EXPENSES..................................................................41
SECTION 16. AUTHORITY TO ADMINISTER COLLATERAL.................................................41
SECTION 17. LIMITATION ON DUTY IN RESPECT OF COLLATERAL........................................42
SECTION 18. GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT.................................43
SECTION 19. TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL............................45
SECTION 20. ADDITIONAL LIEN GRANTORS...........................................................47
SECTION 21. ADDITIONAL SECURED OBLIGATIONS.....................................................47
SECTION 22. NOTICES............................................................................48
SECTION 23. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE.........................................49
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EXHIBIT 99.1
PAGE
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SECTION 24. SUCCESSORS AND ASSIGNS.............................................................49
SECTION 25. AMENDMENTS AND WAIVERS.............................................................50
SECTION 26. CHOICE OF LAW......................................................................50
SECTION 27. JUDGEMENT CURRENCY.................................................................50
SECTION 28. INTEREST ACT.......................................................................50
SECTION 29. WAIVER OF JURY DUTY................................................................51
SECTION 30. SEVERABILITY.......................................................................51
SCHEDULES:
SCHEDULE 1 Equity Interests in Material Subsidiaries Owned by Lien Grantors
SCHEDULE 2 Securities and Other Investments Owned by Lien Grantors
EXHIBITS:
EXHIBIT A Guarantee and Security Agreement Supplement
EXHIBIT B Copyright Security Agreement
EXHIBIT C Patent Security Agreement
EXHIBIT D Trademark Security Agreement
EXHIBIT E Design Security Agreement
EXHIBIT F Perfection Certificate
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CANADIAN GUARANTEE AND SECURITY AGREEMENT
AGREEMENT dated as of [first day of the Collateral Period] among NORTEL
NETWORKS LIMITED (with its successors, "NNL"), Nortel Networks Inc. (with its
successors, "NNI") the SUBSIDIARY GUARANTORS party hereto and JPMORGAN CHASE
BANK, as Collateral Agent (with its successors, the "COLLATERAL AGENT").
WHEREAS, NNL, as borrower, certain financial institutions and JPMorgan
Bank Canada, formerly known as The Chase Manhattan Bank successor by merger to
the Xxxxxx Guaranty Trust Company of New York, Toronto Branch, as Administrative
Agent, are parties to a 364-Day Credit Agreement dated as of April 12, 2000 (as
amended from time to time, the "2000 NNL 364-DAY AGREEMENT"); and
WHEREAS, NNL, as borrower, certain financial institutions, Credit
Suisse First Boston ("CSFB"), as Syndication Agent, and JPMorgan Chase Bank,
formerly known as The Chase Manhattan Bank successor by merger to the Xxxxxx
Guaranty Trust Company of New York, Toronto Branch, as Administrative Agent are
parties to a 5-Year Credit Agreement dated as of April 12, 2000 (as amended from
time to time, the "2000 NNL 5-YEAR AGREEMENT"); and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions, and JPMorgan Chase Bank, formerly known as The Chase Manhattan
Bank successor by merger to the Xxxxxx Guaranty Trust Company of New York, as
Administrative Agent, are parties to a 364-Day Credit Agreement dated as of
April 12, 2000 (as amended from time to time, the "2000 NNI 364-DAY AGREEMENT");
and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions and JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank
successor by merger to the Xxxxxx Guaranty Trust Company of New York, as
Administrative Agent, are parties to a 5-Year Credit Agreement dated as of April
12, 2000 (as amended from time to time, the "2000 NNI 5-YEAR AGREEMENT"); and
WHEREAS, NNL, as borrower, certain financial institutions, CSFB, as
Syndication Agent, and JPMorgan Chase Bank formerly known as The Chase Manhattan
Bank, Toronto Branch, as Administrative Agent, are parties to a 364-Day Credit
Agreement dated as of June 14, 2001 (as amended from time to time, the "2001 NNL
364-DAY AGREEMENT"); and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions, CSFB, as Syndication Agent, and JPMorgan Chase Bank formerly known
as The Chase Manhattan Bank, as Administrative Agent, are parties to a 364-Day
Credit Agreement dated as of June 14, 2001 (as amended from time to time, the
"2001 NNI 364-DAY AGREEMENT"); and
WHEREAS, the parties hereto have agreed that this Agreement shall be in
effect only during any Collateral Period (as defined below); and
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WHEREAS, pursuant to the 0000 XXX 364-Day Agreement and the 2001 NNI
364-Day Agreement (together, the "2001 364-Day Agreements"), on the first day of
any Collateral Period NNL and its Canadian Subsidiaries (as defined below) are
required to enter into a Canadian Guarantee and Security Agreement in the form
hereof;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS.
(a) Terms Defined in the PPSA. Terms defined in the PPSA and used
herein shall, unless otherwise defined herein, have the same
meaning as ascribed to such term in the PPSA, including
"Accessions", "Chattel Paper", "Document of Title", "Goods",
"Instruments", "Money", "Security", "financing statement" and
"financing change statement". However, the term "Goods" when
used herein shall not include "consumer goods" as that term is
defined in the PPSA.
(b) Additional Definitions. The following additional terms, as
used herein, have the following meanings:
"1988 INDENTURE" means the Indenture dated as of November 30, 1988
among NTL, and its successors, the subsidiary guarantors party thereto and The
Toronto-Dominion Bank Trust Company as trustee, as amended from time to time.
"1996 INDENTURE" means the Indenture dated as of February 15, 1996
among NTL, and its successors, the subsidiary guarantors party thereto and The
Bank of New York as trustee, as amended from time to time.
"2000 INDENTURE" means the Indenture dated as of December 15, 2000
among NNC and Citibank N.A. as trustee, as amended from time to time.
"2001 INDENTURE" means the Indenture dated as of August 15, 2001 among
NNC, NNL, as guarantor, and The Bankers Trust Company, as trustee, as amended
from time to time.
"2002 NOTES" means the 6 7/8% Notes due 2002 issued by NTL pursuant to
the 1998 Indenture.
"2003 NOTES" means the 6% Notes due 2003 issued by NTL pursuant to the
1988 Indenture.
"2006 NOTES" means the 6.125% Notes due 2006 issued by NNL pursuant to
the 0000 Xxxxxxxxx.
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"2006 NNCC NOTES" means the 7.40% Notes due 2006 issued by NTL pursuant
to the 1996 Indenture.
"2008 NOTES" means the 4.25% Convertible Senior Notes due 2008 issued
by NNC and guaranteed by NNL pursuant to the 2001 Indenture.
"2023 NOTES" means the 6 7/8% Notes due 2023 issued by NTL pursuant to
the 1988 Indenture.
"2026 NOTES" means the 7.875% Notes due 2026 issued by Northern Telecom
Capital Corporation and guaranteed by NTL pursuant to the 1996 Indenture.
"ACCOUNTS" means all "accounts," as such term is defined in the PPSA,
now owned or hereafter acquired by any Lien Grantor and, in any event, shall
include all accounts due or accruing due and all agreements, books, accounts
receivable, other receivables, book debts, claims and demand of every nature and
kind and other forms of monetary obligations (other than forms of monetary
obligations evidenced by Chattel Paper, Securities or Instruments) now owned or
hereafter received or acquired by or belonging or owing to any Lien Grantor,
whether or not yet earned by performance on the part of such Lien Grantor and
all invoices, letters, documents and papers recording, evidencing or relating
thereto.
"BANK TERMINATION DATE" means the first date on which all of the
following conditions are satisfied: (i) all commitments to extend credit under
any Credit Agreement shall have expired or been terminated, (ii) all
Non-Contingent Secured Obligations arising under any of the Credit Agreements
shall have been paid in full, and (iii) no Contingent Secured Obligation shall
remain outstanding under any of the Credit Agreements, other than any indemnity
claims that have not been asserted on or prior to such date.
"BANKS" means the "Banks" under each of the Credit Agreements.
"BONDS" means, collectively, the 2002 Notes, the 2003 Notes, the 2006
Notes, the 2006 NNCC Notes, the 2008 Notes, the 2023 Notes and the 2026 Notes.
"BUSINESS DAY" means a day on which chartered banks are open for
over-the-counter business in the jurisdiction of incorporation or principal
place of business of the applicable Lien Grantor and excludes Saturdays, Sundays
and statutory holidays therein.
"CANADIAN SUBSIDIARY" means, with respect to any Person, any Subsidiary
(which may be a corporation, limited liability company, partnership or other
legal entity) organized under the laws of Canada or one of the Provinces or
Territories of Canada.
"CAPITAL MARKETS EVENT" has the meaning set forth in the 2001 NNL 364 -
Day Agreement.
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"CASH COLLATERAL ACCOUNT" has the meaning given to it in Section 8.
"CASH COLLATERAL AGREEMENT" means an agreement that governs the
operation of a Cash Collateral Account as provided for in this Agreement, in
form and substance satisfactory to the Collateral Agent, acting reasonably,
executed and delivered by the relevant Lien Grantor, the Collateral Agent and
the relevant Depositary Bank or securities intermediary.
"CASH DISTRIBUTIONS" means dividends, interest and other distributions
and payments (including proceeds of liquidation, sale or other disposition) made
or received in cash upon or with respect to any Collateral and all condemnation
and insurance proceeds received with respect to Real Property Collateral.
"COLLATERAL" means all property, except for Real Property Collateral,
whether now owned or hereafter acquired, on which a Lien is granted or purports
to be granted to the Collateral Agent pursuant to this Agreement, the Guarantee
and Security Agreement Supplements, each of the Intellectual Property Security
Agreements, the Hypothecs and all other documents required to be delivered under
any of the foregoing. When used with respect to a specific Lien Grantor, the
term "Collateral" means any of the foregoing Collateral in which such Lien is
granted or is purporting to be granted (other than Real Property Collateral).
"COLLATERAL AGENT" means JPMorgan Chase Bank, in its capacity as
Collateral Agent under this Agreement and the other Security Documents, and its
successors in such capacity.
"COLLATERAL PERIOD" means any period from and including the first day
when the Debt Rating is lower than BBB- by S&P or Baa3 by Moody's to but
excluding the first day when the Debt Rating is BBB (stable outlook) or higher
by S&P and Baa2 (stable outlook) or higher by Moody's.
"COMMODITY ACCOUNT" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a Lien Grantor.
"CONTINGENT SECURED OBLIGATION" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including any Secured Obligation that is: (i) an obligation under a Designated
Hedging Agreement to make payments that cannot be quantified at such time, (ii)
any other obligation (including any guarantee) that is contingent in nature at
such time, or (iii) an obligation to provide collateral to secure any of the
foregoing types of obligations.
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence.
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"COPYRIGHTS" means all copyrights and intangibles of like nature under
the laws of Canada or any other country (whether or not the underlying works of
authorship have been published) that any Lien Grantor now or hereafter owns or
uses, including:
(i) all registrations and recordings thereof, all copyrightable
works of authorship (whether or not published), and all
applications for copyrights under the laws of Canada or any
other country, including all registrations, recordings and
applications in the Canadian Intellectual Property Office or
in any similar office or agency in any other country or any
political subdivision thereof, including those described in
Schedule 1 to any Copyright Security Agreement,
(ii) all restorations, extensions or renewals of any of the
foregoing,
(iii) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including
damages and payments for past or future infringements thereof.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"CREDIT AGREEMENTS" means the NNI Credit Agreements and the NNL Credit
Agreements.
"DEBT RATING" means any rating by Moody's or S&P with respect to the
senior unsecured non-credit enhanced long-term debt of NNL.
"DEPOSIT ACCOUNT" means any bank deposit, demand, time, savings,
passbook or similar account.
"DEPOSITARY BANK" means a bank or other financial or credit institution
at which a Deposit Account or Cash Collateral Account is maintained.
"DESIGNATED BANK DEBT" has the meaning specified in Section 21(c).
"DESIGNATED CAPITAL MARKETS DEBT" has the meaning specified in Section
21(b).
"DESIGNATED HEDGING AGREEMENT" has the meaning specified in Section
21(a).
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"DESIGNS" means all industrial designs, design patents and other
designs under the laws of Canada or any other country that any Lien Grantor now
or hereafter owns or uses, including:
(i) all registrations and recordings thereof and all applications
in connection therewith including all registrations,
recordings and applications that have been or shall be made or
filed in the Canadian Intellectual Property Office or any
similar office in any country,
(ii) all records, reissues, extensions or renewals of any of the
foregoing,
(iii) all claims for and rights to xxx for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including
damages and payments for past or future infringements thereof.
"DESIGN LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Design now or hereafter in
existence, whether or not registered or recorded and whether or not an
application shall, or is intended to be filed in respect thereof.
"DESIGN SECURITY AGREEMENT" means a Design Security Agreement,
substantially in the form of Exhibit E, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"DRAWDOWN DATE" means any date during a Collateral Period on which an
extension of credit is made under either 2001 364-Day Agreement
"EQUIPMENT" means "equipment", as such term is defined in the PPSA,
whether now owned or hereafter acquired by any Lien Grantor, wherever located
and, in any event, includes all such Lien Grantor's machinery and equipment,
processing equipment, conveyors, machine tools, data processing and computer
equipment with software and peripheral equipment, and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock,
trade fixtures and fixtures together with all additions and accessions thereto,
replacements therefor, all parts therefor, all substitutes for any of the
foregoing, fuel therefor, and all manuals, drawings, instructions, warranties
and rights with respect thereto, and all products and proceeds thereof and
condemnation awards and insurance proceeds with respect thereto.
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"EQUITY INTEREST" means (i) in the case of a corporation, any shares of
its capital stock, (ii) in the case of a limited liability company, any
membership interest therein, (iii) in the case of a partnership, any partnership
interest (whether general or limited) therein, (iv) in the case of any other
business entity, any participation or other interest in the equity or profits
thereof, or (v) any warrant, option, interest or other right to acquire, in any
form whatsoever, any Equity Interest described in this definition.
"EVENT OF DEFAULT" means an "Event of Default" under any Credit
Agreement.
"GUARANTEE" means the Guarantee under Section 2 hereof.
"GUARANTEE AND SECURITY AGREEMENT SUPPLEMENT" means a Guarantee and
Security Agreement Supplement, substantially in the form of Exhibit A, signed
and delivered to the Collateral Agent for the purpose of adding a Subsidiary as
a party hereto pursuant to Section 20 and/or adding additional property to the
Collateral.
"GUARANTEED OBLIGATIONS" means (i) with respect to NNL, the NNL
Guaranteed Obligations and (ii) with respect to any Subsidiary Guarantor, the
NNL Bank Obligations, the NNL Hedging Obligations, the NNL Bond Obligations,
NNL's obligations in respect of any of the NNL Guaranteed Obligations, any
Designated Capital Markets Debt and any Designated Bank Debt.
"GUARANTORS" means NNL and the Subsidiary Guarantors.
"HEDGING AGREEMENT" means (i) any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest rate, currency exchange rate or commodity price hedging
arrangement and (ii) any hedging agreement in respect of common stock entered
into in order to hedge exposure under stock option plans or other benefit plans
for employees, directors or consultants of NNL and its Subsidiaries, but in each
case only if such agreement or arrangement is entered into with a Bank or an
affiliate thereof.
"HYPOTHEC" means each of the hypothecs entered into, from time to time,
by a Lien Grantor and all documents, instruments and agreements entered into
under, by virtue of or otherwise in connection therewith.
"ILLIQUID COLLATERAL" means Collateral other than Liquid Collateral.
"INDENTURE TRUSTEES" means (i) The Toronto-Dominion Bank Trust Company,
as trustee under the 1988 Indenture, (ii) the Bank of New York, as trustee under
the 1996 Indenture, (iii) Citibank, N.A., as trustee under the 2000 Indenture,
and (iv) Bankers Trust Company, as trustee under the 2001 Indenture and their
respective successors in such capacity.
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"INDENTURES" means, collectively, the 1988 Indenture, the 1996
Indenture, the 2000 Indenture and the 2001 Indenture.
"INTANGIBLES" means all "intangibles", as such term is defined in the
PPSA, including all security interests, goodwill, chooses in action and other
contractual benefits and all Intellectual Property.
"INTELLECTUAL PROPERTY" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Designs, (vi) Design Licenses (vi)
Copyrights and (vii) Copyright Licenses, and all rights in or under any of the
foregoing.
"INTELLECTUAL PROPERTY FILING" means with respect to any Patent,
Design, Copyright or Trademark, the filing of the applicable Patent Security
Agreement, Design Security Agreement, Copyright Security Agreement or Trademark
Security Agreement with the Canadian Intellectual Property Office together with
an appropriately completed recordation form in each case sufficient to record
the Transaction Lien granted to the Collateral Agent in such Material Recordable
Intellectual Property.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means a Copyright Security
Agreement, a Design Security Agreement, a Patent Security Agreement or a
Trademark Security Agreement.
