EXHIBIT 10.5
FORM OF GUARANTEE AGREEMENT
A form of Nortel Networks Limited ("NNL") Foreign Subsidiary Guarantee dated as
of April 4, 2002 follows as Exhibit 10.5 to NNL's Quarterly Report on Form 10-Q.
The following agreements are material contracts not filed as exhibits to this
Quarterly Report pursuant to Instruction 2 to Item 601 of Regulation S-K. Each
of the following agreements is substantially identical in all material respects
to the form of NNL Foreign Subsidiary Guarantee except as to the name and
organizational jurisdiction of the applicable subsidiary guarantor in each
agreement.
1. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks Australia Pty Limited, a New South Wales corporation, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
2. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Northern
Telecom do Brasil Industria e Comercio Ltda, a Brazil corporation, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
3. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Northern
Telecom do Brasil Comercio e Servicos Ltda, a Brazil corporation, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
4. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks International Finance & Holding B.V., a Dutch corporation, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
5. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks B.V., a Dutch corporation, for the benefit of JPMorgan Chase Bank,
as Collateral Agent, and the other beneficiaries specified therein.
6. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks Optical Components Limited, a United Kingdom corporation, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
7. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks U.K. Limited (f/k/a Nortel Networks plc), a United Kingdom
corporation, for the benefit of JPMorgan Chase Bank, as Collateral Agent,
and the other beneficiaries specified therein.
8. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks (Luxembourg) S.A., a Luxembourg corporation, for the benefit of
JPMorgan Chase Bank, as Collateral Agent, and the other beneficiaries
specified therein.
9. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks (Ireland) Limited, a Company incorporated in Ireland, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
10. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks (Dublin) Limited, a Company incorporated in Ireland, for the
benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
11. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks (Asia) Limited, a Hong Kong corporation, for the benefit of
JPMorgan Chase Bank, as Collateral Agent, and the other beneficiaries
specified therein.
12. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks Financial Services Limited Liability, a Hungary corporation, for
the benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
13. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks GmbH, a German corporation, for the benefit of JPMorgan Chase
Bank, as Collateral Agent, and the other beneficiaries specified therein.
14. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks Hispania, S.A., a corporation organized under the laws of Spain,
for the benefit of JPMorgan Chase Bank, as Collateral Agent, and the other
beneficiaries specified therein.
15. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks Singapore pte Ltd, a Singapore corporation, for the benefit of
JPMorgan Chase Bank, as Collateral Agent, and the other beneficiaries
specified therein.
16. NNL Foreign Subsidiary Guarantee dated as of April 4, 2002 by Nortel
Networks, s.r.o, a Czech Republic corporation, for the benefit of JPMorgan
Chase Bank, as Collateral Agent, and the other beneficiaries specified
therein.
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NNL FOREIGN SUBSIDIARY GUARANTEE
GUARANTEE dated as of [ ] by [ ], a [ ] corporation
(with its successors, the "GUARANTOR") for the benefit of JPMORGAN CHASE BANK,
as Collateral Agent and certain other financial institutions referred to below.
WHEREAS, the Guarantor is a subsidiary of NORTEL NETWORKS LIMITED, a
Delaware corporation (with its successors, "NNL"); and
WHEREAS, NNL, as borrower, certain financial institutions and X.X.
Xxxxxx Bank Canada, formerly known as The Chase Manhattan Bank successor by
merger to 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 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, Nortel Networks Inc. ("NNI"), as borrower, NNL, as guarantor,
certain financial institutions, and JPMorgan Chase Bank, formerly known as The
Chase Manhattan Bank successor by merger to 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 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, in consideration of the financial and other support that NNL
has provided, and such financial and other support as NNL may in the future
provide, to the Guarantor, the Guarantor is willing to enter into this
Guarantee;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor agrees as follows:
1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"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 (as defined in the U.S. Security Agreement)
arising under any of the Credit Agreements shall have been paid in full, and
(iii) no Contingent Secured Obligation (as defined in the U.S. Security
Agreement) 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.
"BENEFICIARIES" means the holders from time to time of the Guaranteed
Obligations.
"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.
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"CANADIAN SECURITY AGREEMENT" means the Canadian Guarantee and Security
Agreement dated the date hereof among NNL, NNI, the Subsidiaries party thereto
and JPMorgan Chase Bank, as Collateral Agent.
"CAPITAL MARKETS EVENT" has the meaning set forth in any Credit
Agreement.
"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.
"CREDIT AGREEMENTS" means the NNI Credit Agreements and the NNL Credit
Agreements.
"DEBT RATING" means any rating by Xxxxx'x or S&P with respect to the
senior unsecured non-credit enhanced long-term debt of NNL.
"DESIGNATED BANK DEBT" means any indebtedness for borrowed money
designated pursuant to (and in accordance with the terms of) (i) Section 15(b),
(ii) Section 22(c) of the U.S. Security Agreement or (iii) Section 21(c) of the
Canadian Security Agreement.
