EXHIBIT 10.1
NORTEL NETWORKS LIMITED
and the other members of the NORTEL NETWORKS LIMITED GROUP
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NORTEL NETWORKS CORPORATION
and the other members of the NORTEL NETWORKS CORPORATION GROUP
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SECOND AMENDED AND RESTATED RECIPROCAL CREDIT AGREEMENT
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Dated as of December 20, 2001
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................................................2
Section 1.1. Defined Terms....................................................................2
Section 1.2. Wholly Owned Subsidiary..........................................................4
Section 1.3. Currency.........................................................................4
ARTICLE 2 ADVANCES....................................................................................4
Section 2.1. Commitments......................................................................4
Section 2.2. Advances.........................................................................5
Section 2.3. Term and Termination.............................................................6
ARTICLE 3 INTEREST....................................................................................6
Section 3.1. Interest on Advances.............................................................6
Section 3.2. No Interest......................................................................6
Section 3.3. Tax Withholding..................................................................7
ARTICLE 4 REPAYMENT...................................................................................8
Section 4.1. Promise to Repay.................................................................8
Section 4.2. Repayment........................................................................8
Section 4.3. Prepayment.......................................................................8
Section 4.4. Currency.........................................................................8
Section 4.5. Waiver of Presentment and Notice.................................................8
Section 4.6 Conversion Right of Nortel Corporation...........................................8
ARTICLE 5 BORROWINGS GRIDS AND QUARTERLY REPORTS......................................................9
Section 5.1. Individual Borrowings Grids......................................................9
Section 5.2. Consolidated Borrowings Grids....................................................9
Section 5.3. Borrowings Grid Information.....................................................10
Section 5.4. Provision of Borrowings Grid....................................................10
Section 5.5. Obligations Ongoing.............................................................10
Section 5.6. Quarterly Grid Reports..........................................................10
Section 5.7. Unpaid Balance..................................................................10
ARTICLE 6 CONDITIONS TO ADVANCES.....................................................................11
Section 6.1. Conditions to Advances..........................................................11
Section 6.2. Payments in Trust...............................................................13
ARTICLE 7 COVENANTS..................................................................................14
Section 7.1. Nortel Corporation..............................................................14
Section 7.2. Nortel Limited..................................................................14
ARTICLE 8 CHANGE IN OWNERSHIP OR CONTROL.............................................................14
Section 8.1. Change in Ownership or Control..................................................14
ARTICLE 9 GENERAL PROVISIONS.........................................................................15
Section 9.1. Payments........................................................................15
Section 9.2. Waiver..........................................................................15
Section 9.3. Notices.........................................................................16
Section 9.4. Further Assurances..............................................................17
Section 9.5. Headings........................................................................17
Section 9.6. Successors and Assigns..........................................................17
Section 9.7 Severability....................................................................17
Section 9.8. Governing Law...................................................................17
Section 9.9. Counterparts....................................................................18
Section 9.10 Reference to and Effect on the Amended and Restated
Reciprocal Credit Agreement.....................................................18
SCHEDULE A............................................................................................1
AMENDED AND RESTATED RECIPROCAL CREDIT AGREEMENT ADDITIONAL NOTICE INFORMATION........................1
SCHEDULE B............................................................................................1
FORM OF CONSENT AGREEMENT.............................................................................1
SCHEDULE C............................................................................................1
FORM OF BORROWINGS GRID FORMAT ADVANCES AND PAYMENTS OF PRINCIPAL.....................................1
SECOND AMENDED AND RESTATED RECIPROCAL CREDIT AGREEMENT made among Nortel
Networks Corporation ("NORTEL CORPORATION"), Nortel Networks Limited ("NORTEL
LIMITED"), and the other parties who have executed this Agreement, dated as of
December 20, 2001.
WHEREAS Nortel Corporation and Nortel Limited entered into a reciprocal
credit agreement (the "ORIGINAL RECIPROCAL CREDIT AGREEMENT") dated May 1, 2000;
AND WHEREAS Nortel Corporation, Nortel Limited amended and restated the
Original Reciprocal Credit Agreement and the other parties hereto became parties
thereto in an amended and restated reciprocal credit agreement (the "AMENDED AND
RESTATED RECIPROCAL CREDIT AGREEMENT") dated as of November 4, 2001;
AND WHEREAS the parties to the Amended and Restated Credit Agreement wish
to further amend and restate the Amended and Restated Credit Agreement on the
terms and conditions provided for herein;
AND WHEREAS Nortel Limited will use and will continue to use the amount
borrowed from Nortel Corporation for the purpose of earning income from Nortel
Limited's business or property;
AND WHEREAS the conversion by Nortel Corporation of any of its loan to
Nortel Limited into common shares of Nortel Limited, as contemplated in this
Agreement, is not intended by Nortel Corporation and Nortel Limited directly or
indirectly in any way to derogate from or otherwise change or compromise Nortel
Corporation's income earning purpose or income earning use of any amount
borrowed by Nortel Corporation and subsequently loaned by it to Nortel Limited,
and upon and by any such conversion of all or part of any such loan into a
common share of Nortel Limited,, as contemplated in this Agreement, it was and
is Nortel Corporation's continuing intention to maintain and enhance its ability
to earn income from its business or property, including in particular Nortel
Corporation's investment in Nortel Limited;
IN CONSIDERATION OF the mutual covenants, agreements and undertakings
contained or referred to in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties to this Agreement agree to amend and restate the Amended and Restated
Reciprocal Credit Agreement as follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
"ADVANCE" means any amount advanced by a Lender to a Borrower pursuant to
Article 2;
"AGREEMENT" means this amended and restated reciprocal credit agreement among
the parties hereto, including the schedules referred to herein and attached
hereto, as the same may be amended or supplemented in writing from time to time;
"AMENDED AND RESTATED RECIPROCAL CREDIT AGREEMENT" shall have the meaning given
to it in the recitals hereto;
"BANKING DAY" means any day other than a Saturday or a Sunday on which banks in
both Canada and the United States are open for business;
"BORROWER" means any member of the Nortel Corporation Group or the Nortel
Limited Group when acting in its capacity as the recipient of Advances
hereunder;
"BORROWINGS GRID" shall have the meaning given to it in Section 5.1;
"CANADIAN DOLLARS" and "CDN. $" each means lawful money of Canada;
"CANADIAN INTEREST RATE" means 100 percent, 110 percent, 120 percent or 130
percent of the floating one-month Bankers' Acceptance (BA) rate, as mutually
agreed by the Lender and the Borrower on the date of the Advance, and on the
first Banking Day of each month thereafter;
"COMMON SHARES" means fully paid and non-assessable common shares in the capital
of Nortel Limited;
"CONVERSION DATE" shall have the meaning given to it in Section 4.6(2);
"CONVERTIBLE ADVANCES" shall have the meaning given to it in Section 4.6(1);
"CORPORATION GROUP COMMITMENT" means seven hundred and fifty million U.S.