"INVENTORY" means any "inventory", as such term is defined in the PPSA,
now or hereafter owned or acquired by any Lien Grantor, wherever located, and in
any event including inventory, merchandise, Goods and other personal property
which are held by or on behalf of any Lien Grantor for sale or lease or are
furnished or are to be furnished under a contract of service, or which
constitute raw materials, work in process or materials used or consumed or to be
used or consumed in such Lien Grantor's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"INVESTMENT GRADE DATE" means the first day when the Debt Rating is BBB
(stable outlook) or higher by S&P and Baa2 (stable outlook) or higher by
Moody's.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or 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, any
purchase option, call or similar right of a third party with respect to such
securities.
"LIEN GRANTORS" means NNL, NNI and the Subsidiary Guarantors.
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"LIQUID COLLATERAL" means (a) Pledged Accounts, (b) Pledged Chattel
Paper, (c) Pledged Instruments, (d) Cash Collateral Accounts, (e) Pledged
Intellectual Property, (f) any Uncertificated Securities evidencing money market
funds, (g) Pledged Deposit Accounts and (h) the Securities Accounts.
"LIQUID INVESTMENT" means a Permitted Investment (other than commercial
paper) that matures within 30 days after it is first included in the Collateral.
"LOAN DOCUMENTS" means the Credit Agreements (including the notes
thereunder) and the Security Documents.
"LLC INTEREST" means a membership interest or similar interest in a
limited liability company.
"MATERIAL GOVERNMENT CONTRACT" means a contract, between a Lien Grantor
and either (i) the federal government or (ii) a provincial or local government
or any agency or instrumentality thereof, that provides (or can reasonably be
expected to provide) for payments to such Lien Grantor in an aggregate amount
exceeding (x) for the purpose of the first sentence of Section 4(m), $50,000,000
and (y) for the purpose of the second sentence of Section 4(m), $10,000,000.
"MATERIAL INTELLECTUAL PROPERTY" means, with respect to any Lien
Grantor, any Intellectual Property that is material to the business of the NNL
Companies taken as a whole, as such business is presently conducted or proposed
to be conducted.
"MATERIAL RECORDABLE INTELLECTUAL PROPERTY" means the Recordable
Intellectual Property notified in writing from time to time to the Collateral
Agent by any Lien Grantor in accordance with the provisions hereof.
"MATERIAL SUBSIDIARY" has the meaning set forth in the 0000 XXX 364-Day
Agreement.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"NNC" means Nortel Networks Corporation, a Canadian corporation, and
its successors.
"NNFI" means Nortel Networks U.S. Finance Inc.
"NNFI HEDGING OBLIGATIONS" has the meaning set forth in the U.S.
Security Agreement.
"NNI BANK OBLIGATIONS" means (i) all principal of and interest
(including, without limitation, any Post-Petition Interest) on any loan under,
or any note issued pursuant to,
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any NNI Credit Agreement, (ii) all other amounts payable by NNI under any NNI
Credit Agreement, (iii) all obligations of NNI under Section 2 of the U.S.
Security Agreement and (iv) any renewals or extensions of any of the foregoing.
"NNI CREDIT AGREEMENTS" means the 0000 XXX 364-Day Agreement, the 2000
NNI 5-Year Agreement and the 2001 NNI 364-Day Agreement.
"NNI HEDGING OBLIGATIONS" has the meaning set forth in the U.S.
Security Agreement.
"NNI SECURED OBLIGATIONS" means (i) the NNI Bank Obligations, (ii) the
NNI Hedging Obligations (iii) any Designated Bank Debt and (iv) any Designated
Capital Market-Debt of NNI.
"NNL BANK OBLIGATIONS" means (i) all principal of and interest
(including, without limitation, any Post-Petition Interest) on any loan under,
or any note issued pursuant to, any NNL Credit Agreement, (ii) all other amounts
payable by NNL under any NNL Credit Agreement, (iii) all obligations of NNL
under Article 9 of each NNI Credit Agreement; and (iv) any renewals or
extensions of any of the foregoing.
"NNL BOND OBLIGATIONS" means all principal of and interest (including,
without limitation, any Post-Petition Interest) on and other amounts payable
under the 2002 Notes, the 2003 Notes, the 2006 Notes, the 2006 NNCC Notes, the
2008 Notes, the 2023 Notes and the 2026 Notes.
"NNL COMPANIES" means, collectively, NNL, any of its Subsidiaries
(including without limitation NNI and any NNI Subsidiaries) and their respective
affiliates.
"NNL CREDIT AGREEMENTS" means the 0000 XXX 364-Day Agreement, the 0000
XXX 5-Year Agreement and the 0000 XXX 364-Day Agreement.
"NNL GUARANTEED OBLIGATIONS" means the NNI Hedging Obligations, the
NNFI Hedging Obligations, the NNI Bank Obligations, any Designated Bank Debt and
any Designated Capital Markets Debt (other than Designated Capital Markets Debt
of NNL).
"NNL HEDGING OBLIGATIONS" means (i) all obligations of NNL under any
Designated Hedging Agreement, and (ii) any renewals or extensions thereof.
"NNL SECURED OBLIGATIONS" means (i) the NNL Bank Obligations, (ii) the
NNL Bond Obligations, (iii) the NNL Hedging Obligations, (iv) the NNL Guaranteed
Obligations and (v) any Designated Capital Markets Debt of NNL.
"NNL SUBSIDIARY" means any Subsidiary of NNL other than NNI or any
Subsidiary of NNI.
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"NOMINATED PERSON" means a Person whom the issuer of a letter of credit
(i) designates or authorizes to pay, accept, negotiate or otherwise give value
under such letter of credit and (ii) undertakes by agreement or custom and
practice to reimburse.
"NON-CONTINGENT SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"NTL" means Northern Telecom Limited, a Canadian corporation, and its
successors.
"PARTNERSHIP INTEREST" means a partnership interest, whether general or
limited.
"PATENTS" means:
(i) all letters patent of invention issued by Canada or any other
country and all applications for letters patent and all
registrations and recordings thereof pending before the
Canadian Intellectual Property Office including those
described in Schedule 1 to any Patent Security Agreement or in
any similar office or agency in any other country,
(ii) all reissues, divisions, continuations, continuations-in-part,
revisions and extensions of any of the foregoing,
(iii) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing, and
(iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including
damages and payments for past or future infringements thereof.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence or
not.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement,
substantially in the form of Exhibit C, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"PERFECTION CERTIFICATE" means (a) with respect to any Lien Grantor
(other than NNI), a certificate substantially in the form of Exhibit F, and (b)
with respect to NNI, a certificate substantially in the form of Exhibit E to the
U.S. Security Agreement, in each case completed and supplemented with the
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schedules contemplated thereby to the satisfaction of the Collateral Agent, and
signed by an officer of such Lien Grantor.
"PERMITTED INVESTMENTS" means investments in:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the
United States or Canada (or by any agency thereof to the
extent such obligations are backed by the full faith and
credit of the United States or Canada, as the case may be), in
each case maturing within one year from the date of
acquisition thereof;
(b) commercial paper maturing within one year from the date of
acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P, Xxxxx'x or
Dominion Bond Rating Services Limited;
(c) certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the
United States or any State thereof or Canada which has a
combined capital and surplus and undivided profits of at least
$500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above
and entered into with a financial institution satisfying the
criteria described in clause (c) above; and
(e) any other investments made in compliance with Corporate
Procedure No. 303.30 of NNC with respect to cash investments
and safe custody arrangements, substantially as in effect on
the Amendment No. 2 Effective Date (as defined in the 0000 XXX
364-Day Agreement).
"PERMITTED LIENS" means (i) the Transaction Liens and (ii) any other
Liens on the Collateral permitted to be created or assumed or to exist pursuant
to each Credit Agreement.
"PERMITTED RECEIVABLES FINANCING" means, with respect to any Lien
Grantor, any receivables securitization or financing permitted pursuant to the
terms of the Credit Agreements to which such Lien Grantor is a party or by which
it is bound.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLEDGED", when used in conjunction with any type of asset, means at
any time an asset of such type that is included (or that creates rights that are
included) in the Collateral at
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such time pursuant to the terms of this Agreement. For example, "Pledged Equity
Interest" means an Equity Interest that is included in the Collateral at such
time and "Pledged letter of credit" means a letter of credit that creates rights
to payment or performance that are included in the Collateral at such time.
"POST-PETITION INTEREST" means, with respect to any obligation of any
Person, any interest that accrues after the commencement of any case,
proceeding, petition, filing, assignment or other action relating to the
bankruptcy, insolvency or reorganization of such Person (or would accrue but for
the operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"PPSA" means the Personal Property Security Act as in effect from time
to time in the Province of Ontario; provided that, if validity, perfection or
the effect of perfection or non-perfection or the priority of any Transaction
Lien on any Collateral and the rights and remedies of secured parties are
governed by the PPSA or other similar legislation as in effect in a jurisdiction
other than Ontario, "PPSA" means the Personal Property Security Act or other
similar legislation as in effect from time to time in such other jurisdiction
for purposes of the provisions hereof relating to such validity, perfection,
effect of perfection or non-perfection or priority and to such rights and
remedies.
"PROCEEDS" means all "proceeds", as such term is defined in the PPSA
and, in any event, shall include all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the collection,
sale, lease, exchange, assignment, licensing or other disposition of, or other
realization upon, any Collateral, including all claims of the relevant Lien
Grantor against third parties for loss of, damage to, or destruction of, or for
proceeds payable under, or unearned premiums with respect to, policies of
insurance in respect of, any Collateral and any condemnation or requisition
payments.
"RATIO" means, with respect to any Secured Bond Obligation, at any
time, the ratio of (i) the principal amount of such Secured Bond Obligation to
(ii) the principal amount outstanding under the Credit Agreements at such time.
"REAL PROPERTY COLLATERAL" means all real property (including leasehold
interests in real property).
"RECORDABLE INTELLECTUAL PROPERTY" means (i) Patents (other than
Patents described in clauses (iii) and (iv) of the definition thereof)
registered with the Canadian Intellectual Property Office, (ii) Trademarks
(other than Trademarks described in clauses (iii) and (iv) of the definition
thereof) registered with the Canadian Intellectual Property Office, (iii)
Copyrights (other than Copyrights described in clauses (iii) and (iv) of the
definition thereof) registered with the Canadian Intellectual Property Office,
(iv) Designs (other than Designs described in clauses (iii) and (iv) of the
definition thereof) registered with the Canadian Intellectual Property Office,
and all rights in or under any of the foregoing.
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"RELATED TRANSFERRED RIGHTS" means (i) Transferred Receivables, (ii)
rights to payment and collections in respect of such Transferred Receivables,
(iii) security interests or Liens and property subject thereto purporting to
secure or guarantee payment of such Transferred Receivables, (iv) guarantees,
letters of credit, acceptances, insurance and other arrangements from time to
time supporting or securing payment of such Transferred Receivables, (v) all
invoices, documents, books, records and other information with respect to such
Transferred Receivables or the obligors thereon, (vi) with respect to any such
Transferred Receivables, the transferee's interest in the product (including
returned product), the sale of which by such transferee gave rise to such
Transferred Receivables and (vii) all Proceeds of the items described in the
foregoing clauses.
"REQUIRED SECURED BANKS" means, at any time, Banks having at least 51%
of the aggregate amount, without duplication, of (i) the "Commitments" under
each of the 2001 364-Day Agreements and (ii) the aggregate unpaid principal
amount of the "Loans" under each of the 2001 364-Day Agreements.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"SECURED AGREEMENT", when used with respect to any Secured Obligation
of any Lien Grantor, refers collectively to each instrument, agreement or other
document that sets forth obligations of such Lien Grantor and/or rights of the
holder with respect to such Secured Obligation.
"SECURED BOND OBLIGATIONS" means, at any date, the NNL Bond Obligations
and any Designated Capital Markets Debt containing provisions requiring that
such Designated Capital Markets Debt be equally and ratably secured at such date
with the debt under the Credit Agreements.
"SECURED OBLIGATIONS" means, (i) with respect to NNL, the NNL Secured
Obligations (ii) with respect to NNI, the NNI Secured Obligations and (iii) with
respect to each Subsidiary Guarantor, the Guaranteed Obligations guaranteed by
it under Section 2, any Designated Capital Markets Debt of such Lien Grantor and
any Designated Bank Debt of such Lien Grantor.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITIES ACCOUNT" means an account maintained by a securities
intermediary in which securities or other financial assets are held for or on
behalf of a Lien Grantor.
"SECURITY DOCUMENTS" means this Agreement, the Guarantee and Security
Agreement Supplements, the Cash Collateral Agreements, the Intellectual Property
Security
- 15 -
Agreements, the Hypothecs and all other supplemental or additional security
agreements or similar instruments delivered pursuant to any NNL Credit Agreement
or NNI Credit Agreement (other than any such agreement or instrument with
respect to Real Property Collateral).
"SPECIFIED EVENT OF DEFAULT" means an event described in Section
6.01(a), (f) or (g) of the Credit Agreements, or any Event of Default caused by
a breach of any financial or debt covenant contained in any 2001 364-Day
Agreement.
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of NNL.
"SUBSIDIARY GUARANTOR" means each Subsidiary of NNL listed on the
signature pages hereof under the caption "Subsidiary Guarantor" and each
Subsidiary of NNI or NNL that shall, at any time after the date hereof, become a
"Subsidiary Guarantor" pursuant to Section 20 in each case if such Subsidiary is
a Canadian Subsidiary and is not listed on Annex B to either of the 2001 364-Day
Agreements.
"SUPPORTING LETTER OF CREDIT" means a letter of credit that supports
the payment or performance of one or more items included in the Collateral.
"TOTAL COLLATERAL" means the "Collateral" as defined in the 2001 364-
Day Agreements (assuming, for this purpose, that Collateral includes "Foreign
Subsidiary Guarantees" as defined in the 2001 364-Day Agreements in effect at
the time of determination).
"TRADEMARKS" means all of the following, whether registered or
unregistered and whether now owned, used or hereafter acquired or used by any
Lien Grantor:
(i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles,
service marks, logos, brand names, other source or business
identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and intangibles of like
nature, all registrations and recordings thereof, and all
applications in connection therewith, including registrations,
recordings and applications in the Canadian Intellectual
Property Office or in any similar office in any country or any
political subdivision thereof including those described in
Schedule 1 to any Trademark Security Agreement;
(ii) all extensions or renewals of any of the foregoing;
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(iii) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing;
(iv) all income, royalties, damages and payments now or hereafter
due or payable with respect to any of the foregoing, including
damages and payments for past or future infringements thereof;
and
(v) all goodwill associated with or symbolized by any of the
foregoing.
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use any Trademark, including any agreement
identified in Schedule 1 to any Trademark Security Agreement.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"TRANSACTION LIENS" means the Liens granted by the lien grantors under
the Security Documents.
"TRANSFERRED RECEIVABLES" means any receivables that have been sold,
pledged, contributed or otherwise transferred in connection with a Permitted
Receivables Financing.
"U.S. SECURITY AGREEMENT" means the Guarantee and Security Agreement
entered into between NNL, NNI, JPMorgan Chase Bank and other Subsidiaries that
are a party thereto, dated as of the first day of the Collateral Period.
"U.S. SUBSIDIARY" means, with respect to any Person, any Subsidiary
(which may be a corporation, limited liability company, partnership or other
legal entity) organized under the laws of the United States.
(c) Terms Generally. The definitions of terms herein apply equally
to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun includes the
corresponding masculine, feminine and neuter forms. The words
"INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to be
followed by the phrase "WITHOUT LIMITATION". The word "WILL"
shall be construed to have the same meaning and effect as the
word "SHALL". Unless the context requires otherwise, (a) any
definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person
shall be
- 17 -
construed to include such Person's successors and assigns, (c) the
words "HEREIN", "HEREOF" and "HEREUNDER", and words of similar import,
shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (d) all references herein to
Sections, Exhibits and Schedules shall be construed to refer to
Sections of, and Exhibits and Schedules to, this Agreement and (e) the
word "PROPERTY" shall be construed to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts
and contract rights.
SECTION 2. GUARANTEES
(a) Guarantee. Each Guarantor unconditionally guarantees
(severally and not jointly and not jointly and severally) the
full and punctual payment and performance of each of its
Guaranteed Obligations when due (whether at stated maturity,
upon acceleration or otherwise). If any Guaranteed Obligation
of a Guarantor is not paid punctually when due, such Guarantor
agrees that it will forthwith on demand pay the amount not so
paid at the place and in the manner specified in the relevant
Secured Agreement. This Guarantee shall be effective as of the
first day of any Collateral Period, and shall be released in
accordance with Section 2(c) below.