"DESIGNATED CAPITAL MARKETS DEBT" means any indebtedness constituting a
Capital Markets Event designated pursuant to (and in accordance with the terms
of) (i) Section 15(a), (ii) Section 22(b) of the U.S. Security Agreement or
(iii) Section 21(b) of the Canadian Security Agreement.
"DESIGNATED HEDGING AGREEMENT" means any Hedging Agreement designated
pursuant to (and in accordance with the terms of) (i) Section 21(a) of the
Canadian Security Agreement or (ii) Section 22(a) of the U.S. Security
Agreement.
"DISCLOSURE MATERIALS" has the meaning set forth in either 2001 364-Day
Agreement.
"DRAWDOWN DATE" means any date during any Collateral Period on which an
extension of credit is made under either 2001 364-Day Agreement; provided that,
on and after the Refinancing Effective Date with respect to any Credit
Agreement, "Drawdown Date" for purposes of this Guarantee will also include any
date during any Collateral Period on which an extension of credit is made under
the Replacement Agreement with respect to such Credit Agreement.
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"EVENT OF DEFAULT" means an "Event of Default" under any Credit
Agreement.
"GUARANTEED AGREEMENT", when used with respect to any Guaranteed
Obligation, refers collectively to each instrument, agreement or other document
that sets forth such Guaranteed Obligations and/or rights of the holder with
respect to such Guaranteed Obligation.
"GUARANTEED OBLIGATIONS" means (i) the NNL Bank Obligations, (ii) the
NNL Hedging Obligations, (iii) the NNL Bond Obligations, (iv) the NNL Guaranteed
Obligations, (v) any Designated Capital Markets Debt (other than Designated
Capital Markets Debt of the Guarantor) and (vi) any Designated Bank Debt (other
than Designated Bank Debt of such Guarantor).
"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.
"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.
"INDENTURES" means, collectively, the 1988 Indenture, the 1996
Indenture, the 2000 Indenture and the 2001 Indenture.
"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.
"MATERIAL SUBSIDIARY" has the meaning set forth in the 0000 XXX
364-Day Agreement.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
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"1988 INDENTURE" means the Indenture dated as of November 30, 1988
among NTL, 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, the subsidiary guarantors party thereto and The Bank of New York as
trustee, as amended from time to time.
"NNC" means Nortel Networks Corporation, a Canadian corporation, and
its successors.
"NNFI HEDGING OBLIGATIONS" means (i) all obligations of NNFI under any
Designated Hedging Agreement and (ii) any renewals or extensions thereof.
"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, 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" means (i) all obligations of NNI under any
Designated Hedging Agreement and (ii) any renewals or extensions thereof.
"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 CREDIT AGREEMENTS" means the 0000 XXX 364-Day Agreement, the 0000
XXX 5-Year Agreement and the 0000 XXX 364-Day Agreement.
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"NNL GUARANTEED OBLIGATIONS" means (i) the NNI Hedging Obligations,
(ii) the NNFI Hedging Obligations, (iii) the NNI Bank Obligations, (iv) any
Designated Bank Debt and (v) 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.
"NTL" means Northern Telecom Limited, a Canadian corporation, and its
successors.
"OBLIGOR" means any Person whose obligations are guaranteed pursuant to
the terms of this Guarantee.
"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.
"POST-PETITION INTEREST" means, with respect to any obligation of any
Person, any interest that accrues after the commencement of any case, proceeding
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.
"REFINANCING" means, with respect to any Credit Agreement, any renewal
or extension thereof (including pursuant to an amendment and restatement or a
replacement thereof).
"REFINANCING EFFECTIVE DATE" means, with respect to any Credit
Agreement, the first date on which a Refinancing thereof becomes effective.
"REPLACEMENT AGREEMENT" means, with respect to any Credit Agreement,
one or more credit agreements evidencing the Refinancing of such Credit
Agreement, but only if each such credit agreement is designated as a
"Replacement Agreement" for purposes of this Guarantee by NNI or NNL, as the
case may be.
"REQUIRED SECURED BANKS" means, at any date, Included Banks at such
date having at least 51% of the aggregate amount, without duplication, of (i)
the "Commitments" under the applicable Credit Agreements and (ii) the aggregate
unpaid principal amount of the "Loans" under the applicable Credit Agreements.
"INCLUDED BANKS" means, at any date, the Banks party to either of the 2001
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364-Day Agreements and, solely if such date occurs on or after the Refinancing
Effective Date with respect to any Credit Agreement (subject to any exclusion
set forth in such Credit Agreement or Replacement Agreement), the Banks party to
the Replacement Agreement with respect to any Credit Agreement. Prior to the
first Refinancing Effective Date, the Included Banks will be the Banks party to
either 2001 364-Day Credit Agreement and the "applicable Credit Agreements" for
the purpose of clauses (i) and (ii) will be each of the 2001 364-Day Agreements.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"SPECIFIED EVENT OF DEFAULT" means an event described in Section
6.01(a), (f) or (g) of the Credit Agreements (or any corresponding provision of
any Replacement Agreement), or any Event of Default caused by a breach of any
financial or debt covenant contained in either 2001 364-Day Agreement; provided
that, on and after the Refinancing Effective Date with respect to any Credit
Agreement, "Specified Event of Default" for purposes of this Guarantee will also
include any event of default caused by a breach of any financial or debt
covenant contained in any Replacement Agreement with respect to such Credit
Agreement or any other event of default that is designated in such Replacement
Agreement as a "Specified Event of Default" for the purpose of this Guarantee.