Dollars (U.S. $750,000,000) or the Equivalent Cdn. $ Amount thereof;
"ELIGIBLE BANK" means (i) a Canadian bank listed in Schedule I or Schedule II of
the Bank Act (Canada); (ii) a bank organized in one of the United States and
rated A or better by Xxxxx'x, or with an equivalent credit rating; or (iii) a
syndicate of banks all of which are institutions described in (i), (ii) or both;
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"EQUIVALENT CDN. $ AMOUNT" means, on any day with respect to any amount of U.S.
Dollars, the amount of Canadian Dollars which would be required to buy such
amount of U.S. Dollars using the spot rate of the Bank of Canada at
approximately 12:00 noon (Toronto time) on the day;
"INITIAL TERM" means the period commencing on the Original Restatement Date and
terminating three (3) years from such date;
"LENDER" means any member of the Nortel Corporation Group or the Nortel Limited
Group when acting in its capacity as the maker of Advances hereunder;
"LIMITED GROUP COMMITMENT" means seven hundred and fifty million U.S. Dollars
(U.S. $750,000,000) or the Equivalent Cdn. $ Amount thereof
"NORTEL CORPORATION" means Nortel Networks Corporation, a Canadian corporation;
"NORTEL CORPORATION GROUP" means Nortel Corporation, Alteon WebSystems, Inc. (a
Delaware corporation), CoreTek, Inc. (a Delaware corporation), Xros, Inc. (a
Delaware corporation), and any other wholly owned subsidiary or subsidiaries of
Nortel Corporation (excluding Nortel Limited and its subsidiaries) that agree in
writing to be bound by the terms and conditions of this Agreement by executing a
consent agreement substantially in the form attached as Schedule B;
"NORTEL CORPORATION GROUP BORROWINGS GRID" means the borrowings grid for the
Nortel Corporation Group maintained by Nortel Limited and prepared substantially
in the form of Schedule C;
"NORTEL LIMITED" means Nortel Networks Limited, a Canadian corporation;
"NORTEL LIMITED GROUP" means Nortel Limited, Nortel Networks Inc. (a Delaware
corporation), and Nortel Networks U.S. Finance Inc. (a Delaware corporation),
and any other wholly owned subsidiary or subsidiaries of Nortel Limited that
agree in writing to be bound by the terms and conditions of this Agreement by
executing a consent agreement substantially in the form attached as Schedule B;
"NORTEL LIMITED GROUP BORROWINGS GRID" means the borrowings grid for the Nortel
Limited Group maintained by Nortel Corporation and prepared substantially in the
form of Schedule C;
"NOTICE OF CONVERSION" shall have the meaning given to it in Section 4.6(2);
"ORIGINAL RECIPROCAL CREDIT AGREEMENT" shall have the meaning given to it in the
recitals hereto;
"ORIGINAL RESTATEMENT DATE" means November 4, 2001;
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"QUARTERLY GRID REPORT" shall have the meaning given to it in Section 5.6;
"RENEWAL TERM" shall have the meaning given to it in Section 2.3;
"RESTATEMENT DATE" means December 20, 2001;
"TERM" means the Initial Term and any and all Renewal Terms;
"U.S. DOLLARS" and "U.S. $" each means lawful money of the United States of
America; and
"U.S. INTEREST RATE" means an interest rate, as mutually agreed by the Borrower
and the Lender at the time of the making of an Advance, which is 100 percent,
110 percent, 120 percent, or 130 percent of the short-term monthly Applicable
Federal Rate (AFR), as published each month by the U.S. Internal Revenue Service
pursuant to Section 1274(d) of the Internal Revenue Code.
SECTION 1.2 WHOLLY OWNED SUBSIDIARY. For the purposes of this Agreement,
a corporation is a "wholly owned subsidiary" of another corporation if all of
the issued and outstanding voting securities of the corporation are held, other
than by way of collateral security only, by or for the benefit of that other
corporation.
SECTION 1.3 CURRENCY. All references to currency or dollar amounts in
this Agreement, unless otherwise specifically indicated, are to U.S. Dollars.
ARTICLE 2
ADVANCES
SECTION 2.1. COMMITMENTS.
(a) Subject to the terms and conditions of this Agreement, each member of the
Nortel Corporation Group agrees to make Advances to any member of the Nortel
Limited Group during the Term, provided that the aggregate outstanding principal
amount of all Advances made from time to time by members of the Nortel
Corporation Group to members of the Nortel Limited Group shall not exceed the
principal amount of the Corporation Group Commitment in accordance with this
Agreement. Each member of the Nortel Limited Group shall be responsible for
repaying only those Advances made to it, and no member of the Nortel Limited
Group shall be responsible for repaying any Advances made to any other member of
the Nortel Limited Group.
(b) Subject to the terms and conditions of this Agreement, each member of the
Nortel Limited Group agrees to make Advances to any member of the Nortel
Corporation Group during the Term, provided that the aggregate outstanding
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principal amount of all Advances made from time to time by members of the Nortel
Limited Group to members of the Nortel Corporation Group shall not exceed the
principal amount of the Limited Group Commitment in accordance with this
Agreement. Each member of the Nortel Corporation Group shall be responsible for
repaying only those Advances made to it, and no member of the Nortel Corporation
Group shall be responsible for repaying any Advances made to any other member of
the Nortel Corporation Group.
SECTION 2.2. ADVANCES.
(a) REGULAR ADVANCES - Subject to Article 6, a Lender will make Advances
available to a Borrower in either Canadian dollars or U.S. dollars on any
Banking Day upon the request of the Borrower received by the Lender at least one
(1) Banking Day prior to the date on which the Advance is to be deposited. The
request must specify the amount, currency and date of the Advance as well as the
bank account to which the Advance is to be deposited. The request may be made
verbally, provided the Lender shall at all times have the right to request
confirmation of a request in writing. Advances will be made by deposit to the
bank account specified in the Borrower's request.
(b) DEEMED ADVANCES - Notwithstanding Subsection 2.2(a) above, each advance
made prior to the Original Restatement Date by a member of the Nortel
Corporation Group to a member of the Nortel Limited Group, or vice versa, shall
be deemed to be an Advance made under this Agreement, effective as of the
Original Restatement Date,
(i) in a principal amount equal to the principal amount outstanding as
of the Original Restatement Date plus accrued and unpaid interest,
(ii) in the currency of the original advance, and
(iii) at an interest rate (if any) determined in accordance with Article
3;
except that, if any such advance does not comply with the terms and conditions
of this Agreement, including but not limited to the conditions contained in
Section 3.2 and Section 6.1, as though the advance was a new Advance made as of
the Original Restatement Date, then such advance shall not be deemed to be an
Advance made under this Agreement and shall be fully excluded from this
Agreement.