(b) Guarantee Unconditional. The obligations of each Guarantor
under its Guarantee shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of
NNL, any other Lien Grantor or any other Person under
any Secured Agreement, by operation of law or
otherwise;
(ii) any modification or amendment of or supplement to any
Secured Agreement;
(iii) any release, impairment, non-perfection or invalidity
of any direct or indirect security for any obligation
of NNL, any other Lien Grantor or any other Person
under any Secured Agreement;
(iv) any change in the corporate existence, structure or
ownership of NNL, any other Lien Grantor or any other
Person or any of their respective subsidiaries, or
any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Lien Grantor or any
other Person or any of their assets or any resulting
release or discharge of any obligation of any Lien
Grantor or any other Person under any Secured
Agreement;
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(v) the existence of any claim, set-off or other right
that such Guarantor may have at any time against NNL,
any other Lien Grantor, any Secured Party or any
other Person, whether in connection with the Secured
Agreements or any unrelated transactions, provided
that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or
against NNL, any other Lien Grantor or any other
Person for any reason of any Secured Agreement, or
any provision of applicable law or regulation
purporting to prohibit the payment of any Secured
Obligation by any other Lien Grantor or any other
Person; or
(vii) any other act or omission to act or delay of any kind
by NNL, any other Lien Grantor, any other party to
any Secured Agreement, any Secured Party or any other
Person, or any other circumstance whatsoever that
might, but for the provisions of this Section
2(b)(vii), constitute a legal or equitable discharge
of or defense to any obligation of such Guarantor
hereunder but excluding payment in full of the
relevant Guaranteed Obligations.
(c) Release of Guarantee. The Guarantee of each Guarantor will be
released on the earlier of (i) any Investment Grade Date, and
(ii) the Bank Termination Date. If at any time any payment of
a Guaranteed Obligation by a Guarantor is rescinded or must be
otherwise restored or returned upon the insolvency or
receivership of such Guarantor or otherwise, such Guarantee
shall be reinstated with respect thereto as though such
payment had been due but not made at such time. The Collateral
Agent may release any Guarantor from its Guarantee in
accordance with Section 25.
(d) Waiver by Guarantors. Each Guarantor irrevocably waives
acceptance hereof, presentment, demand (except for the demand
requirement with respect to such Guarantor under Sections 2(a)
and 2(g)), protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken
by any Person against or any other Person.
(e) Subrogation. If any Guarantor makes a payment with respect to
a Guaranteed Obligation hereunder, such Guarantor, shall be
subrogated to the rights of the payee against the relevant
obligor (other than such Guarantor) (each for the purposes of
this Section 2, a "RELEVANT OBLIGOR") with respect to such
payment; provided that no Guarantor shall enforce any payment
by way of subrogation against a relevant obligor or by reason
of contribution against any other guarantor of such Guaranteed
Obligation, until the Bank Termination Date.
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(f) Obligation Reinstatement. The obligations of each Guarantor
hereunder shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment
which would otherwise have reduced the Guaranteed Obligations
(whether such payment shall have been by or on behalf of such
Guarantor) is rescinded or reclaimed from the Collateral Agent
or any Secured Party upon the insolvency, bankruptcy,
liquidation or reorganization of a Guarantor or otherwise, all
as though such payment had not been made.
(g) Stay of Acceleration. If acceleration of the time for payment
of any Guaranteed Obligation by a relevant obligor is stayed
by reason of the insolvency or receivership of such relevant
obligor or otherwise, all other Guaranteed Obligations
otherwise subject to acceleration in accordance with their
terms shall nonetheless be payable by each Guarantor hereunder
forthwith on demand by the Collateral Agent.
(h) Right of Set-Off. If a Specified Event of Default has occurred
and is continuing and any Guaranteed Obligation is not paid
promptly when due after a demand has been made, each of the
relevant Secured Parties and their respective affiliates is
authorized, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
obligations at any time owing by such Secured Party or
affiliate to or for the credit or the account of any Guarantor
against the obligations of such Guarantor under its Guarantee,
irrespective of whether or not such Secured Party shall have
made any demand to effect the set-off thereunder and although
such obligations may be unmatured. The rights of each Secured
Party under this Section 2(h) are in addition to all other
rights and remedies (including other rights of set-off) that
such Secured Party may have.
(i) Payments. Each payment to be made by any Guarantor in respect
of any of the Guaranteed Obligations shall be payable in the
currency or currencies in which such Guaranteed Obligations
are denominated at the office of the Collateral Agent and to
the extent permitted by law, shall be made free and clear of
and without deduction or withholding for or on account of any
present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority excluding net income
taxes or branch profit taxes or franchise taxes imposed in
lieu of net income taxes imposed on the Collateral Agent or
any of the Secured Parties as a result of a present or former
connection between the Collateral Agent or any of the Secured
Parties and the jurisdiction of the governmental authority
imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any connection
arising solely from the Collateral Agent or such Secured Party
having executed, delivered or
- 20 -
performed its obligations or received a payment under, or
enforced, as provided herein).
(j) Taxes. Without limiting the generality of the foregoing, if
any taxes or amounts in respect thereof must be deducted or
withheld from any amounts payable or paid by any Guarantor,
then such Guarantor shall pay such additional amounts as may
be necessary to ensure that the Collateral Agent receives a
net amount equal to the full amount which it would have
received had such payment not been made subject to such taxes.
Within thirty (30) days of each payment by a Guarantor of
taxes or in respect of taxes, such Guarantor shall deliver to
the Collateral Agent satisfactory evidence (including
originals, or certified copies, of all relevant receipts) that
such taxes have been duly remitted to the appropriate
authority or authorities.
(k) Indemnification for Taxes. Each Guarantor agrees to indemnify
the Collateral Agent for the full amount of taxes paid by the
Collateral Agent in respect of Section 2(j) and any
liabilities (including penalties, interest and expenses
arising from the failure of any Guarantor to pay such taxes
when due) arising therefrom or therewith, in each case upon
such Guarantor receiving reasonable evidence concerning the
amount of such tax and liability owing. This indemnification
shall be paid within 15 days after the Collateral Agent has
made the demand therefor.
(l) Continuing Guarantee. The Guarantee is a continuing guarantee,
shall be binding on each Guarantor and its successors and
assigns, and shall be enforceable by the Collateral Agent or
the Secured Parties. If all or part of any Secured Party's
interest in any Guaranteed Obligation is assigned or otherwise
transferred, the transferor's rights under the Guarantee, to
the extent applicable to the obligation so transferred, shall
automatically be transferred with such obligation.
(m) Limitation on Obligations of Guarantor. The obligations of
each Guarantor under the Guarantee shall be limited to an
aggregate amount equal to the largest amount that would not
render such Guarantee invalid or unenforceable under any laws
applicable to such Guarantor.
SECTION 3. GRANT OF TRANSACTION LIENS.
(a) Each Lien Grantor, in order to secure its Secured Obligations,
grants to the Collateral Agent for the equal and ratable
benefit of the Secured Parties effective on the first day of
any Collateral Period a continuing security interest in all of
the Lien Grantor's personal property, including all proceeds,
renewals, accretions and substitutions thereof, as the case
may be, whether now owned or existing or hereafter acquired or
arising and regardless of where located including, without
limitation, the following:
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(i) all Accounts;
(ii) all Chattel Paper;
(iii) all deeds, documents, writings, papers, books of
account and other books relating to or being records
of debts, Chattel Paper or Documents of Title or by
which such are or may hereafter be secured,
evidenced, acknowledged or made payable;
(iv) all Documents of Title (whether negotiable or not);
(v) all Equipment;
(vi) all Goods (including all parts, accessories,
attachments, special tools, additions and accessions
thereto);
(vii) all Instruments;
(viii) all Intangibles;
(ix) all Inventory;
(x) all Money;
(xi) all Securities and other Equity Interests in other
Persons;
(xii) all books and records (including customer lists,
credit files, computer programs, printouts and other
computer materials and records) of such Lien Grantor
pertaining to any of its Collateral;
(xiii) such Lien Grantor's ownership interest in and its
cash, Securities and other assets held in (1) its
Cash Collateral Accounts and (2) its Deposit Accounts
from time to time; and
(xiv) all Proceeds of the Collateral described in the
foregoing clauses Section 3(a)(i) through Section
3(a)(xiii)
provided that, with respect to the security interests granted by each Lien
Grantor, the following property shall be excluded from the foregoing security
interests: (A) any Equity Interests held by such Lien Grantor in any Subsidiary
that is not a Canadian Subsidiary, (B) Equity Interests held by such Lien
Grantor in any Subsidiary that is not a Material Subsidiary, (C) Equipment
leased by any Lien Grantor under a lease that prohibits the granting of a Lien
on such Equipment, (D) any intangibles or other rights arising under any
contract, instrument, license or other document if (but only to the extent that)
the grant of a security interest therein would constitute a violation
- 22 -
of a valid and enforceable restriction in favor of a third party (other than any
NNL Company) or would result in an enforceable right to declare a default under,
or an enforceable right to terminate or annul, such contract, instrument,
license or other document, unless and until all required consents shall have
been obtained, it being understood that no Lien Grantor is obliged to obtain
such consent, (E) any Equity Interests in or any debt of any Person (other than
a Material Subsidiary that is a Canadian Subsidiary) if the grant of a security
interest therein would constitute a violation of any shareholder agreement or
other agreement with respect to such Equity Interests or debt among such Lien
Grantors and any other holders of Equity Interests or debt of such Person, (F)
any assets of such Lien Grantor that constitute Transferred Receivables and
Related Transferred Rights on the date on which such Lien Grantor becomes a
party to this Agreement, (G) rights under letters of credit for which the
jurisdiction whose laws govern the liability of the issuer or Nominated Person
with respect thereto is not a jurisdiction in Canada, (H) Deposit Accounts for
which the relevant Depositary Bank's jurisdiction is not Canada, (I) any asset
of NNI and any asset of a Lien Grantor that is a U.S. Subsidiary if such asset
is not located in Canada or any Province or Territory thereof, it being
understood that accounts receivable and rights constituting Intangibles (other
than Intellectual Property registered with the Canadian Intellectual Property
Office) are not located in Canada or any Province or Territory thereof for the
purpose of this clause (I), (J) with respect to any Lien Grantor other than NNI
and other than any Lien Grantor that is a U.S. Subsidiary, any asset of such
Lien Grantor which is not located in Canada or any Province or Territory
thereof, it being understood that accounts receivable and rights constituting
Intangibles (including Intellectual Property registered with the Canadian
Intellectual Property Office) are located in Canada or any Province or Territory
thereof for the purpose of this clause (J), (K) any Equity Interest held by NNL
in NNI, and any Equity Interest held by NNL in Nortel Networks Technology
Corporation, (L) any Equity Interest held by any Lien Grantor in an unlimited
liability company, unless, in the case of an Equity Interest otherwise required
to be delivered hereunder, the Collateral Agent shall have requested otherwise
(M) any Equity Interest held by NNI or any other U.S. Subsidiary in any other
Subsidiary and (N) the last day of the term of any lease or any extension or
renewal thereof, oral or written, or agreement therefor, now held or hereafter
acquired by any Lien Grantor but upon the enforcement of the security interest
hereunder, the applicable Lien Grantor shall stand possessed of such last day in
trust to assign the same to any person acquiring such term.
The security interests granted by each Lien Grantor pursuant to this
Section 3(a) shall terminate in accordance with Section 19.
(b) With respect to each right to payment or performance included
in the Collateral from time to time, the Transaction Lien
granted therein includes a continuing security interest in (i)
any supporting obligation that supports such payment or
performance and (ii) any Lien that (x) secures such right to
payment or performance or (y) secures any such supporting
obligation.
- 23 -
(c) The Transaction Liens are granted as security only and shall
not subject the Collateral Agent or any other Secured Party
to, or transfer or in any way affect or modify, any obligation
or liability of any Lien Grantor with respect to any of the
Collateral or any transaction in connection therewith.
(d) If the Collateral is realized upon and the security interest
in the Collateral is not sufficient to satisfy all Secured
Obligations, each Lien Grantor acknowledges and agrees that,
subject to the provisions of the PPSA, such Lien Grantor shall
continue to be liable for any Secured Obligations remaining
outstanding and Collateral Agent shall be entitled to pursue
full payment thereof.
(e) Each Lien Grantor and the Collateral Agent hereby acknowledge
that value has been given, such Lien Grantor has rights in the
Collateral or, with respect to any after acquired Collateral,
will have rights in such Collateral when so acquired and this
Agreement constitutes a security agreement as that term is
defined in the PPSA.
SECTION 4. GENERAL REPRESENTATIONS WARRANTIES AND COVENANTS
Each Lien Grantor represents and warrants, at the times set forth
below, and covenants, where indicated below, as follows:
(a) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period and on each Drawdown Date, that at
such time, such Lien Grantor is a corporation duly organized,
incorporated, amalgamated or continued, as the case may be,
and validly existing (except with respect to NNI) under the
laws of the jurisdiction identified as its jurisdiction of
organization, incorporation, amalgamation or continuance, as
the case may be, in the Perfection Certificate or such other
jurisdiction in Canada (or any Province thereof), of which
such Lien Grantor gives prior written notice to the Collateral
Agent (and upon the giving of such notice, the Perfection
Certificate shall be deemed to have been amended to reflect
the information set forth in such notice), and has made all
filings with, and given all notices to all governmental
authorities required under the laws of the jurisdiction
identified as its jurisdiction of organization, incorporation,
amalgamation or continuance, as the case may be, in its
Perfection Certificate.
(b) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, that Schedule 1 lists all Pledged
Equity Interests in Material Subsidiaries that are Canadian
Subsidiaries owned by such Lien Grantor on the date of
delivery of Schedule 1 and held directly by such Lien Grantor
(i.e., not through a Subsidiary, a securities intermediary or
any other Person).
- 24 -
(c) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, that Schedule 2 lists (i) all
Pledged Securities not credited to a Securities Account and
owned by such Lien Grantor on the date of delivery of such
Schedule 2 (except Securities evidencing Equity Interests in
Subsidiaries, Securities of non-Canadian issuers and Equity
Interests constituting minority investments in privately held
companies), (ii) each Securities Account to which Securities
are credited or deposited in respect of which such Lien
Grantor has Securities with a fair market value in excess of
$5,000,000, and (iii) all Commodity Accounts in respect of
which any of the Lien Grantors is the account holder or the
customer on the date of delivery of such Schedule 2.
(d) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, and on each Drawdown Date, that
such Lien Grantor has provided to the Collateral Agent a
written notice setting forth the 100 most valuable items of
Intellectual Property owned by the NNL Companies at such time,
as reasonably determined by the Lien Grantors, acting in their
reasonable discretion.
(e) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, that all Pledged Equity Interests
owned by such Lien Grantor at such time are owned by it free
and clear of any Lien other than (i) the Transaction Liens and
(ii) any tax liens, judgment liens, put/call arrangements and
Liens existing on the date of this Agreement that are
Permitted Liens. Each Lien Grantor covenants that it will
cause all Pledged Equity Interests owned by such Lien Grantor
from time to time to be owned by it free and clear of any Lien
other than (i) the Transaction Liens and (ii) any tax liens,
judgment liens, put/call arrangements and Liens existing on
the date of this Agreement that are Permitted Liens. Such Lien
Grantor represents and warrants, on the first day of the first
Collateral Period and on each Drawdown Date, that all shares
of capital stock included in such Pledged Equity Interests at
such time with respect to a Material Subsidiary that is a
Canadian Subsidiary of such Lien Grantor have been duly
authorized and validly issued and are fully paid and
non-assessable. Such Lien Grantor covenants that it will
ensure that none of the Pledged Equity Interests with respect
to a Material Subsidiary that is a Canadian Subsidiary of such
Lien Grantor are subject to any option to purchase or similar
right of any Person. Such Lien Grantor covenants that it will
not become a party to or otherwise bound by any agreement
(except the Credit Agreements, the Security Documents and the
Indentures) which restricts in any manner the rights of any
present or future holder of any Pledged Equity Interest with
respect to a Material Subsidiary that is a Canadian Subsidiary
of such Lien Grantor with respect thereto.
(f) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, that at such time such Lien
Grantor owns or has rights in all of its Collateral (other
than after-acquired Collateral in which such Lien Grantor will
- 25 -
own or have rights in such Collateral at the time so acquired)
free and clear of any Lien other than Permitted Liens. Each
Lien Grantor covenants that it shall own or have rights in all
of its Collateral, free and clear of any Lien other than
Permitted Liens.
(g) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period and on each Drawdown Date, that at
such time (i) no financing statement, financing change
statement, security agreement, mortgage or similar or
equivalent document or instrument covering all or part of the
Collateral owned by such Lien Grantor is on file or of record
in any jurisdiction in Canada in which such filing or
recording would be effective to perfect or record a Lien on
such Collateral, except financing statements, financing change
statements, mortgages or other similar or equivalent documents
with respect to Permitted Liens and (ii) no Collateral owned
by such Lien Grantor is in the possession or under the control
of any other Person having a claim thereto or security
interest therein, other than a Permitted Lien.
(h) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period and on each Drawdown Date, that,
to the extent attachment and creation of the Transaction Liens
are governed by the laws of a jurisdiction in Canada, the
Transaction Liens on all Collateral owned by such Lien Grantor
at such time (i) have been validly created, (ii) attach to
each item of such Collateral on the date hereof (or, if such
Lien Grantor first obtains rights thereto on a later date, on
such later date) and (iii) when so attached, will secure all
the Secured Obligations of such Lien Grantor.