(c) POOLING OF FUNDS - The notional pooling of funds pursuant to the terms
and conditions of a cash pooling agreement or other form of banking agreement
(i) by any member or members of the Nortel Corporation Group with the funds of
any member or members of the Nortel Limited Group, or (ii) by any member or
members of the Nortel Limited Group with the funds of any member or members of
the Nortel Corporation Group, shall not be deemed to be, constitute or otherwise
entail an Advance made under this Agreement. The members of the Nortel Limited
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Group shall not at any time, individually or collectively, notionally pool funds
of one or more members of the Nortel Limited Group in an aggregate amount
exceeding fifty million U.S. Dollars (U.S.$50,000,000) with the funds of any
member or members of the Nortel Corporation Group. The members of the Nortel
Corporation Group shall not at any time, individually or collectively,
notionally pool funds of one or more members of the Nortel Corporation Group in
an aggregate amount exceeding fifty million U.S. Dollars (U.S.$50,000,000) with
the funds of any member or members of the Nortel Limited Group.
SECTION 2.3 TERM AND TERMINATION. After the completion of the Initial
Term, this Agreement shall automatically renew for up to three consecutive
one-year renewal terms (each, a "Renewal Term"), unless earlier terminated by
notice in writing given by either Nortel Corporation or Nortel Limited to the
other parties to this Agreement not less than five (5) Banking Days prior to the
effective date of the termination.
ARTICLE 3
INTEREST
SECTION 3.1 INTEREST ON ADVANCES. Subject to Section 3.2, Advances made
to a Borrower shall bear interest at a U.S. Interest Rate, for Advances made in
U.S. Dollars, or at a Canadian Interest Rate, for Advances made in Canadian
Dollars. Such interest amounts shall be computed and compounded monthly, shall
be documented in the applicable Quarterly Grid Report, and shall be payable on
the net month-end balance by the applicable Borrower 10 days after each
September 30 and March 31. Notwithstanding the foregoing, a Lender and the
relevant Borrower may agree in writing at each September 30 or March 31 that the
accrued interest from that semi-annual period is not payable and will be
compounded and included in the aggregate indebtedness of the relevant Borrower,
provided that the Corporation Group Commitment or the Limited Group Commitment,
as applicable, will not have been exceeded as a result of the inclusion of such
accrued interest in the Borrower's aggregate indebtedness. All interest
calculations shall be documented in the applicable Quarterly Grid Report.
SECTION 3.2 NO INTEREST. If, in respect of an Advance, the Borrower and
the Lender are both resident in Canada, then the Borrower and the Lender may
agree at the time of the making of the Advance that the Advance shall bear no
interest, provided that the following conditions, and the conditions in Article
6, are met:
(a) the Borrower has, at the time of making of the Advance, an
established committed credit facility with an Eligible Bank, with
sufficient availability thereunder, capable of being used to
finance the repayment to the Lender of all Advances outstanding
from time to time when due pursuant to demand or otherwise; and
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(b) in the case of Advances made by a member of the Nortel Limited
Group, the Lender and Nortel Limited are each able, financially
and legally, at the time of the Advance to declare and pay a
dividend on its common shares outstanding at the time of the
Advance in an amount equal to the amount of the Advance.
SECTION 3.3. TAX WITHHOLDING. If withholding of any tax is required in
respect of any payment by any Borrower to any Lender hereunder,
(a) the Lender shall complete and provide to the Borrower, or if
required, to the applicable taxing authority, within a reasonable
period of time, such forms, certifications or other documents in
order to allow the Borrower to make payments to the Lender without
any deduction or withholding, or deduction at a reduced rate, on
account of withholding taxes; and,
(b) the Borrower shall:
(i) withhold the appropriate tax amount, if any, from
such payment;
(ii) pay such tax amount to the relevant authorities in
accordance with applicable law; and
(iii) furnish to the Lender within 30 calendar days of the
tax payment, all original tax receipts or certified
copies, in the Lender's name showing payment of the
tax and such other documentation relating to the tax
payment which Lender may reasonably request;
provided that, if such tax receipts are not provided
to the Lender, it shall be assumed that the Borrower
made no payment of tax to the relevant authorities
and the amount previously withheld from such payment
shall be paid to the Lender.
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ARTICLE 4
REPAYMENT
SECTION 4.1 PROMISE TO REPAY. Each Borrower promises to pay, in
accordance with Section 4.2, the principal amount of, and accrued and unpaid
interest on, all Advances made under this Agreement to such Borrower by any
Lender, and outstanding against such Borrower as recorded in the column headed
"Unpaid Principal Balance" on the applicable Borrowings Grid, to or to the order
of such Lender, at the Lender's offices, or such other place as the Lender may
designate.
SECTION 4.2 REPAYMENT. The principal outstanding in respect of all
Advances, together with accrued and unpaid interest, is due and payable on the
earlier of (a) written demand for repayment being made by the Lender to the
Borrower at least three (3) Banking Days in advance of the specified repayment
date, (b) a change in ownership or control in accordance with Section 8.1, and
(c) the last Banking Day of the Term.
SECTION 4.3 PREPAYMENT. A Borrower may, in its sole and absolute
discretion, from time to time without notice, bonus or penalty, make prepayments
in any amounts desired, on account of the principal and interest, if applicable,
outstanding on any Advance. If more than one Advance is outstanding at the time
a Borrower elects to make a prepayment, the Borrower shall be entitled to
specify at the time it makes said prepayment the specific Advance to which the
prepayment will apply. All prepayments will be applied first on account of
interest, if any, and then on account of principal due hereunder for the Advance
to which the prepayment applies.
SECTION 4.4 CURRENCY. All repayments and prepayments of amounts on
account of principal and interest shall be made in the currency in which the
applicable Advance was made.
SECTION 4.5 WAIVER OF PRESENTMENT AND NOTICE. Each Borrower under this
Agreement waives presentment for payment and notice of non-payment.
SECTION 4.6 CONVERSION RIGHT OF NORTEL CORPORATION. (1) Nortel
Corporation shall have the right at any time and from time to time, prior to
repayment of Advances by Nortel Corporation to Nortel Limited (the "CONVERTIBLE
ADVANCES"), to convert the whole, or any part in excess of $100 million, of the
principal amount outstanding under the Convertible Advances into one (1) Common
Share (rather than any other number of Common Shares that would result from
dividing such principal amount by a conversion price that otherwise would be
specified); provided that, at the time of such conversion, Nortel Corporation
beneficially owns, directly or indirectly, all of the outstanding Common Shares.
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(2) Subject to Section 4.6(1) above, Nortel Corporation may convert all
or part of the Convertible Advances outstanding by delivering to Nortel Limited
a notice of conversion, in writing, specifying that portion of the Principal
Amount outstanding that Nortel Corporation elects to convert (the "NOTICE OF
CONVERSION"). Nortel Limited shall, within two Banking Days following the
receipt of the Notice of Conversion (the "CONVERSION DATE") deliver to Nortel
Corporation one (1) Common Share, provided, however, that there shall be no
payment or adjustment by Nortel Limited on account of any interest accrued or
accruing from the date of the last preceding interest payment date on the
principal amount of the Convertible Advances so converted. Subject to the
foregoing provisions of this Section 4.6(2), at the close of business on the
Conversion Date: (i) such conversion shall be deemed to have been made, and (ii)
Nortel Corporation shall be treated for all purposes as having become the holder
of record of such Common Share. The Common Share issued upon such conversion
shall rank only in respect of dividends declared in favour of shareholders of
record on or after the Conversion Date.
(3) Notwithstanding Section 4.6(1), above, should it be determined by any
relevant taxing authority subsequently to a conversion of the whole or any part
of the Convertible Advances that such conversion into one (1) Common Share is
insufficient to be consistent with and satisfy the income earning purposes and
uses of and by Nortel Corporation and Nortel Limited, Nortel Limited shall issue
and Nortel Corporation shall cause Nortel Limited to issue such additional
Common Shares as shall be sufficient to be consistent with and to satisfy the
income earning purposes and uses of and by Nortel Corporation and Nortel
Limited.
ARTICLE 5
BORROWINGS GRIDS AND QUARTERLY REPORTS
SECTION 5.1 INDIVIDUAL BORROWINGS GRIDS. All Advances and all payments on
account of such Advances by a given Lender to a given Borrower shall be recorded
by a notation on a borrowings grid (a "Borrowings Grid") maintained by the
Lender. Any failure to make any required notation on the applicable Borrowings
Grid shall not affect the liability of a Borrower to the respective Lender in
respect of the relevant Advance.
SECTION 5.2 CONSOLIDATED BORROWINGS GRIDS. In addition to the individual
Borrowings Grids, all Advances and all payments on account of such Advances
shall be evidenced by a notation on the consolidated Nortel Limited Group
Borrowings Grid, in the case of borrowings by members of the Nortel Limited
Group, and on the consolidated Nortel Corporation Group Borrowings Grid, in the
case of borrowings by members of the Nortel Corporation Group. Nortel
Corporation shall maintain the Nortel Limited Group Borrowings Grid, and Nortel
Limited shall maintain the Nortel Corporation Group Borrowings Grid. Any failure
to make any required notation on the applicable Borrowings Grid shall not affect
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the liability of a Borrower to the respective Lender in respect of the relevant
Advance.
SECTION 5.3. BORROWINGS GRID INFORMATION. Each Borrowings Grid shall
contain the following information: (i) the name(s) of the Borrower(s) and the
Lender(s), as well as the date, currency and amount of each Advance and the
resulting increase in the Unpaid Principal Balance; (ii) the Interest Rate
applicable to each Advance, if applicable; and (iii) the date and amount of each
repayment or prepayment on account of the principal paid to the Lender and the
resulting decrease of the Unpaid Principal Balance.
SECTION 5.4. PROVISION OF BORROWINGS GRID. As may be requested by a
Borrower from time to time, each Lender shall obtain and provide a copy of the
relevant Borrowings Grid to its respective Borrower.
SECTION 5.5. OBLIGATIONS ONGOING. The reduction of the Unpaid Principal
Balance on the relevant Borrowings Grid to zero at any time or from time to time
shall not affect the ongoing validity of this Agreement or the obligations of
any Borrower with respect to any Unpaid Principal Balance subsequently recorded
against such Borrower on the relevant Borrowings Grid.
SECTION 5.6. QUARTERLY GRID REPORTS. (a) Nortel Limited shall prepare a
report (a "Quarterly Grid Report") attaching the Nortel Corporation Group
Borrowings Grid and also evidencing the appropriate interest calculations for
any and all Advances under this Agreement by members of the Nortel Limited Group
to members of the Nortel Corporation Group. Nortel Limited shall submit its
Quarterly Grid Report to Nortel Corporation and the applicable Borrowers for
approval on the last Banking Day of each quarter.
(b) Nortel Corporation shall prepare a Quarterly Grid Report attaching the
Nortel Limited Group Borrowings Grid and also evidencing the appropriate
interest calculations for any and all Advances under this Agreement by members
of the Nortel Corporation Group to members of the Nortel Limited Group. Nortel
Corporation shall submit its Quarterly Grid Report to Nortel Limited and the
applicable Borrowers for approval on the last Banking Day of each quarter.
SECTION 5.7. UNPAID BALANCE. Each Borrower acknowledges, confirms and
agrees with each Lender that all amounts recorded on the Quarterly Grid Reports
prepared by Nortel Corporation and Nortel Limited in accordance with this
Article 5 will constitute prima facie evidence of any and all balances owing as
indicated in such Quarterly Grid Reports, and, in the absence of evidence to the
contrary, will be conclusive evidence of any unpaid balance. In the event of a
conflict between a Borrowings Grid and a Quarterly Grid Report, the Quarterly
Grid Report shall govern. If a Quarterly Grid Report has not yet been prepared
in respect of a given quarter, then each Borrower acknowledges, confirms and
agrees
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with each Lender that all amounts recorded on the applicable Group Borrowings
Grid prepared by Nortel Corporation or Nortel Limited, as the case may be, in
accordance with this Article 5 will constitute prima facie evidence of any and
all balances owing as indicated in such Group Borrowings Grid, and, in the
absence of evidence to the contrary, will be conclusive evidence of any unpaid
balance.