(i) Each Lien Grantor (other than NNI) represents and warrants
that, on or prior to January 31, 2002, such Lien Grantor has
delivered a Perfection Certificate to the Collateral Agent.
The information set forth therein is correct and complete as
of the date of delivery thereof.
(j) Each Lien Grantor represents and warrants, on the first day of
each Collateral Period and on each Drawdown Date, that when
PPSA financing statements or financing change statements
describing the Collateral have been filed in the applicable
offices located in the jurisdictions where such Lien Grantor's
assets are located as specified in its Perfection Certificate
and, with respect to NNI, in each Province of Canada, and the
security interests in Collateral located in Quebec have been
published in the Register of Personal and Movable Real Rights
("RPMRR"), if applicable, (as amended pursuant to Section
4(a)), the Transaction Liens will constitute perfected
security interests in the Collateral owned by such Lien
Grantor in favor of the Collateral Agent for the rateable
benefit of the Secured Parties to the extent that a security
interest therein may be perfected by filing pursuant to the
PPSA or the Civil Code of Quebec, as the case may be, prior,
in the case of Collateral other
than (x) fixtures and (y) Collateral with respect to which
Intellectual Property Filings must be made in order to perfect
a Lien thereon, to all other Liens and rights of others
therein except Permitted Liens. When, in addition to the
filing of such PPSA financing statements and financing change
statements and the publication of the security interests in
Collateral located in Quebec in the RPMRR, if applicable, the
applicable Intellectual Property Filings have been made with
respect to such Lien Grantor's Material Recordable
Intellectual Property (including any future filings required
pursuant to Sections 5(a) and 6(a)), the Transaction Liens
will constitute perfected security interests in all right,
title and interest of such Lien Grantor in its Material
Recordable Intellectual Property to the extent that security
interests therein may be perfected by such filings, prior to
all other Liens and rights of others therein except Permitted
Liens. Except for (i) the filing of such PPSA financing
statements and financing change statements and the publication
of the security interest in Collateral located in Quebec in
the RPMRR, if applicable, and (ii) such Intellectual Property
Filings, no registration, recordation or filing with any
Canadian, Provincial or Territorial governmental body, agency
or official is required in connection with the execution or
delivery of the Security Documents or is necessary for the
validity or enforceability thereof or for the perfection or
due recordation of the Transaction Liens or for the
enforcement of the Transaction Liens to the extent that a
security interest in the Collateral may be perfected therein
by the filings described in (i) and (ii) above (it being
understood that any disposition of Collateral constituting
Securities is subject to applicable securities laws).
(k) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, and on each Drawdown Date, that
at such time no Lien Grantor is the claimant with respect to a
claim in excess of $10,000,000, arising in tort in which the
claim arose in the course of the Lien Grantor's business or
profession that has not been made subject to the Transaction
Liens; provided that such representation is not made with
respect to any claim in tort arising in a jurisdiction outside
Canada.
(l) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period and on each Drawdown Date, that at
such time no Lien Grantor is the beneficiary under any letter
of credit in a maximum face amount in excess of $10,000,000
other than a Supporting Letter of Credit with respect to which
the issuer thereof has not (i) been notified that such letter
of credit has been made subject to a Transaction Lien and (ii)
acknowledged receipt of such notice.
(m) Each Lien Grantor represents and warrants, on the first day of
the first Collateral Period, and on each Drawdown Date, that
at such time such Lien Grantor is not a party to any Material
Governmental Contract, except as disclosed in writing to the
Collateral Agent on or prior to such time. Each Lien Grantor
covenants that, if a
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Specified Event of Default shall have occurred and be
continuing, such Lien Grantor will, promptly at the request of
the Collateral Agent, execute and deliver to the Collateral
Agent with respect to Pledged Material Government Contracts
all assignments, notices of assignment and other documents
required to be filed with (x) any Provincial or Territorial
government or agency or (y) the federal government in
accordance with the Financial Administration Act, as amended
(the "FINANCIAL ADMINISTRATION ACT"), in either case to insure
compliance with the Financial Administration Act or any
similar applicable legislation of any Province or Territory of
Canada; provided that no such execution and delivery shall be
required with respect to any Material Governmental Contract to
the extent such execution and delivery is contrary to the
Financial Administration Act or any similar applicable
legislation of any Province or Territory of Canada.
SECTION 5. ADDITIONAL COVENANTS.
Each Lien Grantor covenants as follows:
(a) To the extent permitted by applicable law, such Lien Grantor
appoints the Collateral Agent as such Lien Grantor's
attorney-in-fact to execute and file (i) all Intellectual
Property Filings in respect of Material Recordable
Intellectual Property, (ii) so long as a Specified Event of
Default shall have occurred and be continuing, Intellectual
Property Filings with respect to other Recordable Intellectual
Property and (iii) other filings in Canada, including
financing statements and financing change statements, required
or requested for the purposes of creating, perfecting and
preserving the Transaction Liens, all acts of such attorney
being hereby ratified and confirmed; and such power, is
coupled with an interest, shall be irrevocable until all the
Transaction Liens granted by such Lien Grantor terminate
pursuant to Section 19. The relevant Lien Grantor will pay the
reasonable costs of, or incidental to, (i) any Intellectual
Property Filings in respect of Material Recordable
Intellectual Property, (ii) so long as a Specified Event of
Default shall have occurred and be continuing, any
Intellectual Property Filings with respect to other Recordable
Intellectual Property and (iii) any other filing of any
financing or financing change statements or other documents
recorded or filed pursuant hereto.
(b) Such Lien Grantor will not effect any "Asset Sale" referred to
in Section 5.13(g) of either 2001 364 - Day Agreement with
respect to any Collateral if at such time a Specified Event of
Default has occurred and is continuing.
(c) Such Lien Grantor (other than NNI) will use commercially
reasonable efforts consistent with its customary commercial
practice to cause to be collected from its account debtors,
when due, all amounts owing under its Accounts (including
delinquent Accounts, which will be collected in accordance
with such Lien
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Grantor's customary collection procedures) and will apply all
amounts collected thereon, forthwith upon receipt thereof, to
the outstanding balances of such Accounts. Subject to the
rights of the Collateral Agent and the other Secured Parties
hereunder if a Specified Event of Default shall have occurred
and be continuing, such Lien Grantor may allow in the ordinary
course of business as adjustments to amounts owing under its
Accounts (i) any extension or renewal of the time or times for
payment, or settlement for less than the total unpaid balance,
that such Lien Grantor finds appropriate in accordance with
sound business judgment and (ii) refunds or credits, all in
the ordinary course of its business and consistent with such
Lien Grantor's historical collection practices. The reasonable
costs and out-of-pocket expenses (including reasonable legal
fees) of collection incurred by such Lien Grantor and the
reasonable out-of-pocket expenses incurred by the Collateral
Agent, shall be paid by such Lien Grantor.
(d) Upon the occurrence and during the continuance of a Specified
Event of Default, if payments with respect to any of such Lien
Grantor's Pledged Accounts are received in a lockbox or
similar account, and at such time such Lien Grantor and
Collateral Agent have established a Cash Collateral Account in
respect of such account, such Lien Grantor (other than NNI)
will at all times cause such account to be subject to a Cash
Collateral Agreement.
(e) If a Specified Event of Default shall have occurred and be
continuing, such Lien Grantor (other than NNI) will, if
requested to do so by the Collateral Agent, promptly notify
(and such Lien Grantor authorizes the Collateral Agent so to
notify) each account debtor in respect of any of its Pledged
Accounts that such Accounts have been assigned to the
Collateral Agent hereunder, and that any payments due or to
become due in respect of such Accounts are to be made directly
to the Collateral Agent or its designee.
(f) Such Lien Grantor (other than NNI) will promptly deliver to
the Collateral Agent as Collateral hereunder any Pledged
Chattel Paper, negotiable Documents of Title and any Pledged
Instruments owned by such Lien Grantor, endorsed to the order
of the Collateral Agent, or accompanied by duly executed
instruments of assignment, with signatures appropriately
guaranteed, all in form and substance reasonably satisfactory
to the Collateral Agent; provided that no Lien Grantor shall
be required to deliver (i) any such Pledged Chattel Paper to
the extent that it was entered into or provided in connection
with vendor financing and (ii) any such Pledged Instruments to
the extent the aggregate principal or face amount of such
Pledged Instrument of such Lien Grantor does not exceed
$10,000,000. On the first day of a Collateral Period and on
each Drawdown Date, the Transaction Liens on the Pledged
Chattel Paper, the Pledged negotiable Documents of Title and
the Pledged Instruments will be perfected by possession,
subject to no prior Liens or rights of others other than
Permitted Liens provided that the Collateral
- 29 -
Agent takes possession of such Pledged Chattel Paper, Pledged
negotiable Documents of Title or Pledged Instruments, as the
case may be, and that possession thereof as collateral is
retained by the Collateral Agent or a person on its behalf
other than such Lien Grantor or its agent. So long as no
Specified Event of Default shall have occurred and be
continuing, the Collateral Agent will, promptly upon request
by the relevant Lien Grantor, make appropriate arrangements
for making any Pledged Chattel Paper, negotiable Documents of
Title or Pledged Instrument available to the relevant Lien
Grantor for purposes of presentation, collection or renewal
(any such arrangement to be effected, to the extent deemed
reasonably appropriate by the Collateral Agent, against trust
receipt or like document).
(g) No Lien Grantor shall be required to deliver to the Collateral
Agent any vehicle identification number with respect to any
motor vehicle constituting Collateral, to reflect the security
interest therein granted to the Collateral Agent pursuant to
this Agreement.
(h) Each Lien Grantor that owns or occupies immovable or movable
property situated in Quebec and/or real property in any other
jurisdiction of Canada, shall, as applicable and within the
time so specified in the 0000 XXX 364-Day Agreement, execute
and deliver to the Collateral Agent (i) a deed of Hypothec in
respect of movable property and a deed of Hypothec in respect
of immovable property owned by such Lien Grantor in Quebec and
issue of bonds, bond certificate and pledge agreement (all
substantially in the form of the drafts circulated among the
parties hereto prior to the date hereof, with such amendments
and modifications as are necessary to satisfy the intent of
the NNL 364-Day Agreement or which the Collateral Agent may
reasonably request) (ii) a debenture and debenture delivery
agreement (all substantially in the form of the drafts
circulated among the parties hereto prior to the date hereof,
with such amendments and modifications as are necessary to
satisfy the intent of the NNL 364-Day Agreement or which the
Collateral Agent may reasonably request) in respect of all
real property owned by such Lien Grantor in all other
jurisdictions of Canada, and (iii) all other ancillary and
supplementary documents or documentation required for
registration with respect to any of the foregoing. All
documents executed and delivered pursuant to the terms hereof
shall, in accordance with the terms of the 0000 XXX 364-Day
Agreement, be held in escrow by the Collateral Agent.
SECTION 6. RECORDABLE INTELLECTUAL PROPERTY
Each Lien Grantor covenants as follows:
(a) On the date on which it becomes a party to this Agreement,
such Lien Grantor will sign and deliver to the Collateral
Agent Intellectual Property Security Agreements
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with respect to all Material Recordable Intellectual Property
then owned by it. Within 30 days after each March 31 and
September 30 thereafter, and on or prior to any such Drawdown
Date, such Lien Grantor shall sign and deliver to the
Collateral Agent any Intellectual Property Security Agreement
provided by the Collateral Agent and necessary to grant
Transaction Liens on all Material Recordable Intellectual
Property owned by it on such March 31 or September 30 or such
Drawdown Date that is not covered by any previous Intellectual
Property Security Agreement so signed and delivered by it. In
each case, it will, as soon as practicable upon the request of
the Collateral Agent, provide the Collateral Agent with all
documentation necessary in order to enable the Collateral
Agent to make all Intellectual Property filings necessary to
perfect the Transaction Liens on Material Recordable
Intellectual Property.
(b) Such Lien Grantor will maintain its Material Intellectual
Property in a commercially reasonable, prudent manner
consistent with its past practices and with respect to any
Material Intellectual Property which has been infringed,
misappropriated or diluted, in each case in a material
respect, by a third party, the relevant Lien Grantor will,
unless such Lien Grantor shall reasonably determine that such
action would be of negligible value, economic or otherwise,
take commercially reasonable steps consistent with its past
practices to xxx for infringement, misappropriation or
dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and take such
other actions as such Lien Grantor shall reasonably deem
appropriate under the circumstances to protect such Material
Intellectual Property.
SECTION 7. SECURITIES AND OTHER INVESTMENTS
Each Lien Grantor represents and warrants, at the times set forth
below, and covenants, where indicated below, as follows:
(a) Certificated Securities. On the first day of the first
Collateral Period and on each Drawdown Date, such Lien Grantor
represents and warrants that, as of such date, such Lien
Grantor has delivered to the Collateral Agent as Collateral
hereunder all certificates representing (i) any Pledged
certificated Securities ("PLEDGED CERTIFICATED SECURITIES")
owned as of such date by such Lien Grantor and not credited to
a Securities Account evidencing an Equity Interest in a
Material Subsidiary that is a Canadian Subsidiary of such Lien
Grantor and (ii) any other Pledged Certificated Securities
owned as of such date by such Lien Grantor and not credited to
a Securities Account having a fair market value in excess of
$3,000,000 (other than Securities evidencing (x) Equity
Interests in Subsidiaries and (y) Equity Interests
constituting minority investments in privately held companies.
Such Lien Grantor covenants that whenever such Lien Grantor
acquires any certificate representing a Pledged Certificated
Security described in
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clauses (i) or (ii) of the immediately preceding sentence,
such Lien Grantor will as promptly as practicable deliver such
certificate to the Collateral Agent as Collateral hereunder.
(b) Uncertificated Securities. On the first day of the first
Collateral Period and on each Drawdown Date, such Lien Grantor
shall give written instructions to the relevant depository
institution or other applicable Person, together with a
written copy thereof to the Collateral Agent, sufficient for
the depository institution or other applicable Person to
record in its book entry system that the Collateral Agent is
the pledgee of (i) each Pledged uncertificated Security
("PLEDGED UNCERTIFICATED SECURITIES") then owned by such Lien
Grantor as of such date and evidencing an Equity Interest in a
Material Subsidiary that is a Canadian Subsidiary of such Lien
Grantor and (ii) any other Pledged Uncertificated Securities
of a Canadian issuer then owned by such Lien Grantor as of
such date and having a fair market value in excess of
$5,000,000 (except Securities owned by such Lien Grantor as of
such date evidencing Equity Interests in Subsidiaries and
Equity Interest constituting minority investments in privately
held companies). Such Lien Grantor covenants that whenever
such Lien Grantor acquires any other Pledged Uncertificated
Security described in clauses (i) or (ii) of the immediately
preceding sentence, such Lien Grantor shall give written
instructions to the relevant depository institution or other
applicable Person, together with a written copy thereof to the
Collateral Agent, sufficient for the depository institution or
other Person to record in its book entry system that the
Collateral Agent is the pledgee of such after-acquired Pledged
Uncertificated Security.
(c) Perfection as to Certificated Securities. Such Lien Grantor
represents and warrants on the first day of a Collateral
Period and on each Drawdown Date, that (a) the Transaction
Lien on the Pledged Certificated Securities will be perfected
by possession, provided that the Collateral Agent takes
possession of the Pledged Certificated Securities and that
possession thereof as collateral is retained by the Collateral
Agent or a person on its behalf other than such Lien Grantor
or its agent, and (b) provided that the Collateral Agent is
acting in good faith and has no notice of any adverse claim
affecting the Pledged Certificated Securities, the Transaction
Lien on the Pledged Certificated Securities has priority over
any other security interest in the Pledged Certificated
Securities perfected by registration or temporarily perfected
under the PPSA.
(d) Perfection as to Uncertificated Securities. Such Lien Grantor
represents and warrants on the first day of a Collateral
Period and on each Drawdown Date, that (a) the Transaction
Lien on the Pledged Uncertificated Securities will be
perfected by possession, provided that the Collateral Agent
takes possession of the Pledged Uncertificated Securities and
that possession thereof as collateral is retained by
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the Collateral Agent or a person on its behalf other than such
Lien Grantor or its agent, and (b) provided that the
Collateral Agent is acting in good faith and has no notice of
any adverse claim affecting the Pledged Uncertificated
Securities, the Transaction Lien on the Pledged Uncertificated
Securities has priority over any other security interest in
the Pledged Uncertificated Securities perfected by
registration or temporarily perfected under the PPSA.
(e) Delivery of Pledged Certificates. Each Lien Grantor covenants
that all Pledged Certificates, when delivered to the
Collateral Agent, will be in suitable form for transfer by
delivery, or accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent.
SECTION 8. CASH COLLATERAL ACCOUNTS.