ARTICLE 6
CONDITIONS TO ADVANCES
SECTION 6.1. CONDITIONS TO ADVANCES. The obligation of a Lender to make
any Advances will be conditional upon the following:
(a) receipt by such Lender of the following in form and substance
reasonably satisfactory to such Lender:
(i) the request required under Section 2.2; and
(ii) any other documents or assurances that the Lender
may reasonably require;
(b) there has not occurred and there is not continuing a default or
breach under any other agreement, document or instrument (i)
involving the failure of Nortel Corporation, Nortel Limited, the
Borrower or the Lender to make any payment when due in respect of
any borrowed money, or a guarantee for borrowed money, in excess
of $100,000,000 (or the equivalent amount in any other currency or
currencies), in the aggregate, or (ii) causing, or permitting any
creditor or a trustee to cause, any indebtedness of Nortel
Corporation, Nortel Limited, the Borrower or the Lender in excess
of $100,000,000 (or the equivalent amount in any other currency or
currencies), in the aggregate, to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment;
(c) in the case of Advances by any member of the Nortel Limited Group,
there are no arrears of dividends (other than non-cumulative
dividends the entitlement to which has been extinguished) on any
series of preference shares of Nortel Limited or of the Lender
outstanding from time to time; except that, Nortel Limited and the
Lender may waive the condition in this paragraph (c): (i) if and
to the extent that the Advance is being made to permit the
Borrower to make any payment of the principal of, premium, if any,
interest or additional interest, if any, on any outstanding
indebtedness of the Borrower to an arm's length entity and which
is guaranteed by Nortel Limited or the Lender; or (ii) upon a good
faith determination by the board of directors of each of Nortel
Limited and the Lender, after consideration of the interests of
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the holders of the outstanding preference shares, that making such
Advance would be in the best interests of Nortel Limited and the
Lender, respectively;
(d) in the case of Advances by any member of the Nortel Corporation
Group (other than Nortel Corporation), there are no arrears of
dividends (other than non-cumulative dividends the entitlement to
which has been extinguished) on any series of preference shares of
the Lender outstanding from time to time; except that, the Lender
may waive the condition in this paragraph (d): (i) if and to the
extent that the Advance is being made to permit the Borrower to
make any payment of the principal of, premium, if any, interest or
additional interest, if any, on any outstanding indebtedness of
the Borrower to an arm's length entity and which is guaranteed by
the Lender; or (ii) upon a good faith determination by the board
of directors of the Lender, after consideration of the interests
of the holders of the outstanding preference shares, that making
such Advance would be in the best interests of the Lender;
(e) at the time of the making of the Advance:
(i) none of Nortel Corporation, Nortel Limited, or the
Lender is, or after making the Advance would be,
unable to pay its liabilities as they become due;
and
(ii) none of Nortel Corporation, Nortel Limited, or the
Lender has ceased paying its current obligations in
the ordinary course of business as they generally
become due;
(f) the making of the Advance is not prohibited financial assistance
under the corporate law governing the Lender;
(g) the Lender has surplus funds available to it to make the Advance
based on the Lender's cash flow forecast for the fiscal quarter in
which the Advance is to be made;
(h) no decree, judgment, or order by a court having jurisdiction in
the premises having been entered adjudging Nortel Corporation,
Nortel Limited or the Borrower a bankrupt or insolvent or
approving as properly filed a petition seeking reorganization,
readjustment, arrangement, composition or similar relief for
Nortel Corporation, Nortel Limited or the Borrower under any
bankruptcy, insolvency or other similar applicable law or
appointing a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of Nortel Corporation, Nortel Limited or
the Borrower, as the case may be, of a substantial part of its
property, or for the winding up or liquidation of its affairs
- 13 -
and no substantial part of the property of the Nortel Corporation,
Nortel Limited or the Borrower having been sequestered or
attached;
(i) none of Nortel Corporation, Nortel Limited or the Borrower having
instituted proceedings to be adjudicated a voluntary bankrupt, or
having consented to the filing of a bankruptcy proceeding against
it, or having filed a petition or answer or consent seeking
reorganization, readjustment, arrangement, composition or similar
relief under any bankruptcy, insolvency or other similar
applicable law and none of Nortel Corporation, Nortel Limited or
the Borrower having consented to the filing of any such petition,
or having consented to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency for it or of a
substantial part of its property, or having made an assignment for
the benefit of creditors and no corporate action having been taken
by Nortel Corporation, Nortel Limited or the Borrower in
furtherance of any of the foregoing actions;
(j) in the case of Advances by any member of the Nortel Corporation
Group (other than Nortel Corporation), the prior approval of the
Treasurer or Assistant Treasurer of Nortel Corporation or of any
other person as may be designated in writing for the purposes
hereof by Nortel Corporation, and such prior approval shall be
evidenced by an electronic mail message transmitted from the
person approving the Advance, or, in circumstances where
electronic mail is not available or practicable, by such other
reasonable form of written communication from the person approving
the Advance as such person may deem appropriate in the
circumstances; and
(k) in the case of Advances by any member of the Nortel Limited Group
(other than Nortel Limited), the prior approval of the Treasurer
or Assistant Treasurer of Nortel Limited or of any other person as
may be designated in writing for the purposes hereof by Nortel
Limited, and such prior approval shall be evidenced by an
electronic mail message transmitted from the person approving the
Advance, or, in circumstances where electronic mail is not
available or practicable, by such other reasonable form of written
communication from the person approving the Advance as such person
may deem appropriate in the circumstances.
SECTION 6.2. PAYMENTS IN TRUST. A Lender shall not, and shall not be
deemed, in any circumstances, to have waived compliance with any conditions
precedent listed in Section 6.1 hereof. In the event any Advance is made without
compliance with all of the conditions precedent listed in Section 6.1 hereof,
the Advance shall be deemed to have been paid by the Lender to the Borrower in
- 14 -
trust for the Lender and the Borrower shall forthwith repay the amount of the
said Advance to the Lender.
ARTICLE 7
COVENANTS
SECTION 7.1 NORTEL CORPORATION. Nortel Corporation covenants that it
shall cause every other member of the Nortel Corporation Group to have
sufficient funds at all times to meet such member's obligations to make any and
all payments on account of principal and/or interest due and payable in
connection with any and all Advances made to such member under this Agreement.
Nothing in this Section 7.1 shall (i) constitute Nortel Corporation a guarantor
of any Advance made under this Agreement to any other member of the Nortel
Corporation Group, or (ii) deem Nortel Corporation to have assumed any Advance,
or any obligations in connection with any Advance, made under this Agreement to
any other member of the Nortel Corporation Group.
SECTION 7.2 NORTEL LIMITED. Nortel Limited covenants that it shall cause
every other member of the Nortel Limited Group to have sufficient funds at all
times to meet such member's obligations to make any and all payments on account
of principal and/or interest due and payable in connection with any and all
Advances made to such member under this Agreement. Nothing in this Section 7.2
shall (i) constitute Nortel Limited a guarantor of any Advance made under this
Agreement to any other member of the Nortel Limited Group, or (ii) deem Nortel
Limited to have assumed any Advance, or any obligations in connection with any
Advance, made under this Agreement to any other member of the Nortel Limited
Group.
ARTICLE 8
CHANGE IN OWNERSHIP OR CONTROL
SECTION 8.1 CHANGE IN OWNERSHIP OR CONTROL. If a party to this Agreement
(a "Removed Party"):
(a) is acquired by another corporation, or is merged into or consolidated
with another corporation, or engages in any amalgamation, or plan of
arrangement, or any other transaction, and, upon completion of any such
acquisition, merger, or other transaction, the Removed Party, or the
successor corporation resulting from any such transaction, is no longer a
direct or indirect wholly owned subsidiary of Nortel Corporation and/or
Nortel Limited, or
(b) is liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation, whether or not such other
corporation is a
- 15 -
direct or indirect wholly owned subsidiary of Nortel Corporation and/or
Nortel Limited, or
(c) is a member of the Nortel Limited Group (other than Nortel Limited) and
becomes a direct or indirect wholly owned subsidiary of Nortel
Corporation (and is not also a direct or indirect wholly owned subsidiary
of Nortel Limited), or is a member of the Nortel Corporation Group and
becomes a direct or indirect wholly owned subsidiary of Nortel Limited,
then, upon completion of any such transaction or event, (i) the principal
outstanding in respect of all Advances made to the Removed Party, together with
accrued and unpaid interest, shall immediately become due and payable by the
Removed Party without notice; (ii) the principal outstanding in respect of all
Advances made by the Removed Party to another party under this Agreement,
together with accrued and unpaid interest, shall immediately become due and
payable by the other party without notice; and (iii) no additional Advances
shall be made under this Agreement by or to the Removed Party. Notwithstanding
the foregoing, if the Removed Party is a Removed Party by virtue of clause (c)
above, then the Removed Party and the applicable Borrower(s) or Lender(s), as
the case may be, may deem any or all of the outstanding Advances made under this
Agreement by or to the Removed Party to have been fully repaid by negotiating
independent loan documentation in respect of any or all such Advances in lieu of
actual repayment thereof. Upon the repayment of the principal amount
outstanding, and accrued and unpaid interest, in respect of all Advances made
under this Agreement by or to the Removed Party, or upon deemed repayment
pursuant to the execution of independent loan documentation, the Removed Party
shall cease to be a party to this Agreement and all such Advances shall cease to
be governed by this Agreement and shall be removed from all Borrowings Grids and
Quarterly Grid Reports prepared under this Agreement.
ARTICLE 9
GENERAL PROVISIONS
SECTION 9.1 PAYMENTS. All payments required will be made in immediately
available funds at the office of the respective Lender at the address listed for
such Lender under Section 9.3 or to any other place that such Lender directs.
SECTION 9.2 WAIVER. Subject to Section 6.2,
(a) a Lender may in writing waive any breach by the respective
Borrower of any of the provisions contained in this Agreement or
any default by the respective Borrower in the observance or
performance of any covenant required to be observed or performed
under this Agreement; and
- 16 -
(b) the parties to this Agreement may in writing waive compliance with
Section 8.1, notwithstanding the occurrence of a transaction or
event contemplated by Subsections 8.1(a), (b), or (c), and deem
the party to this Agreement that would have otherwise been a
Removed Party to continue to be a full and participating party to
this Agreement in all respects as if the transaction or event
contemplated by Subsections 8.1(a), (b), or (c) had not occurred;
provided that no act or omission by a Lender will be taken in any manner
whatsoever to affect any subsequent breach, or default, or the rights resulting
therefrom.
SECTION 9.3 NOTICES. Any request, notice or demand made or given in
connection with this Agreement may be given by delivery to the relevant party at
its address or facsimile number set forth below, or any other address or
facsimile number that a party may direct:
(a) if to Nortel Corporation:
Nortel Networks Corporation
c/o Nortel Networks Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Assistant Treasurer
Facsimile Number: (000) 000-0000
with a copy to:
Attention: Corporate Secretary
Facsimile Number: (000) 000-0000
(b) if to Nortel Limited:
Nortel Networks Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Assistant Treasurer
Facsimile Number: (000) 000-0000
- 17 -
with a copy to:
Attention: Corporate Secretary
Facsimile Number: (000) 000-0000
(c) if to a member of the Nortel Corporation Group (other than Nortel
Corporation), to the member's address listed in Schedule A, with a
copy to Nortel Corporation;
(d) if to a member of the Nortel Limited Group (other than Nortel
Limited), to the member's address listed in Schedule A, with a
copy to Nortel Limited; and
(e) if to a member of the Nortel Corporation Group or the Nortel
Limited Group who becomes a party to this Agreement by executing a
consent agreement after the Restatement Date, to the member's
address listed in the applicable consent agreement, with copies to
such other persons as may be indicated in the consent agreement.
SECTION 9.4 FURTHER ASSURANCES. Each Borrower agrees that it will, from
time to time, at the request of a Lender, execute and deliver or obtain and
deliver any agreements, instruments and documents and take all further action as
may be reasonably required by such Lender to accomplish the purposes of this
Agreement.
SECTION 9.5 HEADINGS. The headings of this Agreement are included for
convenience of reference only and do not constitute a part of this Agreement for
any other purpose.
SECTION 9.6 SUCCESSORS AND ASSIGNS. All of the covenants, stipulations,
promises and agreements in this Agreement shall bind the parties' respective
successors and permitted assigns, whether so expressed or not; provided,
however, that no party may, without the prior consent of the others, assign any
rights, powers, duties, or obligations under this Agreement.
SECTION 9.7 SEVERABILITY. Any provision of this Agreement which is or
becomes prohibited or unenforceable in any jurisdiction, does not invalidate,
affect or impair the remaining provisions thereof and any such prohibition or
unenforceability in any jurisdiction does not invalidate or render unenforceable
such provision in any other jurisdiction.
SECTION 9.8 GOVERNING LAW. This Agreement and all other documents and
instruments referred to will be construed in accordance with and governed by the
laws of the Province of Ontario and the laws of Canada applicable therein.
- 18 -
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
SECTION 9.10 REFERENCE TO AND EFFECT ON THE AMENDED AND RESTATED
RECIPROCAL CREDIT AGREEMENT. On and after the date hereof, each reference in the
Amended and Restated Reciprocal Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words like import, and each reference to the
Amended and Restated Reciprocal Credit Agreement in all other agreements,
documents, instruments delivered by all or any one or more of the parties hereto
shall mean and be a reference to the Amended and Restated Reciprocal Credit
Agreement as amended and restated hereby, and except as this Second Amended and
Restated Reciprocal Credit Agreement may be further amended, restated or
supplemented, the Amended and Restated Reciprocal Credit Agreement shall remain
in full force and effect and is hereby ratified and confirmed.
- 19 -
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the Restatement Date.
NORTEL NETWORKS CORPORATION
By: "XXXXXXXXX X. XXXXXXXXX"
---------------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Treasurer
By: "XXXX X. XXXXXXXXX"
---------------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Treasurer
NORTEL NETWORKS LIMITED
By: "XXXXXXXXX X. XXXXXXXXX"
---------------------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Treasurer
By: "XXXX X. XXXXXXXXX"
---------------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Treasurer
NORTEL NETWORKS INC.
By: "XXXX XXXXX"
---------------------------------------------------
Name: Xxxx Xxxxx
Title: President
NORTEL NETWORKS U.S.
FINANCE INC.
By: "XXXX XXXXX"
---------------------------------------------------
Name: Xxxx Xxxxx
Title: President
[Second Amended and Restated Reciprocal Credit Agreement - Signature Page]
- 20 -
ALTEON WEBSYSTEMS, INC.
By: "XXXXXX XXXXX"
---------------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
CORETEK, INC.
By: "XXXX XXXXXXX"
---------------------------------------------------
Name: Xxxx Xxxxxxx
Title: President
XROS, INC.
By: "XXXXXX XXXXX"
---------------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Assistant Treasurer
[Second Amended and Restated Reciprocal Credit Agreement - Signature Page]
SCHEDULE A
SECOND AMENDED AND RESTATED
RECIPROCAL CREDIT AGREEMENT
ADDITIONAL NOTICE INFORMATION
NORTEL NETWORKS INC.
Nortel Networks Plaza
000 Xxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxx
Xxxxxx Xxxxxx
00000-0000
Attn: Treasurer
cc: Secretary
Facsimile: 000-000-0000
NORTEL NETWORKS U.S. FINANCE INC.