(a) If and when required for purposes hereof, the Collateral Agent
and each Lien Grantor will establish with respect to each Lien
Grantor an account (its "CASH COLLATERAL ACCOUNT"), in the
name of the applicable Lien Grantor maintained at a bank or
financial institution acceptable to the Collateral Agent. The
Cash Collateral Accounts shall be pledged to, and subject to
the control of, the Collateral Agent in a manner satisfactory
to the Collateral Agent. Such Lien Grantor hereby pledges and
grants to the Collateral Agent as security for its Secured
Obligations a security interest in all amounts held in the
Cash Collateral Accounts from time to time and all proceeds
thereof. Each Cash Collateral Account will be operated as
provided in this Section 8 and Section 9.
(b) The Collateral Agent shall deposit the following amounts, as
and when received by it, in each Lien Grantor's Cash
Collateral Account: each amount required to be deposited
therein by any provision of any Credit Agreement or other Loan
Document referred to therein; each Cash Distribution required
by Section 12 to be deposited therein; and each amount
realized or otherwise received by the Collateral Agent with
respect to assets of such Lien Grantor upon any exercise of
remedies pursuant to any Security Document upon the occurrence
and during the continuance of (x) with respect to Illiquid
Collateral, an Event of Default and (y) with respect to Liquid
Collateral, a Specified Event of Default.
(c) The Collateral Agent shall maintain such records and/or
establish such sub-accounts as shall be required to enable it
to identify the amounts held in each Cash Collateral Account
from time to time pursuant to Section 8(b).
(d) Unless (x) an Event of Default shall have occurred and be
continuing and the Required Secured Banks shall have
instructed the Collateral Agent to stop withdrawing amounts
from the Cash Collateral Accounts pursuant to this subsection
8(d) or (y) the maturity of any of the Bonds or the
indebtedness
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outstanding under the Credit Agreements shall have been
accelerated, any Cash Distributions or other amounts deposited
in the Cash Collateral Account shall, at the relevant Lien
Grantor's request, (x) be withdrawn and applied to pay Secured
Obligations that are then due and payable or (y) if no Event
of Default has occurred and is continuing, be withdrawn and
returned to such Lien Grantor.
SECTION 9. OPERATION OF CASH COLLATERAL ACCOUNTS; CARE AND USE OF COLLATERAL
(a) All Cash Distributions received with respect to assets held in
a Cash Collateral Account shall be deposited therein promptly
upon receipt thereof.
(b) Funds held in any Securities Account may, until withdrawn, be
invested and reinvested in Permitted Investments as the
relevant Lien Grantor shall determine from time to time;
provided that, if a Specified Event of Default shall have
occurred and be continuing, Collateral Agent may select such
Permitted Investments.
(c) So long as no Specified Event of Default shall have occurred
and be continuing, funds held in any Cash Collateral Account
may, until withdrawn, be invested and reinvested in Permitted
Investments; provided that if a Specified Event of Default
shall have occurred and be continuing, Collateral Agent may
select such Permitted Investments.
(d) So long as a Specified Event of Default shall have occurred
and be continuing, no Lien Grantor will cause funds to be
transferred from a Cash Collateral Account to any other
account owned by an NNL Company unless such other account is a
Cash Collateral Account and such transfer is permitted under
the Credit Agreements by which such Lien Grantor is bound.
(e) If a Specified Event of Default shall have occurred and be
continuing, the Collateral Agent may (i) retain, or instruct
the relevant securities intermediary or Depositary Bank to
retain, all cash and investments then held in any Cash
Collateral Account, (ii) liquidate, or instruct the relevant
securities intermediary or Depositary Bank to liquidate, any
or all investments held therein and/or (iii) withdraw any
amounts held therein and apply such amounts as provided in
Section 14.
(f) If a Specified Event of Default shall have occurred and be
continuing, and immediately available cash on deposit in any
Cash Collateral Account is not sufficient to make any
distribution or withdrawal to be made pursuant hereto, the
Collateral Agent will cause to be liquidated, as promptly as
practicable, such investments held in or credited to such Cash
Collateral Account as shall be
- 34 -
required to obtain sufficient cash to make such distribution
or withdrawal and, notwithstanding any other provision hereof,
such distribution or withdrawal shall not be made until such
liquidation has taken place.
SECTION 10. TRANSFER OF RECORD OWNERSHIP
(a) At any time when an Event of Default shall have occurred and
be continuing, the Collateral Agent may (and to the extent
that action by it is required, the relevant Lien Grantor, if
directed to do so by the Collateral Agent, will as promptly as
practicable) cause each of the Pledged Certificated Securities
(or any portion thereof specified in such direction) to be
transferred of record into the name of the Collateral Agent or
its nominee. Promptly upon sending any such direction, the
Collateral Agent will notify each relevant Lien Grantor
thereof, and from time to time thereafter such Lien Grantor
will take any and all actions reasonably requested by the
Collateral Agent to facilitate compliance with this subsection
10(a).
(b) Communications after Transfer of Record Ownership. The
Collateral Agent will promptly give to the relevant Lien
Grantor copies of any notices and other communications
received by the Collateral Agent with respect to Pledged
Certificated Securities registered in the name of the
Collateral Agent or its nominee.
SECTION 11. RIGHT TO VOTE SECURITIES
(a) Unless (x) with respect to any Pledged Security and any
Pledged Equity Interest not credited to a Securities Account,
other than Uncertificated Securities representing shares in a
money market fund, an Event of Default shall have occurred and
be continuing or (y) with respect to any Pledged Security and
any Pledged Equity Interest credited to a Securities Account
and any Uncertificated Securities representing shares in a
money market fund, a Specified Event of Default shall have
occurred and be continuing, each Lien Grantor will have the
right, from time to time, to vote and to give consents,
ratifications and waivers with respect to any Pledged Security
and any Pledged Equity Interest, owned by it, and the
Collateral Agent will, upon receiving a written request from
such Lien Grantor, promptly deliver to such Lien Grantor or as
specified in such request such proxies, powers of attorney,
consents, ratifications and waivers in respect of any such
Pledged Security or Pledged Equity Interest, as the case may
be, that is registered in the name of the Collateral Agent or
its nominee, in each case as shall be specified in such
request and be in form and substance reasonably satisfactory
to the Collateral Agent. Unless (x) with respect to any
Pledged Security and any Pledged Equity Interest not credited
to a Securities Account and Uncertificated Securities
representing shares in a money market fund, an Event of
Default shall
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have occurred and be continuing or (y) with respect to any
Pledged Security and any Pledged Equity Interest credited to a
Securities Account other than Uncertificated Securities
representing shares in a money market fund, a Specified Event
of Default shall have occurred and be continuing, the
Collateral Agent will have no right to take any action which
the owner of a Pledged Security or a Pledged Equity Interest,
as the case may be, is entitled to take with respect thereto,
except the right to receive payments and other distributions
to the extent provided herein.
(b) If (x) with respect to any Pledged Security not credited to a
Securities Account other than Uncertificated Securities
representing shares in a money market fund, an Event of
Default shall have occurred and be continuing or (y) with
respect to any Pledged Security credited to a Securities
Account other than Uncertificated Securities representing
shares in a money market fund, a Specified Event of Default
shall have occurred and be continuing, the Collateral Agent
will have the right to the extent permitted by law (and, in
the case of a Pledged Security, Pledged Partnership Interest
or Pledged LLC Interest, by the relevant partnership
agreement, limited liability company agreement, operating
agreement or other governing document) to vote, to give
consents, ratifications and waivers and to take any other
action with respect to the Pledged Equity Interests, with the
same force and effect as if the Collateral Agent were the
absolute and sole owner thereof, and each Lien Grantor will
take all such action as the Collateral Agent may reasonably
request from time to time to give effect to such right.
SECTION 12. CERTAIN CASH DISTRIBUTIONS
Cash Distributions with respect to assets held in a Cash Collateral
Account shall be deposited and held therein, or withdrawn therefrom, as provided
in Section 8 and Section 9. If a Specified Event of Default shall have occurred
and be continuing Cash Distributions (other than amounts less than $3,000,000)
with respect to any Pledged Equity Interest that is not held in a Cash
Collateral Account (whether held in the name of a Lien Grantor or in the name of
the Collateral Agent or its nominee) shall be deposited, as soon as practicable
upon receipt thereof, in a Cash Collateral Account of the relevant Lien Grantor
if such account exists at such time and if applicable, applied in accordance
with the prepayment provisions of the 2001 364-Day Agreements.
SECTION 13. REMEDIES UPON EVENT OF DEFAULT OR SPECIFIED EVENT OF DEFAULT
(a) If (x) with respect to Illiquid Collateral, an Event of
Default shall have occurred and be continuing, or (y) with
respect to Liquid Collateral, a Specified Event of Default
shall have occurred and be continuing, the Collateral Agent
may exercise (or cause its sub-agents to exercise) any or all
of the remedies available to it (or to
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such sub-agents) under the Security Documents with respect to
Illiquid Collateral or Liquid Collateral, as applicable.
Without limiting the generality of the foregoing, if (x) with
respect to Illiquid Collateral, an Event of Default shall have
occurred and be continuing, or (y) with respect to Liquid
Collateral, a Specified Event of Default shall have occurred
and be continuing, the Collateral Agent may exercise on behalf
of the Secured Parties all the rights of a secured party under
the PPSA with respect to Illiquid Collateral or Liquid
Collateral, as applicable, and, in addition, the Collateral
Agent may, if a Specified Event of Default shall have occurred
and be continuing, without being required to give any notice,
except as herein provided or as may be required by mandatory
provisions of law, withdraw all cash held in the Cash
Collateral Accounts and apply such cash as provided in Section
14 and, if there shall be no such cash or if such cash shall
be insufficient to pay all the Secured Obligations in full,
take possession of, sell, lease, license or otherwise dispose
of (x) if an Event of Default has occurred and is continuing,
the Illiquid Collateral or any part thereof and (y) if a
Specified Event of Default shall have occurred and be
continuing, the Liquid Collateral or any part thereof. Notice
of any such sale or other disposition shall be given to the
relevant Lien Grantor(s) as required by Section 16.
(b) Without limiting the generality of the foregoing, if a
Specified Event of Default shall have occurred and be
continuing: (i) the Collateral Agent may use, license or
sublicense, whether general, special or otherwise, and whether
on an exclusive or non-exclusive basis, any Pledged
Intellectual Property (including any Pledged Recordable
Intellectual Property) throughout the world for such term or
terms, on such conditions and in such manner as the Collateral
Agent shall in its sole discretion determine; provided the
Collateral Agent shall notify the relevant Lien Grantor of any
license or sublicenses so granted (but failure to give such
notice shall not effect validity of such license) and that
such licenses or sublicenses do not conflict with any existing
license or applicable law; (ii) the Collateral Agent may
(without assuming any obligation or liability thereunder), at
any time and from time to time, in its sole and reasonable
discretion, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and
remedies of any Lien Grantor in, to and under any of its
Pledged Intellectual Property and take or refrain from taking
any action under any thereof, and each Lien Grantor releases
the Collateral Agent and each other Secured Party from
liability for, and agrees to hold the Collateral Agent and
each other Secured Party free and harmless from and against
any claims and reasonable expenses arising out of, any lawful
action so taken or omitted to be taken with respect thereto,
except for claims and reasonable expenses arising from the
Collateral Agent's or such Secured Party's gross negligence or
wilful misconduct or a breach of any duty that the Collateral
Agent has under this Agreement (after giving effect to Section
17 and Section 18); and (iii) upon request by the Collateral
Agent (which
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shall not be construed as implying any limitation on its
rights or powers), each Lien Grantor will execute and deliver
to the Collateral Agent a power of attorney, in form and
substance satisfactory to the Collateral Agent, for the
implementation of any sale, lease, license or other
disposition of any of such Lien Grantor's Pledged Intellectual
Property or any action related thereto. In connection with any
such disposition, but subject to any confidentiality
restrictions imposed on such Lien Grantor in any license or
similar agreement, such Lien Grantor will supply to the
Collateral Agent its know-how and expertise relating to the
relevant Intellectual Property or the products or services
made or rendered in connection with such Intellectual
Property, and its customer lists and other records relating to
such Intellectual Property and to the distribution of said
products or services.
(c) Upon the occurrence of and during the continuance of any Event
of Default or Specified Event of Default, as applicable, the
Collateral Agent may appoint or reappoint by instrument in
writing, any person or persons, whether an officer or officers
or an employee or employees of the Collateral Agent or not, to
be a receiver or receivers (hereinafter called a "RECEIVER",
which term when used herein shall include a receiver and
manager) of Collateral (including any interest, income or
profits therefrom) and may remove any Receiver so appointed
and appoint another in his/her stead. Any such Receiver shall,
so far as concerns responsibility for his/her acts, be deemed
the agent of the Lien Grantors and not the Collateral Agent or
any Secured Party, and neither the Collateral Agent nor any
Secured Party shall be in any way responsible for any
misconduct, negligence or non-feasance on the part of any such
Receiver, his/her servants, agents or employees. Subject to
the provisions of the instrument appointing him/her, any such
Receiver shall (i) have such powers as have been granted to
the Collateral Agent under subsection (a) and (b) above, and
(ii) shall be entitled to exercise such powers at any time
that such powers would otherwise be exercisable by the
Collateral Agent under subsection (a) and (b) above, as
applicable, which powers shall include the power to preserve
Collateral or its value, and, where a Specified Event of
Default has occurred and is continuing, to carry on or concur
in carrying on all or any part of the business of such Lien
Grantor. To facilitate the foregoing powers, any such Receiver
may, to the exclusion of all others, including such Lien
Grantor, enter upon, use and occupy all premises owned or
occupied by such Lien Grantor wherein Collateral may be
situate, maintain Collateral upon such premises, and, where a
Specified Event of Default has occurred and is continuing,
borrow money on a secured or unsecured basis and use
Collateral directly in carrying on such Lien Grantor's
business or as security for loans or advances to enable the
Receiver to carry on such Lien Grantor's business or
otherwise, as such Receiver shall, in its discretion,
determine. Except as may be otherwise directed by the
Collateral Agent, all money received from time to time by such
Receiver in carrying out his/her appointment shall be received
in trust for and paid over to the
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Collateral Agent. Every such Receiver may, in the discretion
of the Collateral Agent, be vested with all or any of the
rights and powers of the Collateral Agent.
SECTION 14. APPLICATION OF PROCEEDS
(a) The Collateral Agent may (i) if a Specified Event of Default
shall have occurred and be continuing, apply any cash held in
the Collateral Accounts and (ii) if (x) with respect to
Illiquid Collateral, an Event of Default shall have occurred
and be continuing or (y) with respect to Liquid Collateral, a
Specified Event of Default shall have occurred and be
continuing, apply the proceeds of any sale or other
disposition of all or any part of the Illiquid Collateral or
Liquid Collateral, as applicable, in either case in the
following order of priorities:
(1) to pay the expenses of such sale or other disposition,
including reasonable compensation to agents of and counsel for
the Collateral Agent, and all reasonable expenses, liabilities
and advances incurred or made by the Collateral Agent in
connection with the Security Documents, and any other amounts
then due and payable to the Collateral Agent pursuant to
Section 15 or any amounts owing to any Indenture Trustee under
(x) Section 5.05 of each of the 1988 Indenture, the 1996
Indenture and the 0000 Xxxxxxxxx and (y) Section 6.10 of the
2001 Indenture;
(2) to pay the due and unpaid principal, face amount or
termination amount of the Secured Obligations ratably, on the
basis of the principal or face amount of such Secured
Obligations (or, with respect to Contingent Secured
Obligations, provide for the payment thereof pursuant to
Section 14(b)), until payment in full of the principal of all
Secured Obligations shall have been made (or, with respect to
Contingent Secured Obligations, so provided for);
(3) to pay ratably the due and unpaid interest accrued on the
Secured Obligations in accordance with the provisions of the
applicable Secured Agreement, as applicable;
(4) to pay all other due and unpaid Secured Obligations and
all due and unpaid commitment fees and participation fees
under each Credit Agreement ratably (or, with respect to
Contingent Secured Obligations, provide for the payment
thereof pursuant to Section 14(b)), until payment in full of
all such other Secured Obligations and fees shall have been
made (or, with respect to Contingent Secured Obligations, so
provided for); and
(5) to pay to the relevant Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining
from the proceeds of the Collateral owned by it;
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provided that Collateral owned by any Guarantor and any proceeds thereof shall
be applied pursuant to the foregoing clauses (1), (2), (3) and (4) of this
Section 14(a) to the Secured Obligations of such Guarantor consisting of
Guaranteed Obligations of such Guarantor only to the extent permitted by the
limitation in Section 2(m). The Collateral Agent may make such distributions
hereunder in cash or in kind or, on a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received
by the Collateral Agent would, but for the provisions of this
Section 14(b), be payable pursuant to Section 14(a) in respect
of a Contingent Secured Obligation, the Collateral Agent shall
not apply any monies to pay such Contingent Secured Obligation
but instead (x) notify the holder of such Contingent Secured
Obligation and (y) with respect to the holder of such
Contingent Secured Obligations excluding the holder of any
Secured Bond Obligation, request the holder thereof, at least
10 days before each proposed distribution hereunder, to notify
the Collateral Agent as to the maximum amount of such
Contingent Secured Obligation if then ascertainable (e.g., in
the case of a letter of credit, the maximum amount available
for subsequent drawings thereunder). If the holder of such
Contingent Secured Obligation (excluding the holder of any
Secured Bond Obligation) does not notify the Collateral Agent
of the maximum ascertainable amount thereof at least two
Business Days before such distribution, such holder will not
be entitled to share in such distribution. If such holder does
so notify the Collateral Agent as to the maximum ascertainable
amount thereof, or if such holder is the holder of any Secured
Bond Obligation (regardless of whether such holder has
provided any notice to the Collateral Agent), the Collateral
Agent will allocate to such holder a portion of the monies to
be distributed in such distribution, calculated as if such
Contingent Secured Obligation were outstanding in such maximum
ascertainable amount. However, the Collateral Agent will not
apply such portion of such monies to pay such Contingent
Secured Obligation, but instead will hold such monies and
invest such monies in Liquid Investments. All such monies and
Liquid Investments and all proceeds thereof will constitute
Collateral hereunder, but will be subject to distribution in
accordance with this Section 14(b) rather than Section 14(a).