Nortel Networks Plaza
200 Athens Way
Nashville, TN
USA
37228-1397
Attn: Treasurer
cc: Secretary
Facsimile: 000-000-0000
ALTEON WEBSYSTEMS, INC.
Nortel Networks Plaza
000 Xxxxxx Xxx
Xxxxxxxxx, XX
X.X.X.
00000-0000
Attn: Treasurer
Facsimile: 000-000-0000
- 2 -
CORETEK, INC.
Nortel Networks Plaza
000 Xxxxxx Xxx
Xxxxxxxxx, XX
X.X.X.
00000-0000
Attn: Treasurer
Facsimile: 000-000-0000
XROS, INC.
Nortel Networks Plaza
000 Xxxxxx Xxx
Xxxxxxxxx, XX
X.X.X.
00000-0000
Attn: Treasurer
Facsimile: 000-000-0000
SCHEDULE B
FORM OF CONSENT AGREEMENT
Date:
--------------------
The undersigned (the "Member") is a [jurisdiction] corporation and a wholly
owned subsidiary of Nortel Networks [Corporation/Limited]. The Member hereby
executes this Consent Agreement to evidence the following matters to the parties
to the Second Amended and Restated Reciprocal Credit Agreement among Nortel
Networks Corporation, Nortel Networks Limited, and the other parties thereto
(the "Reciprocal Credit Agreement"):
1. The Member agrees to become a member of the Nortel [Corporation/Limited]
Group, effective as of the date of this Consent Agreement, and agrees to
be bound by the terms and conditions of the Reciprocal Credit Agreement;
and
2. The Member agrees that for the purposes of Subsection 9.3(e) of the
Reciprocal Credit Agreement, any request, notice or demand made or given
in connection with the Reciprocal Credit Agreement may be given to the
Member by delivery to the address or facsimile number listed below, with
a copy to Nortel Networks [Corporation/Limited].
Capitalized terms used but not otherwise defined in this Consent Agreement shall
have the meanings given to them in the Reciprocal Credit Agreement.
IN WITNESS WHEREOF the Member has caused this Consent Agreement to be executed
by its duly authorized officers as of the date first written above.
--------------------------------
(Member Name)
--------------------------------
(Signature)
--------------------------------
(Officer's Title)
--------------------------------
(Address)
--------------------------------
--------------------------------
(Facsimile)
SCHEDULE C
FORM OF BORROWINGS GRID FORMAT
ADVANCES AND PAYMENTS OF PRINCIPAL
PRINCIPAL UNPAID
AMOUNT OF CURRENCY OF INTEREST RATE REPAID OR PRINCIPAL NOTATION MADE
DATE BORROWER LENDER ADVANCE ADVANCE APPLICABLE PREPAID BALANCE APPROVED BY BY
---- -------- ------ --------- ----------- ------------- --------- --------- ----------- -------------
AMENDMENT NO. 1
TO THE SECOND AMENDED AND RESTATED
RECIPROCAL CREDIT AGREEMENT
AMENDMENT NO. 1 (the "AMENDMENT"), dated as of December 20, 2001, among
Nortel Networks Corporation ("NORTEL CORPORATION"), Nortel Networks Limited
("NORTEL LIMITED"), and the other parties to the Reciprocal Credit Agreement (as
defined below).
WHEREAS Nortel Corporation, Nortel Limited, and certain other parties
entered into a Second Amended and Restated Reciprocal Credit Agreement (the
"RECIPROCAL CREDIT AGREEMENT") dated as of December 20, 2001;
AND WHEREAS Nortel Limited has entered into an amended and restated
credit agreement (the "NORTEL LIMITED BANK CREDIT FACILITY") dated as of the
date hereof, among, Nortel Limited, X.X. Xxxxxx Bank Canada, formerly known as
The Chase Manhattan Bank of Canada, as administrative agent, Credit Suisse First
Boston, as syndication agent, and the banks listed on the signature pages
thereof, which credit agreement requires, inter alia, that certain obligations
of Nortel Limited, including obligations of the Nortel Limited Group under the
Reciprocal Credit Agreement, be subordinate to right of payment required under
the Nortel Limited Bank Credit Facility;
AND WHEREAS the parties hereto have agreed to amend the Reciprocal Credit
Agreement as hereinafter provided;
NOW THEREFORE this Agreement witnesseth that for good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, each term used
herein which is defined in the Reciprocal Credit Agreement shall have the
meaning assigned to such term in the Reciprocal Credit Agreement. Each reference
to "hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Reciprocal Credit Agreement shall from and after the date
hereof refer to the Reciprocal Credit Agreement as amended by this Amendment.
2. AMENDMENTS TO ARTICLE 1. Section 1.1 of the Reciprocal Credit Agreement
is amended by:
(a) adding after the definition of "Nortel Limited" and before the
definition of "Nortel Limited Group", the following:
- 2 -
"`NORTEL LIMITED ADVANCE' shall have the meaning given to
it in Section 4.7(a);
`NORTEL LIMITED BANK CREDIT FACILITY' means the amended and
restated credit agreement dated as of December 20, 2001,
among, Nortel Limited, X.X. Xxxxxx Bank Canada, formerly
known as The Chase Manhattan Bank of Canada, as
administrative agent, Credit Suisse First Boston, as
syndication agent, and the banks listed on the signature
pages thereof;"; and
(b) adding after the definition of "Nortel Limited Group Borrowing
Grid" and before the definition of "Notice of Conversion", the
following:
"`NORTEL LIMITED SENIOR DEBT' means all obligations payable
from time to time by the Nortel Limited Group pursuant to
the Nortel Limited Bank Credit Facility and the other "Loan
Documents" (as defined therein) (including, without
limitation, all obligations for the payment of principal of
and interest (including interest accruing on or after, or
which would accrue but for, the filing of any petition in
bankruptcy or for reorganization relating to the Nortel
Limited or any other member of the Nortel Limited Group,
whether or not a claim for post-petition interest is
allowed in such proceeding) on the "Loans" (as defined in
the Nortel Limited Bank Credit Facility);"
3. AMENDMENTS TO ARTICLE 4. Article 4 of the Reciprocal Credit Agreement is
amended as follows:
(a) Section 4.2 of the Reciprocal Credit Agreement shall be deleted
and the following substituted therefor:
"SECTION 4.2. REPAYMENT. The principal outstanding in
respect of all Advances, together with accrued and unpaid
interest, is, subject to Section 4.7 hereof, due and
payable on the earlier of (a) written demand for repayment
being made by the Lender to the Borrower at least three (3)
Banking Days in advance of the specified repayment date,
(b) a change in ownership or control in accordance with
Section 8.1, and (c) the last Banking Day of the Term."
(b) Section 4.3 of the Reciprocal Credit Agreement shall be amended by
inserting at the beginning of the first sentence thereof the
phrase "Subject to Section 4.7 hereof,".