The Collateral Agent will hold all such monies and Liquid
Investments and the net proceeds thereof in trust until all or
part of such Contingent Secured Obligation becomes a
Non-Contingent Secured Obligation, whereupon the Collateral
Agent at the request of the relevant Secured Party will apply
the amount so held in trust to pay such Non-Contingent Secured
Obligation; provided that, if the other Secured Obligations
theretofore paid pursuant to the same clause of Section 14(a)
(i.e., clause (2) or (4)) were not paid in full, the
Collateral Agent will apply the amount so held in trust to pay
the same percentage of such Non-Contingent Secured Obligation
as the percentage of such other Secured Obligations
theretofore paid pursuant to the same clause of Section 14(a).
If (i) the holder of such Contingent Secured Obligation shall
advise the Collateral Agent that no
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portion thereof remains in the category of a Contingent
Secured Obligation and (ii) the Collateral Agent still holds
any amount held in trust pursuant to this Section 14(b) in
respect of such Contingent Secured Obligation (after paying
all amounts payable pursuant to the preceding sentence with
respect to any portions thereof that became Non-Contingent
Secured Obligations), such remaining amount will be applied by
the Collateral Agent in the order of priorities set forth in
Section 14(a).
(c) With respect to any Secured Bond Obligation, whether or not a
Contingent Secured Obligation, including, without limitation,
the principal outstanding of and interest on such Secured Bond
Obligation, an amount (the "DETERMINED AMOUNT") with respect
to such Secured Bond Obligation shall be required to be paid
or held by the Collateral Agent with respect to each of
Sections 14(a)(2), 14(a)(3) and 14(a)(4) (each, a "LEVEL")
equal to (x) the Ratio multiplied by (y) the sum of (A) the
proceeds of any sale or other disposition of Collateral that
are, in fact, being applied by the Collateral Agent to amounts
owed under the Credit Agreements at the applicable Level, plus
(B) the proceeds of such Collateral proposed to be held by the
Collateral Agent pursuant to Section 14(b) to cover the
Contingent Secured Obligations relating to the Credit
Agreements at such Level in accordance with Section 14(b).
Notwithstanding the foregoing, if the amount to be applied to
the Secured Bond Obligations at any Level would be greater if
the Ratio were calculated by reference to a Secured Obligation
(other than the principal under the Credit Agreements) that
constitutes "Funded Debt" under any Indenture, such Secured
Obligation shall be used in order to determine the amount to
be applied to the Secured Bond Obligations at such Level.
Section 14 of this Agreement (including this Section 14(c)) is
intended to comply with the equal and ratable negative pledge
provisions of the Indentures and shall be construed to give
effect to such intention. The Collateral Agent shall be
obligated to offer to pay to the relevant Indenture Trustee
any portion of the Determined Amounts that are, in fact, due
and payable at such time as such Determined Amounts are
calculated, and the Collateral Agent shall deposit any
remaining portion of such Determined Amounts, and any amounts
not accepted by the relevant Indenture Trustee, in a
segregated account solely for the benefit of the holders of
the relevant Secured Bond Obligation (and all amounts on
deposit in such account shall be invested in Liquid
Investments).
(d) In making the payments and allocations required by this
Section 14, the Collateral Agent may rely upon information
supplied to it pursuant to Section 18(f). All distributions
made by the Collateral Agent pursuant to this Section 14 shall
be final (except in the event of manifest error) and the
Collateral Agent shall have no duty to inquire as to the
application by any Secured Party of any amount distributed to
it.
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SECTION 15. FEES AND EXPENSES
Each Lien Grantor will forthwith upon demand pay to the Collateral
Agent: (i) the amount of any taxes that the Collateral Agent may have been
required to pay by reason of the Transaction Liens or to free any Collateral
from any other Lien thereon, (ii) the amount of any and all reasonable
out-of-pocket expenses, including transfer taxes and reasonable fees and
expenses of counsel and other experts, that the Collateral Agent may incur
(except, so long as no Specified Event of Default shall have occurred and be
continuing, any filing fees with respect to Intellectual Property Filings other
than with respect to Material Recordable Intellectual Property) in connection
with (x) the administration or enforcement of the Security Documents, including
such reasonable out-of-pocket expenses as are incurred to preserve the value of
the Collateral or the validity, perfection, rank or value of any Transaction
Lien, (y) the collection, sale or other disposition of any Collateral or (z) the
exercise by the Collateral Agent of any of its rights or powers under the
Security Documents; (iii) the amount of any fees that the Borrower shall have
agreed in writing to pay to the Collateral Agent and that shall have become due
and payable in accordance with such written agreement; and (iv) the amount
required to indemnify the Collateral Agent for, or hold it harmless and defend
it against, any loss, liability or expense (including the reasonable fees and
out-of-pocket expenses of its counsel and any experts or sub-agents appointed by
it hereunder) incurred or suffered by the Collateral Agent in connection with
the Security Documents, (except so long as no Specified Event of Default shall
have occurred and be continuing, any filing fees with respect to or arising in
connection with Intellectual Property Filings other than with respect to
Material Recordable Intellectual Property) except to the extent that such loss,
liability or expense arises from the Collateral Agent's gross negligence or
wilful misconduct or a breach of any duty that the Collateral Agent has under
this Agreement (after giving effect to Section 17 and Section 18). Any such
amount not paid to the Collateral Agent as soon as practicable will bear
interest for each day thereafter until paid at a rate per annum equal to the sum
of 2% plus the highest rate applicable to the base rate loans under the Credit
Agreements. If any transfer tax, documentary stamp tax, withholding tax or other
tax is payable in connection with any transfer or other transaction provided for
in the Security Documents, the Lien Grantors will pay such tax and provide any
required tax stamps to the Collateral Agent or as otherwise required by law.
SECTION 16. AUTHORITY TO ADMINISTER COLLATERAL
Each Lien Grantor irrevocably appoints the Collateral Agent its true
and lawful attorney, with full power of substitution, in the name of such Lien
Grantor, any Secured Party or otherwise, for the sole use and benefit of the
Secured Parties, but at NNL's expense, to the extent permitted by law to
exercise, at any time and from time to time while (x) an Event of Default with
respect to Illiquid Collateral and (y) a Specified Event of Default with respect
to Liquid Collateral shall have occurred and be continuing, all or any of the
following powers with respect to all or any of such Lien Grantor's Collateral:
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(a) to demand, xxx for, collect, receive and give acquittance for
any and all monies due or to become due upon or by virtue
thereof,
(b) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(c) to sell, lease, license or otherwise dispose of the same or
the proceeds or avails thereof, as fully and effectually as if
the Collateral Agent were the absolute owner thereof, and
(d) to extend the time of payment of any or all thereof and to
make any allowance or other adjustment with reference thereto,
provided that, except in the case of Collateral that is
perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, the Collateral
Agent will give the relevant Lien Grantor at least ten days'
prior written notice of the time and place of any public sale
thereof or the time after which any private sale or other
intended disposition thereof will be made. Any such notice
shall comply with the provisions of the PPSA.
For the purposes of holding any security granted by any of the NNL
Companies pursuant to the laws of the Province of Quebec, JPMorgan Chase Bank is
hereby appointed by each of the NNL Companies a party hereto and accepted by all
of the Lenders as the holder of an irrevocable power of attorney or fonde de
pouvoir (within the meaning of Article 2692 of the Civil Code of Quebec) for all
present and future Lenders and JPMorgan Chase Bank hereby accepts such
appointment. By executing an assignment agreement, any future Lender shall be
deemed to ratify the power of attorney granted to JPMorgan Chase Bank hereunder.
SECTION 17. LIMITATION ON DUTY IN RESPECT OF COLLATERAL
Beyond the exercise of reasonable care in the custody and preservation
thereof, the Collateral Agent will have no duty as to any Collateral in its
possession or control or in the possession or control of any sub-agent or bailee
selected by it in good faith or any income therefrom or as to the preservation
of rights against prior parties or any other rights pertaining thereto. The
Collateral Agent will be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession or control if such
Collateral is accorded treatment substantially equal to that which it accords
its own property, and will not be liable or responsible for any loss or damage
to any Collateral, or for any diminution in the value thereof, by reason of any
act or omission of any sub-agent or bailee selected by the Collateral Agent in
good faith, except to the extent that such liability arises from the Collateral
Agent's gross negligence or wilful misconduct.
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SECTION 18. GENERAL PROVISIONS CONCERNING THE COLLATERAL AGENT
(a) Authority. The Collateral Agent is authorized to take such
actions and to exercise such powers as are delegated to the
Collateral Agent by the terms of the Security Documents,
together with such actions and powers as are reasonably
incidental thereto.
(b) Rights and Powers as a Secured Party. The bank serving as the
Collateral Agent shall, in its capacity as a Secured Party,
have the same rights and powers as any other Secured Party and
may exercise the same as though it were not the Collateral
Agent. Such bank and its affiliates may accept deposits from,
lend money to and generally engage in any kind of business
with any NNL Company as if it were not the Collateral Agent
hereunder.
(c) Limited Duties and Responsibilities. The Collateral Agent
shall not have any duties or obligations under the Security
Documents except those expressly set forth therein. Without
limiting the generality of the foregoing, (a) the Collateral
Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether an Event of Default has occurred
and is continuing, (b) the Collateral Agent shall not have any
duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers
expressly contemplated by the Security Documents that the
Collateral Agent is required in writing to exercise by the
Required Secured Banks (or such other number or percentage of
the Banks as shall be necessary under the relevant
circumstances), and (c) except as expressly set forth in the
Loan Documents, the Collateral Agent shall not have any duty
to disclose, and shall not be liable for any failure to
disclose, any information relating to any NNL Company that is
communicated to or obtained by the bank serving as Collateral
Agent or any of its affiliates in any capacity. The Collateral
Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Secured
Banks or in the absence of its own gross negligence or wilful
misconduct. The Collateral Agent shall not be responsible for
the existence, genuineness or value of any Collateral or for
the validity, perfection, priority or enforceability of any
Transaction Lien, whether impaired by operation of law or by
reason of any action or omission to act on its part under the
Security Documents, in either case absent its own gross
negligence or wilful misconduct. The Collateral Agent shall be
deemed not to have knowledge of any Event of Default unless
and until written notice thereof is given to the Collateral
Agent by any Lien Grantor or a Secured Party, and the
Collateral Agent shall not be responsible for or have any duty
to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Security
Document, (ii) the contents of any certificate, report or
other document delivered thereunder or in connection therewith
other than by it, (iii) the performance or observance of any
of the covenants, agreements or other terms or
- 44 -
conditions set forth in any Security Document, (iv) the
validity, enforceability, effectiveness or genuineness of any
Security Document or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth
in any Security Document.
(d) Authority to Rely on Certain Writings, Statements and Advice.
The Collateral Agent shall be entitled to rely on, and shall
not incur any liability for relying on, any notice, request,
certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed
or sent by the proper Person. The Collateral Agent also may
rely on any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Collateral Agent
may consult with legal counsel (who may be counsel for any NNL
Company), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel,
accountant or expert. The Collateral Agent may rely
conclusively on advice from the applicable Indenture Trustee
as to whether at any time the maturity of any Bonds has been
accelerated.
(e) Sub-Agents and Related Parties. The Collateral Agent may
perform any of its duties and exercise any of its rights and
powers through one or more sub-agents appointed by it in good
faith. The Collateral Agent and any such sub-agent may perform
any of its duties and exercise any of its rights and powers
through its directors, officers, employees and agents (the
"RELATED PARTIES"). The exculpatory provisions of Section 17
and this Section 18 shall apply to any such sub-agent, the
Related Parties of the Collateral Agent and a Receiver.
(f) Information as to Secured Obligations and Actions by Secured
Parties. For all purposes of the Security Documents, including
determining the amounts of the Secured Obligations and whether
a Secured Obligation is a Contingent Secured Obligation or
not, or whether any action has been taken under any Secured
Agreement, the Collateral Agent will be entitled to rely on
information from (i) its own records for information as to the
Banks, their Secured Obligations and actions taken by them,
(ii) the relevant Indenture Trustee for information as to the
Secured Obligations outstanding under any Indenture and
actions taken by the holders thereof, (iii) any Secured Party
for information as to its Secured Obligations and actions
taken by it, to the extent that the Collateral Agent has not
obtained such information from the foregoing sources, and (iv)
NNL, to the extent that the Collateral Agent has not obtained
information from the foregoing sources.
(g) The Collateral Agent may refuse to act on any notice, consent,
direction or instruction from any Secured Parties or any
agent, trustee or similar representative thereof that, in the
Collateral Agent's opinion, (i) is contrary to law or the
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provisions of any Security Document, (ii) may expose the
Collateral Agent to liability (unless the Collateral Agent
shall have been indemnified, to its reasonable satisfaction,
for such liability by the Secured Parties that gave such
notice, consent, direction or instruction) or (iii) is unduly
prejudicial to Secured Parties not joining in such notice,
consent, direction or instruction.
(h) Resignation; Successor Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as
provided in this subsection, the Collateral Agent may resign
at any time by notifying the Banks and NNL. Upon any such
resignation, the Required Secured Banks shall have the right
to appoint a successor Collateral Agent reasonably acceptable
to NNL. If no successor shall have been so appointed by the
Required Secured Banks and shall have accepted such
appointment within 30 days after the retiring Collateral Agent
gives notice of its resignation, then the retiring Collateral
Agent may, on behalf of the Secured Parties, appoint a
successor Collateral Agent reasonably acceptable to NNL which
shall be a bank with an office in New York, New York or
Toronto, Ontario, or an affiliate of any such bank. Upon
acceptance of its appointment as Collateral Agent hereunder by
a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Collateral Agent hereunder, and the retiring
Collateral Agent shall be discharged from its duties and
obligations hereunder. The fees payable by NNL to a successor
Collateral Agent shall be the same as those payable to its
predecessor unless otherwise agreed by NNL and such successor.
After the Collateral Agent's resignation hereunder, the
provisions of this Section 18 and Section 17 shall continue in
effect for the benefit of such retiring Collateral Agent, its
sub-agents and their respective Related Parties in respect of
any actions taken or omitted to be taken by any of them while
the retiring Collateral Agent was acting as Collateral Agent.
SECTION 19. TERMINATION OF TRANSACTION LIENS; RELEASE OF COLLATERAL
(a) The Transaction Liens granted by each Lien Grantor shall
terminate on the earlier of (i) any Investment Grade Date and
(ii) the Bank Termination Date.
(b) Concurrently with any sale, exchange, assignment, lease or
other disposition by any Lien Grantor (except a lease or a
sale, exchange, assignment or other disposition to another
Lien Grantor whose "Secured Obligations" hereunder include
"Secured Obligations" of the Lien Grantor effecting such sale
or other disposition) of the Collateral permitted by the
Credit Agreements and not expressly prohibited by this
Agreement, the Transaction Liens on the assets sold or
disposed of (but not in any Proceeds arising from such sale or
disposition) will
- 46 -
cease immediately without any action by the Collateral Agent
or any other Secured Party.
(c) Upon any Collateral of any Lien Grantor becoming Transferred
Receivables or Related Transferred Rights, the Transaction
Lien thereon (but not in any Proceeds thereof) will cease
immediately without any action by the Collateral Agent or any
other Secured Party; provided that, if the transaction
pursuant to which such Collateral becoming Transferred
Receivables or Related Transferred Rights is an Asset Sale
referred to in Section 5.13(g) of either 2001 364-Day
Agreement, no Specified Event of Default shall have occurred
and be continuing. The Collateral Agent shall be fully
protected in relying on a certificate of the relevant Lien
Grantor stating that any Collateral qualifies as Transferred
Receivables or Related Transferred Rights.