- 3 -
(c) The following shall be inserted at the end of Article 4 as a new
Section 4.7:
"SECTION 4.7. SUBORDINATION OF ADVANCES TO NORTEL LIMITED
GROUP. The payment of, and the right of a Borrower which is
a member of the Nortel Limited Group to prepay, any Advance
made hereunder to a Borrower which is a member of the
Nortel Limited Group or interest in relation thereto shall
be subordinate and junior in right of payment to the Nortel
Limited Senior Debt, as follows:
(a) No payment or prepayment of any principal or
interest on account of any Advance made to a Borrower which
is a member of the Nortel Limited Group (such Advances
referred to hereinafter as a "Nortel Limited Advance") and
no repurchase, redemption or other retirement (whether at
the option of the Lender or otherwise) of any Nortel
Limited Advance shall be made; provided that (A) payments
of interest may be made from any source, and (B) payment or
prepayments of principal may be made from any source (other
than proceeds (whether used directly or indirectly, and
whether the purpose of such use is immediate, incidental or
ultimate) of "Loans" (as defined in the Nortel Limited Bank
Credit Facility) in excess of $500,000,000), in each of
clauses (A) and (B), if, at the time of such payment of
interest or payment or prepayment of principal and
immediately after giving effect thereto (x) there shall not
exist a default in the payment or prepayment of any
principal of or interest on any Nortel Limited Senior Debt
and (y) there shall not have occurred a default hereunder
with respect to the relevant Nortel Limited Advance
requiring immediate repayment of the Nortel Limited
Advance;
(b) In the event of any insolvency or bankruptcy
proceedings, or any receivership, liquidation,
reorganization or other similar proceedings, relative to
Nortel Limited or any other member of the Nortel Limited
Group or to such entity's creditors, as such, or to its
property, or in the event of any proceeding for voluntary
liquidation, dissolution or other winding up of such
entity, whether or not involving insolvency or bankruptcy,
then the holders of the Nortel Limited Senior Debt shall be
entitled to receive payment in full in cash of all Nortel
Limited Senior Debt before the holders of any Nortel
Limited Advance are entitled to receive any payment on
account of any Nortel Limited Advance, and to that end the
holders of the Nortel Limited Senior Debt shall be entitled
to receive distributions of any kind of character,
- 4 -
whether in cash or property or securities, which may be
payable or deliverable in any such proceedings in respect
of any Nortel Limited Advance;
(c) If any Nortel Limited Advance is declared or
otherwise becomes due and payable (under circumstances when
the provisions of the foregoing paragraphs (a) or (b),
above, are not applicable, whether as a result of the
occurrence of an event of default under such Nortel Limited
Advance or otherwise), the holders of Nortel Limited Senior
Debt outstanding at the time such Nortel Limited Advance so
becomes due and payable shall be entitled to receive
payment in full of all Nortel Limited Senior Debt before
the holders of any Nortel Limited Advance are entitled to
receive any payment on account of any Nortel Limited
Advance;
(d) If, notwithstanding the occurrence of any of the
events described in paragraphs (a), and (b) and (c), above,
any such payment or distribution of assets of Nortel
Limited or any other member of the Nortel Limited Group of
any kind or character, whether in cash, property or
securities, shall be received by the holders of any Nortel
Limited Advance before all Nortel Limited Senior Debt is
paid in full in cash, or provision made for such payment in
a manner satisfactory to the "Agent" (as defined in the
Nortel Limited Bank Credit Facility), such payment or
distribution shall be held in trust for the benefit of, and
shall be paid over or delivered to, the holders of such
Nortel Limited Senior Debt or their representative or
representatives, as their respective interests may appear,
for application to the payment in full of all Nortel
Limited Senior Debt remaining unpaid to the extent
necessary to pay such Nortel Limited Senior Debt in full in
cash, in accordance with its terms, after giving effect to
any concurrent payment or distribution to the holders of
such Nortel Limited Senior Debt;
(e) No holder of Nortel Limited Senior Debt shall be
prejudiced in its right to enforce subordination of the
Nortel Limited Advances by an act or failure to act on the
part of Nortel Limited or any other member of the Nortel
Limited Group; and
(f) The foregoing provisions of paragraphs (a)
through (e) are solely for the purpose of defining the
relative rights of the holders of Nortel Limited Senior
Debt, on the one hand, and the Lenders of any Nortel
Limited Advances, on the other hand, and that nothing
therein shall impair, as between Nortel Limited or
- 5 -
any other member of the Nortel Limited Group and the
Lenders of any Nortel Limited Advances, the obligation of
Nortel Limited or any other member of the Nortel Limited
Group, which shall be unconditional and absolute, to pay to
the Lenders of any Nortel Limited Advances the principal
thereof and interest thereon in accordance with its terms,
and nothing in this Section 4.7 shall prevent the Lenders
of any Nortel Limited Advances from exercising all remedies
otherwise permitted by applicable law or provided for in
this Agreement upon default thereunder, subject to the
rights under paragraphs (a), (b), (c), (d) and (e) above of
holders of Nortel Limited Senior Debt to receive cash,
property or securities otherwise payable or deliverable to
the Lenders of any Nortel Limited Advance."
4. AMENDMENT TO ARTICLE 6. Article 6 amended as follows:
(a) Section 6.1 is amended by deleting the "." At the end of
sub-section 6.1(k) and substituting therefor the phrase "; and",
and inserting at the end of Section 6 the following as a new
sub-section 6.1(l):
"(l) in the case of Advances by any member of the Nortel
Limited Group, including Nortel Limited, the Advance shall
be permitted under Section 5.12(j) of the Nortel Limited
Bank Credit Facility."
5. EFFECT ON THE RECIPROCAL CREDIT AGREEMENT. Except as specifically amended
hereby, the Reciprocal Credit Agreement shall remain in full force and effect
and is hereby ratified and confirmed.
6. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the Province of Ontario and of Canada applicable
therein.
7. COUNTERPARTS. This Amendment may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[Remainder of this page is intentionally blank.]
- 6 -
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date first written above.
NORTEL NETWORKS CORPORATION
By: "XXXXXXXXX X. XXXXXXXXX"
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Treasurer
By: "XXXX X. XXXXXXXXX"
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Treasurer
NORTEL NETWORKS LIMITED
By: "XXXXXXXXX X. XXXXXXXXX"
----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Treasurer
By: "XXXX X. XXXXXXXXX"
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Assistant Treasurer
NORTEL NETWORKS INC.
By: "XXXX XXXXX"
----------------------------------------
Name: Xxxx Xxxxx
Title: President
- 7 -
NORTEL NETWORKS U.S.
FINANCE INC.
By: "XXXX XXXXX"
-------------------------------------------
Name: Xxxx Xxxxx
Title: President
ALTEON WEBSYSTEMS, INC.
By: "XXXXXX XXXXX"
-------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Treasurer
CORETEK, INC.
By: "XXXX XXXXXXX"
-------------------------------------------
Name: Xxxx Xxxxxxx
Title: President
XROS, INC.
By: "XXXXXX XXXXX"
--------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and Assistant Treasurer