(d) Upon any Collateral of any Lien Grantor consisting of cash,
cash equivalents or Permitted Investments becoming the subject
of a hedging transaction permitted under the terms of the
Credit Agreements, the Transaction Lien thereon (but not in
any Proceeds thereof) will cease immediately without any
action by the Collateral Agent or any other Secured Party;
provided that, if the transaction pursuant to which such
Collateral becoming the subject of a hedging transaction is an
Asset Sale referred to in Section 5.13(g) of either 2001
364-Day Agreement, no Specified Event of Default shall have
occurred and be continuing.
(e) Upon any Collateral of any Lien Grantor consisting of
Securities subject to a put/call arrangement permitted by the
terms of the Credit Agreements being transferred to any person
other than another Lien Grantor as a result of the exercise of
such put/call arrangement, the Transaction Lien thereon (but
not in any Proceeds thereof) will cease immediately without
any action by the Collateral Agent or any other Secured Party;
provided that, if the transaction pursuant to which such
Collateral being so transferred is an Asset Sale referred to
in Section 5.13(g) of either 2001 364-Day Agreement, no
Specified Event of Default shall have occurred and be
continuing.
(f) In addition to the foregoing, at any time before the
Transaction Liens terminate, the Collateral Agent may (i)
release any Collateral (but not all or any substantial part of
the Total Collateral) with the prior written consent of the
Required Secured Banks or (ii) release all or any substantial
part of the Total Collateral with the prior written consent of
all the Banks under the 2001 364-Day Agreements or (iii) amend
this Agreement so that the Secured Obligations of any Lien
Grantor excludes the obligations of such Lien Grantor under
any Credit Agreement with the prior written consent of all
Banks party to such Credit Agreement.
- 47 -
(g) Upon any termination of a Transaction Lien or release of
Collateral, or change in the Secured Obligations of any Lien
Grantor, the Collateral Agent will promptly, at the expense
of the relevant Lien Grantor, execute and deliver to such Lien
Grantor such documents as such Lien Grantor shall reasonably
request to evidence the termination of such Transaction Lien
or the release of such Collateral, or change in the Secured
Obligations, as the case may be, and shall deliver to such
Lien Grantor any documents or instruments, including without
limitation stock certificates, evidencing any Collateral no
longer subject to any Transactions Liens.
SECTION 20. ADDITIONAL LIEN GRANTORS
Any Person may become a party hereto by signing and delivering to the
Collateral Agent a Guarantee and Security Agreement Supplement, whereupon such
Person shall become a "SUBSIDIARY GUARANTOR" and a "LIEN GRANTOR" as defined
herein. Any NNL Subsidiary that is a Canadian Subsidiary shall become a
"Subsidiary Guarantor" and a "Lien Grantor" hereunder only if required by the
provisions of any of the Credit Agreements.
SECTION 21. ADDITIONAL SECURED OBLIGATIONS
(a) NNL or NNI may from time to time designate its obligations
under any Hedging Agreement (a "DESIGNATED HEDGING AGREEMENT")
as an additional Secured Obligation for purposes hereof by
delivering to the Collateral Agent a certificate signed by a
financial officer that (i) identifies such Hedging Agreement,
specifying the name and address of the other party thereto,
the notional principal amount thereof and the expiration date
thereof and (ii) states that NNL's or NNI's obligations (as
applicable) thereunder are designated as Secured Obligations
for purposes hereof.
(b) Any Lien Grantor may from time to time designate any
indebtedness constituting a Capital Markets Event ("DESIGNATED
CAPITAL MARKETS DEBT") as (i) an additional Secured Obligation
or (ii) as an additional Guaranteed Obligation (other than for
Designated Capital Markets Debt of such Lien Grantor) for
purposes hereof by delivering to the Collateral Agent a
certificate signed by a financial officer that (i) identifies
such indebtedness and the material terms thereof and (ii)
states that the obligations thereunder are designated as
Secured Obligations and Guaranteed Obligations for purposes
hereof; provided that no such designation shall be effective
unless and until, and solely to the extent that, the
commitments under the Credit Agreements shall have been
reduced and the loans outstanding thereunder shall have been
repaid, in each case to the extent required by the terms of
the Credit Agreements as a result of such Capital Markets
Event and provided further, that no Lien Grantor may designate
any indebtedness constituting a Capital Markets Event owed by
(i) NNI or (ii) any U.S. Subsidiary of NNI in either case as a
Guaranteed Obligation of such Lien Grantor if such
- 48 -
Lien Grantor is a non-U.S. Subsidiary of NNI in the case of
(i) immediately above or a non-U.S. Subsidiary of such U.S.
Subsidiary in the case of (ii) immediately above.
(c) Any Lien Grantor that is a Material Subsidiary of NNL or NNI
may from time to time designate any indebtedness for borrowed
money (other than indebtedness constituting a Capital Markets
Event) owed by any Material Subsidiary of NNL or NNI to any
Bank or any wholly-owned subsidiary of any Bank or any other
financial institution and outstanding on December 20, 2001 or
incurred pursuant to a commitment to extend credit in effect
on such date or any extensions, renewals, replacements and
refinancings thereof ("DESIGNATED BANK DEBT") as (i) an
additional Secured Obligation or (ii) as an additional
Guaranteed Obligation (other than for Designated Bank Debt of
such Lien Grantor) for purposes hereof by delivering to the
Collateral Agent a certificate signed by a financial officer
that (i) identifies such indebtedness and the material terms
thereof and (ii) states that the obligations thereunder are
designated as Secured Obligations and Guaranteed Obligations
for purposes hereof; provided that the aggregate amount of
indebtedness (without duplication) designated as "Designated
Bank Debt" under this Agreement and any other security or
guarantee document entered into by NNL, NNI and their Material
Subsidiaries for the benefit of the Secured Parties will not
exceed $300,000,000 in aggregate principal amount and provided
further, that no Lien Grantor may designate any such
indebtedness owed by any U.S. Subsidiary of NNI as a
Guaranteed Obligation of such Lien Grantor if such Lien
Grantor is a non-U.S. Subsidiary of such U.S. Subsidiary of
NNI.
SECTION 22. NOTICES
Each notice, request or other communication given to any party
hereunder shall be in writing (which term includes facsimile or other electronic
transmission) and shall be effective (i) when hand delivered or sent by courier
to such party at its address specified below, (ii) when sent to such party by
facsimile or other electronic transmission, addressed to it at its facsimile
number or electronic address specified below, and such party sends back an
electronic confirmation of receipt or (iii) ten days after being sent to such
party by certified or registered Canada or United States mail, addressed to it
at its address specified below, with first class or airmail postage prepaid:
(a) in the case of any Lien Grantor listed on the signature pages
hereof:
C/O Nortel Networks Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX
X0X 0X0
Attention: Corporate Secretary
- 49 -
Facsimile: 000-000-0000
MS: 036/NO/230
(b) in the case of any other Lien Grantor, its address, facsimile
number or e-mail address set forth in its Guarantee and
Security Agreement Supplement;
(c) in the case of the Collateral Agent:
JPMorgan Chase Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: 000-000-0000
E-mail: xxxxxx.xxxxxx@xxxxxxxx.xxx
(d) in the case of any other Secured Party, to the Collateral
Agent to be forwarded to such Secured Party at its address or
facsimile number or e-mail address, if any, specified in or
pursuant to the relevant Secured Agreement.
Any party may change its address, facsimile number and/or e-mail
address for purposes of this Section 22 by giving notice of such change to the
Collateral Agent and the Lien Grantors in the manner specified above.
SECTION 23. NO IMPLIED WAIVERS; REMEDIES NOT EXCLUSIVE
No failure by the Collateral Agent or any Secured Party to exercise,
and no delay in exercising and no course of dealing with respect to, any right
or remedy under any Security Document shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent or any Secured
Party of any right or remedy under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right or remedy. The
rights and remedies specified in the Loan Documents are cumulative and are not
exclusive of any other rights or remedies provided by law.
SECTION 24. SUCCESSORS AND ASSIGNS
This Agreement is for the benefit of the Collateral Agent and the
Secured Parties. If all or any part of any Secured Party's interest in any
Secured Obligation is assigned or otherwise transferred in accordance with the
transfer provisions applicable thereto, the transferor's rights hereunder, to
the extent applicable to the obligation so transferred, shall be automatically
transferred with such obligation. This Agreement shall be binding on the Lien
Grantors and their respective successors and assigns.
- 50 -
SECTION 25. AMENDMENTS AND WAIVERS
Neither this Agreement nor any provision hereof may be waived, amended,
modified or terminated except pursuant to an agreement or agreements in writing
entered into by the parties hereto, with the consent of the Required Secured
Banks; provided that any such agreement that effects a release of any Collateral
or amends the definition of Secured Obligations shall be made in accordance with
Section 19(f). No such waiver, amendment or modification shall affect the rights
of a Secured Party (other than a Bank) hereunder more adversely than it affects
the comparable rights of the Bank hereunder, without the consent of such Secured
Party.
SECTION 26. CHOICE OF LAW
This Agreement shall be construed in accordance with and governed by
the laws of the Province of Ontario and the laws of Canada applicable therein,
except as otherwise required by mandatory provisions of law.
SECTION 27. JUDGEMENT CURRENCY
If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due from a Lien Grantor in the currency expressed to be payable
in any Loan Document (the "SPECIFIED CURRENCY") into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Collateral Agent could purchase the specified currency
with such other currency at the Collateral Agent's Toronto office on the
domestic Business Day preceding that on which final judgment is given. The
obligations of the Lien Grantor in respect of any sum due to the Collateral
Agent hereunder shall, notwithstanding any judgment in a currency other than the
specified currency, be discharged only to the extent that on the domestic
Business Day following receipt by the Collateral Agent of any sum adjudged to be
so due in such other currency the Collateral Agent may in accordance with normal
banking procedures purchase the specified currency with such other currency; if
the amount of the specified currency so purchased is less than the sum
originally due to the Collateral Agent, in the specified currency, the Lien
Grantor agrees, to the fullest extent that it may effectively do so, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Collateral Agent, against such loss, and if the amount of the specified currency
so purchased exceeds the sum originally due to the Collateral Agent, in the
specified currency, then the Collateral Agent agrees to remit such excess to the
Lien Grantor.
SECTION 28. INTEREST ACT
For purposes of disclosure pursuant to the Interest Act (Canada), the
annual rates of interest or fees to which the rates of interest or fees provided
in any Credit Agreement and in this Agreement (and stated herein as applicable
to be computed on the basis of a 365 day year or any other period of time less
than a calendar year) are equivalent are the rates so determined
- 51 -
multiplied by the actual number of days in the applicable calendar year and
divided by 365 or such other period of time.
SECTION 29. WAIVER OF JURY DUTY
EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY SECURITY
DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY AND FOR ANY COUNTERCLAIM
THEREIN (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR COUNSEL OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 30. SEVERABILITY
If any provision of any Security Document is invalid or unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions of the Security Documents shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Collateral
Agent and the Secured Parties in order to carry out the intentions of the
parties thereto as nearly as may be possible and (ii) the invalidity or
unenforceability of such provision in such jurisdiction shall not affect the
validity or enforceability thereof in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NORTEL NETWORKS LIMITED
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS INC.
By:
--------------------------------------------
Name:
Title:
JPMORGAN CHASE BANK, AS COLLATERAL AGENT
By:
--------------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
1328556 ONTARIO INC.
By:
--------------------------------------------
Name:
Title:
- 2 -
NORTEL COMMUNICATIONS INC.
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS GLOBAL CORPORATION
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS INTERNATIONAL CORPORATION
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS TECHNOLOGY CORPORATION
By:
--------------------------------------------
Name:
Title:
SCHEDULE 1
EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES
OWNED BY LIEN GRANTORS
(AS OF THE DATE HEREOF)
ISSUER JURISDICTION OWNER OF PERCENTAGE NUMBER OF
OF EQUITY INTEREST OWNED SHARES OR
ORGANIZATION UNITS
---------------------------------------------------------------------------------------------------------
1328556 Ontario Inc. Ontario Nortel Networks Limited 100% 19,074,418
Nortel Communications Inc. Ontario Nortel Networks Limited 100% 000
Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx Nortel Networks Limited 100% 5,060,201
Corporation
Nortel Networks International Canada Nortel Networks Limited 100% 10,000
Corporation
S-1-1
SCHEDULE 2
SECURITIES AND OTHER INVESTMENTS
(OTHER THAN EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES)
OWNED BY LIEN GRANTORS
(AS OF THE DATE HEREOF)
PART 1 - SECURITIES
ISSUER JURISDICTION OWNER OF SECURITIES AMOUNT TYPE OF
OF OWNED SECURITY
ORGANIZATION
----------------------------------------------------------------------------------------------------
Mindready Solutions Inc. Quebec Nortel Networks Limited Publicly Traded
Stock
PART 2 - SECURITIES
OWNER SECURITIES INTERMEDIARY ACCOUNT NUMBER
----------------------------------------------------------------------------------------------------
Nortel Networks Limited RBC Capital Markets 4752221814
PART 3 - COMMODITY ACCOUNTS
The Lien Grantors are Commodity Customers with respect to the following
Commodity Accounts:
OWNER COMMODITY ACCOUNT NUMBER
INTERMEDIARY
----------------------------------------------------------------------------------------------------
NONE
S-2-2
EXHIBIT A
TO SECURITY AGREEMENT
GUARANTEE AND SECURITY AGREEMENT SUPPLEMENT
GUARANTEE AND SECURITY AGREEMENT SUPPLEMENT dated as of [THE DATE OF EXECUTION
IF SUCH DATE OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE ON THE FIRST DAY OF
THE FIRST COLLATERAL PERIOD FOLLOWING EXECUTION] between [NAME OF LIEN GRANTOR]
(the "CORPORATION") and JPMORGAN CHASE BANK, as Collateral Agent.
WHEREAS, Nortel Networks Limited, the Subsidiary Guarantors party thereto and
JPMorgan Chase Bank, as Collateral Agent, are parties to a Canadian Guarantee
and Security Agreement dated as of [THE FIRST DAY OF THE COLLATERAL PERIOD] (as
heretofore amended and/or supplemented, the "GUARANTEE AND SECURITY AGREEMENT");
WHEREAS, the Corporation desires to become [IS] a party to the Guarantee and
Security Agreement as a Subsidiary Guarantor and Lien Grantor thereunder; and
WHEREAS, terms defined in the Guarantee and Security Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein;
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
(a) The Corporation shall be a Subsidiary Guarantor and Lien
Grantor for all purposes under the Guarantee and Security
Agreement and the documents executed in connection therewith,
and, as such, shall guarantee, to the extent set forth in the
Guarantee and Security Agreement, the Guaranteed Obligations.
(b) The Corporation shall (i) be bound by all covenants,
agreements, acknowledgements and other terms and provisions
applicable to it, as a Subsidiary Guarantor and Lien Grantor
pursuant to the Guarantee and Security Agreement and the
documents executed in connection therewith to the same extent,
and in the same manner, as if it (in its capacity as a
Subsidiary Guarantor and Lien Grantor) were an original party
thereto and (ii) perform all obligations required of it
pursuant to the Guarantee and Security Agreement and such
other documents in such capacity.
(c) The Guarantee and Security Agreement is incorporated into this
Canadian Guarantee and Security Agreement Supplement as if set
out in full herein.
A - 1
(d) The Subsidiary Guarantor hereby acknowledges that it has
received and reviewed a copy (in execution form) of the
Guarantee and Security Agreement (including, without
limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to
therein (including, without limitation, all amendments,
supplements and other modifications thereto).
(e) Grant of Transaction Liens.
(i) In order to secure the Secured Obligations, the
Corporation grants to the Collateral Agent for the
equal and ratable benefit of the Secured Parties,
effective on [THE LATER OF THE DATE HEREOF (IF SUCH
DATE OCCURS DURING A COLLATERAL PERIOD) AND THE FIRST
DAY OF ANY COLLATERAL PERIOD FOLLOWING EXECUTION
HEREOF] a continuing security interest in all the
following property of the Corporation, whether now
owned or existing or hereafter acquired or arising
and regardless of where located (the "NEW
COLLATERAL"):
[DESCRIBE PROPERTY BEING ADDED TO THE COLLATERAL](1)
The security interests granted by the Corporation
pursuant hereto shall terminate in accordance with
Section 19 of the Guarantee and Security Agreement.
(ii) With respect to each right to payment or performance
included in the Collateral from time to time, the
Transaction Lien granted therein includes a
continuing security interest in (A) any supporting
obligation that supports such payment or performance
and (B) any Lien that (x) secures such right to
payment or performance or (y) secures any such
supporting obligation.
(iii) The foregoing Transaction Liens are granted as
security only and shall not subject the Collateral
Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or
liability of the Corporation with respect to any of
the New Collateral or any transaction in connection
therewith.
(f) Delivery of Collateral. On the date of execution hereof if
such date occurs during a Collateral Period and otherwise on
the first day of the first Collateral Period following
execution hereof and on the first day of any subsequent
Collateral
----------
1 If the Lien Grantor is not hereby already a party to the Guarantee and
Security Agreement, clauses (i) through (xii) of, and the proviso to, Section 3
of the Guarantee and Security Agreement may be appropriate.
A - 2
Period, the Corporation has complied with the provisions of
Section 5 of the Guarantee and Security Agreement with respect
to Chattel Paper and Instruments, and Section 7 of the
Guarantee and Security Agreement with respect to Securities
and Equity Interests, in each case if and to the extent
included in the New Collateral at such time.
(g) Party to Guarantee and Security Agreement. Upon executing and
delivering this Guarantee and Security Agreement Supplement to
the Collateral Agent, the Corporation will become a party to
the Guarantee and Security Agreement and will thereafter have
all the rights and obligations of a Corporation thereunder and
be bound by all the provisions thereof as fully as if the
Corporation were one of the original parties thereto.(2)
(h) Address of Lien Grantor. The address, facsimile number and
e-mail address of the Corporation for purposes of Section
22(b) of the Guarantee and Security Agreement are:
[ADDRESS, FACSIMILE NUMBER AND E-MAIL ADDRESS OF LIEN GRANTOR]
(i) Representations and Warranties.(3)
(i) The Corporation represents and warrants, on [THE DATE
OF EXECUTION HEREOF IF SUCH DATE OCCURS DURING A
COLLATERAL PERIOD AND OTHERWISE ON THE FIRST DAY OF
THE FIRST COLLATERAL PERIOD FOLLOWING EXECUTION
HEREOF] and on each Drawdown Date, that on such date
it is a corporation duly incorporated, amalgamated or
continued, as the case may be, validly existing and
in good standing under the laws of the jurisdiction
identified as its jurisdiction of incorporation,
amalgamation or continuance, as the case may be, in
its Perfection Certificate or such other jurisdiction
of which the Corporation gives prior written notice
to the Collateral Agent.
(ii) The Corporation represents and warrants, on [THE DATE
OF EXECUTION HEREOF] that at such time it has
delivered a Perfection Certificate to the Collateral
Agent. The information set forth therein is correct
and complete as of the date of delivery thereof.
(iii) The Corporation represents and warrants, on [THE
LATER OF THE DATE OF EXECUTION HEREOF IF SUCH DATE
OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE ON
THE FIRST DAY OF THE FIRST COLLATERAL PERIOD
FOLLOWING THE
----------
2 Delete Sections (g) and (h) if the Lien Grantor is already a party to the
Guarantee and Security Agreement.
3 Modify as needed if the Lien Grantor is not a corporation.
A - 3
EXECUTION HEREOF,] that execution and delivery of
this Guarantee and Security Agreement Supplement by
the Corporation and the performance by it of its
obligations under the Guarantee and Security
Agreement as supplemented hereby (i) are within its
corporate or other powers, have been duly authorized
by all necessary corporate or other action, (ii)
require no action by or in respect of, or filing
with, any governmental body, agency or official other
than filings for perfection of Transaction Liens on
the New Collateral and (iii) do not contravene, or
constitute a default under, any provision of
applicable law or regulation or of its organizational
documents, or of any agreement, judgment, injunction,
order, decree or other instrument binding upon it
except with respect to (ii) and (iii) above, any such
action, filing or contravention which would not have
a material adverse effect on the ability of
Corporation to perform its obligations under this
Canadian Guarantee and Security Agreement Supplement
or the Guarantee and Security Agreement or result in
the creation or imposition of any Lien (except a
Transaction Lien) on any of its assets.
(iv) The Corporation represents and warrants, on [THE
LATER OF THE DATE OF EXECUTION HEREOF IF SUCH DATE
OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE ON
THE FIRST DAY OF THE FIRST COLLATERAL PERIOD
FOLLOWING THE EXECUTION HEREOF], that the Guarantee
and Security Agreement as supplemented hereby will
constitute a valid and binding agreement of the
Corporation, enforceable in accordance with its
terms, except as limited by applicable bankruptcy,
insolvency, fraudulent conveyance or other similar
laws affecting creditors' rights generally and
general principles of equity.
(v) Each of the representations and warranties set forth
in Section 4 through to Section 11 of the Guarantee
and Security Agreement is true as applied to the
Corporation and the New Collateral on the date
required to be made under the Guarantee and Security
Agreement. For purposes of the foregoing sentence,
references in said Sections to a "Lien Grantor" shall
be deemed to refer to the Corporation, references to
"Schedules to the Guarantee and Security Agreement"
shall be deemed to refer to the corresponding
Schedules to this Canadian Guarantee and Security
Agreement Supplement [AND] references to "Collateral"
shall be deemed to refer to the New Collateral [, AND
THE COLLATERAL PERIOD SHALL BE DEEMED TO HAVE
COMMENCED ON THE DATE OF EXECUTION HEREOF IF SUCH
DATE OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE
ON THE FIRST DAY OF THE FIRST COLLATERAL PERIOD
FOLLOWING EXECUTION HEREOF.]
A - 4
(j) Governing Law. This Guarantee and Security Agreement
Supplement shall be construed in accordance with and governed
by the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee and Security
Agreement Supplement to be duly executed by their respective authorized officers
as of the day and year first above written.
[THE CORPORATION]
By:
------------------------------------------
Name:
Title:
Acknowledged and agreed to by the undersigned as of the first date written
above.
JPMORGAN CHASE BANK, as Collateral Agent
By:
------------------------------------------
Name:
Title:
NORTEL NETWORKS LIMITED.
By:
------------------------------------------
Name: o
Title: o
NORTEL NETWORKS INC.
By:
------------------------------------------
Name: o
Title: o
A - 5
1328556 ONTARIO INC.
By:
------------------------------------------
Name: o
Title: o
NORTEL COMMUNICATIONS INC.
By:
------------------------------------------
Name: o
Title: o
NORTEL NETWORKS GLOBAL CORPORATION
By:
------------------------------------------
Name: o
Title: o
NORTEL NETWORKS INTERNATIONAL CORPORATION
By:
------------------------------------------
Name: o
Title: o
NORTEL NETWORKS TECHNOLOGY CORPORATION
By:
------------------------------------------
Name: o
Title: o
A - 6
A - 7
EXHIBIT B
TO SECURITY AGREEMENT
CANADIAN COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS)
WHEREAS, [NAME OF LIEN GRANTOR], a _____________ corporation(4) (herein referred
to as the "LIEN GRANTOR") owns the Copyright Collateral (as defined below);
WHEREAS, pursuant to (i) a Canadian Guarantee and Security Agreement dated as of
[THE FIRST DAY OF THE COLLATERAL PERIOD] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiary Guarantors party thereto and JPMorgan Chase Bank,
as Collateral Agent for the Secured Parties referred to therein (in such
capacity, together with its successors in such capacity, the "GRANTEE"), and
(ii) certain other Security Documents (including this Canadian Copyright
Security Agreement), the Lien Grantor has secured certain obligations (the
"SECURED OBLIGATIONS") by granting to the Grantee for the benefit of such
Secured Parties a continuing security interest in personal property of the Lien
Grantor, including all right, title and interest of the Lien Grantor in, to and
under the Copyright Collateral (as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the Secured Obligations, a continuing security interest in all of the
Lien Grantor's right, title and interest in, to and under the following (all of
the following items or types of property being herein collectively referred to
as the "COPYRIGHT COLLATERAL"), whether now owned or existing or hereafter
acquired or arising:
(i) each Copyright (as defined in the Security Agreement)
owned by the Lien Grantor, including, without
limitation, each Copyright registration of which the
Lien Grantor has provided the Collateral Agent
written notice; and
(ii) all proceeds of, revenues from, and accounts and
general intangibles arising out of, the foregoing,
including, without limitation, all proceeds of and
revenues from any claim by the Lien Grantor against
third parties for past, present or future
infringement of any Copyright (including, without
limitation, any Copyright owned by the Lien Grantor
and of which the Lien Grantor has provided the
Collateral Agent written notice).
----------
4 Modify as needed if the Lien Grantor is not a corporation.
The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Copyright Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Canadian Copyright
Security Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor and the Grantee acknowledge and affirm that the
rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
___ day of _______________, ________.
[NAME OF LIEN GRANTOR]
By:
-----------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
--------------------------------
Name:
Title:
EXHIBIT C
TO SECURITY AGREEMENT
CANADIAN PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS)
WHEREAS, [NAME OF LIEN GRANTOR], a ________________ corporation(5) (herein
referred to as the "LIEN GRANTOR") owns the Patent Collateral (as defined
below);
WHEREAS, pursuant to (i) a Canadian Guarantee and Security Agreement dated as of
[THE FIRST DAY OF THE COLLATERAL PERIOD] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiary Guarantors party thereto and JPMorgan Chase Bank,
as Collateral Agent for the Secured Parties referred to therein (in such
capacity, together with its successors in such capacity, the "GRANTEE"), and
(ii) certain other Security Documents (including this Canadian Patent Security
Agreement), the Lien Grantor has secured certain obligations (the "SECURED
OBLIGATIONS") by granting to the Grantee for the benefit of such Secured Parties
a continuing security interest in personal property of the Lien Grantor,
including all right, title and interest of the Lien Grantor in, to and under the
Patent Collateral (as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the Secured Obligations, a continuing security interest in all of the
Lien Grantor's right, title and interest in, to and under the following (all of
the following items or types of property being herein collectively referred to
as the "PATENT COLLATERAL"), whether now owned or existing or hereafter acquired
or arising:
(i) each Patent (as defined in the Security Agreement)
owned by the Lien Grantor, including, without
limitation, each Patent of which the Lien Grantor has
provided the Collateral Agent written notice; and
(ii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and
revenues from any claim by the Lien Grantor against
third parties for past, present or future
infringement of any Patent owned by the Lien Grantor
(including, without limitation, any Patent of which
the Lien Grantor has provided the Collateral Agent
written notice).
----------
5 Modify as needed if the Lien Grantor is not a corporation.
C -1
The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the Patent
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Canadian Patent Security
Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor and the Grantee acknowledge and affirm that the
rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Patent Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
_______ day of _________________, ________.
[NAME OF LIEN GRANTOR]
By:
---------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
----------------------------------
Name:
Title:
C - 2
EXHIBIT D
TO SECURITY AGREEMENT
CANADIAN TRADEMARK SECURITY AGREEMENT
(TRADEMARK REGISTRATIONS, TRADEMARK APPLICATIONS)
WHEREAS, [NAME OF LIEN GRANTOR], a ________________ corporation(6) (herein
referred to as the "LIEN GRANTOR") owns the Trademark Collateral (as defined
below);
WHEREAS, pursuant to (i) a Canadian Guarantee and Security Agreement dated as of
[THE FIRST DAY OF THE COLLATERAL PERIOD] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiary Guarantors party thereto and JPMorgan Chase Bank,
as Collateral Agent for the Secured Parties referred to therein (in such
capacity, together with its successors in such capacity, the "GRANTEE"), and
(ii) certain other Security Documents (including this Canadian Trademark
Security Agreement), the Lien Grantor has secured certain obligations (the
"SECURED OBLIGATIONS") by granting to the Grantee for the benefit of such
Secured Parties a continuing security interest in personal property of the Lien
Grantor, including all right, title and interest of the Lien Grantor in, to and
under the Trademark Collateral (as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the Secured Obligations, a continuing security interest in all of the
Lien Grantor's right, title and interest in, to and under the following (all of
the following items or types of property being herein collectively referred to
as the "TRADEMARK COLLATERAL"), whether now owned or existing or hereafter
acquired or arising:
(i) each Trademark (as defined in the Security Agreement)
owned by the Lien Grantor, including, without
limitation, each Trademark registration and
application of which the Lien Grantor has provided
the Collateral Agent written notice, and all of the
goodwill of the business connected with the use of,
or symbolized by, each Trademark; and
(ii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and
revenues from any claim by the Lien Grantor against
third parties for past, present or future unfair
competition with, or violation of intellectual
property rights in connection with or injury to, or
infringement or dilution of, any Trademark owned by
the Lien
----------
6 Modify as needed if the Lien Grantor is not a corporation.
D - 1
Grantor (including, without limitation, any Trademark
of which the Lien Grantor has provided the Collateral
Agent written notice).
The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Trademark Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Canadian Trademark
Security Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor and the Grantee acknowledge and affirm that the
rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of _________________, ________.
[NAME OF LIEN GRANTOR]
By:
----------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
------------------------------------
Name:
Title:
D - 2
EXHIBIT E
TO SECURITY AGREEMENT
CANADIAN INDUSTRIAL DESIGN SECURITY AGREEMENT
(INDUSTRIAL DESIGNS, INDUSTRIAL DESIGN APPLICATIONS)
WHEREAS, [NAME OF LIEN GRANTOR], a ________________ corporation(7) (herein
referred to as the "LIEN GRANTOR") owns the Design Collateral (as defined
below);
WHEREAS, pursuant to (i) a Canadian Guarantee and Security Agreement dated as of
[THE FIRST DAY OF THE COLLATERAL PERIOD] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiary Guarantors party thereto and JPMorgan Chase Bank,
as Collateral Agent for the Secured Parties referred to therein (in such
capacity, together with its successors in such capacity, the "GRANTEE"), and
(ii) certain other Security Documents (including this Canadian Industrial Design
Security Agreement), the Lien Grantor has secured certain obligations (the
"SECURED OBLIGATIONS") by granting to the Grantee for the benefit of such
Secured Parties a continuing security interest in personal property of the Lien
Grantor, including all right, title and interest of the Lien Grantor in, to and
under the Design Collateral (as defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Lien Grantor grants to the Grantee, to
secure the Secured Obligations, a continuing security interest in all of the
Lien Grantor's right, title and interest in, to and under the following (all of
the following items or types of property being herein collectively referred to
as the "DESIGN COLLATERAL"), whether now owned or existing or hereafter acquired
or arising:
(i) each Design (as defined in the Security Agreement)
owned by the Lien Grantor, including, without
limitation, each Design of which the Lien Grantor has
provided the Collateral Agent written notice; and
(ii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and
revenues from any claim by the Lien Grantor against
third parties for past, present or future
infringement of any Design owned by the Lien Grantor
(including, without limitation, any Design of which
the Lien Grantor has provided the Collateral Agent
written notice).
----------
7 Modify as needed if the Lien Grantor is not a corporation.
E - 1
The Lien Grantor irrevocably constitutes and appoints the Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Design Collateral any and all
appropriate action which the Lien Grantor might take with respect to the Design
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Canadian Industrial Design
Security Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the security
interests granted by the Lien Grantor to the Grantee pursuant to the Security
Agreement. The Lien Grantor and the Grantee acknowledge and affirm that the
rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Design Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Canadian Industrial Design
Security Agreement to be duly executed by its officer thereunto duly authorized
as of the _______ day of _________________, ________.
[NAME OF LIEN GRANTOR]
By:
----------------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
------------------------------------
Name:
Title:
E - 2
EXHIBIT F
TO SECURITY AGREEMENT
PERFECTION CERTIFICATE
The undersigned is a duly authorized officer of [NAME OF LIEN GRANTOR]
(the "LIEN GRANTOR"). With reference to the Canadian Guarantee and Security
Agreement dated as of [THE FIRST DAY OF COLLATERAL PERIOD] among Nortel Networks
Limited, each Subsidiary Party thereto and JPMORGAN CHASE BANK, as Collateral
Agent (terms defined therein being used herein as therein defined), the
undersigned certifies to the Collateral Agent and each other Secured Party as
follows:
A. INFORMATION REQUIRED FOR FILINGS AND SEARCHES FOR PRIOR FILINGS.
1. Jurisdiction of Organization. The Lien Grantor is a [corporation]
organized under the laws of .
----------------------
2. Name. The exact [corporate] name of the Lien Grantor as such name
appears in its [articles of incorporation] is as follows:
B. ADDITIONAL INFORMATION REQUIRED FOR SEARCHES FOR PRIOR FILINGS.
1. Current Locations.
(a) The chief executive office and, if different, the registered
head office, of the Lien Grantor is located at the following
address:
MAILING ADDRESS COUNTRY PROVINCE
(b) The following are all locations where there is real property
owned or leased in Canada by the Lien Grantor:
MAILING ADDRESS COUNTRY PROVINCE
H - 1
(c) The following are all current locations in Canada not
identified above where the Lien Grantor maintains any
Inventory which is other than inventory in-transit and or with
third party logistics providers, on consignment, on loan,
involved in a repair process, in third party marshalling and
distribution centres, on customer premises, with contract
manufacturers or component level providers or inventory that
is not on the property at which a system house is located:
MAILING ADDRESS COUNTRY PROVINCE
IN WITNESS WHEREOF, [I/WE] have hereunto set [MY/OUR RESPECTIVE] hand
this day of o, 2002.
By:
-------------------------------
Name:
Title:
H - 2