"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 the Guarantor.
"2000 INDENTURE" means the Indenture dated as of December 15, 2000
among NNL, Nortel Networks Capital Corporation 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.
"2001 364-DAY AGREEMENTS" means the 2001 NNI 364-Day Agreement and the
0000 XXX 364-Day Agreement.
"2002 NOTES" means the 6-7/8% Notes due 2002 issued by NTL pursuant to
the 1988 Indenture.
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"2003 NOTES" means the 6% Notes due 2003 issued by NTL pursuant to the
1988 Indenture.
"2008 NOTES" means the 4.25% Convertible Senior Notes due 2008 issued
by NNC and guaranteed by NNL pursuant to the 2001 Indenture.
"2006 NOTES" means the 6.125% Notes due 2006 issued by NNL pursuant to
the 2000 Indenture.
"2006 NNCC NOTES" means the 7.40% Notes due 2006 issued by NTL pursuant
to the 1996 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.
"TOTAL COLLATERAL" means the "Collateral" as defined in any Credit
Agreement (assuming, for this purpose, that Collateral includes all "Foreign
Subsidiary Guarantees" as defined in any Credit Agreement, in effect at any time
of determination).
"U.S. SECURITY AGREEMENT" means the U.S. Guarantee and Security
Agreement dated as of the date hereof among NNL, NNI, the Subsidiaries party
thereto and JPMorgan Chase Bank, as Collateral Agent.
(b) Special provision with respect to Refinancings. On and after the
Refinancing Effective Date with respect to any Credit Agreement, any reference
herein to such Credit Agreement (including for the avoidance of doubt any
reference to "2000 NNI 364-Day Agreement", "2000 NNI 5-Year Agreement", "2001
NNI 364-Day Agreement", "2000 NNL 364-Day Agreement", "2000 NNL 5-Year
Agreement" or the "2001 NNL 364-Day Agreement") shall be deemed to be a
reference to the Replacement Agreement with respect thereto.
(c) Terms Generally. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) 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
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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, (b) any reference herein to any Person shall
be 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 Guarantee in its entirety and not to any particular
provision hereof, and (d) 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.
2. The Guarantee. The Guarantor unconditionally guarantees the full
and punctual payment of each Guaranteed Obligation when due (whether at stated
maturity, upon acceleration or otherwise). If any Guaranteed Obligation is not
paid punctually when due, the 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 Guaranteed Agreement. This Guarantee shall be effective as of the first
day of any Collateral Period, and shall be released in accordance with Section 4
below.
3. Guarantee Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any Obligor or any other Person under any
Guaranteed Agreement, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any Guaranteed
Agreement;
(c) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of any Obligor or any other
Person under any Guaranteed Agreement;
(d) any change in the corporate existence, structure or ownership of
any Obligor or any other Person or any of their respective subsidiaries, or any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any
Obligor or any other Person or any of their assets or any resulting release or
discharge of any obligation of any other Person under any Guaranteed Agreement;
(e) the existence of any claim, set-off or other right that the
Guarantor may have at any time against any Obligor, any Beneficiary or any other
Person, whether in connection with the Guaranteed Agreements or any unrelated
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transactions; provided that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
Obligor or any other Person for any reason of any Guaranteed Agreement, or any
provision of applicable law or regulation purporting to prohibit the payment of
any Guaranteed Obligation by any Obligor or any other Person; or
(g) any other act or omission to act or delay of any kind by any
Obligor, any other party to any Guaranteed Agreement, any Beneficiary or any
other Person, or any other circumstance whatsoever that might, but for the
provisions of this clause (g), constitute a legal or equitable discharge of or
defense to any obligation of the Guarantor hereunder, but excluding payment in
full of the Guaranteed Obligations.
4. Release of Guarantee. This Guarantee 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 is rescinded or must be
otherwise restored or returned upon the insolvency or receivership of the
Guarantor or otherwise, this 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 the Guarantor from this Guarantee in accordance with Section
14.
5. Waiver by the Guarantor. The Guarantor irrevocably waives
acceptance hereof, presentment, demand (except for the demand requirement under
Section 2 and Section 7), 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 any other Person.
6. Subrogation. If the Guarantor makes a payment with respect to a
Guaranteed Obligation hereunder, the Guarantor shall be subrogated to the rights
of the payee against the relevant Obligor with respect to such payment; provided
that the Guarantor shall not enforce any payment by way of subrogation against
such Obligor or by reason of contribution against any other guarantor of such
Guaranteed Obligation, until the Bank Termination Date.
7. Stay of Acceleration. If acceleration of the time for payment of
any Guaranteed Obligation by any Obligor is stayed by reason of the insolvency
or receivership of such Obligor or otherwise, all Guaranteed Obligations
otherwise subject to acceleration in accordance with their terms shall
nonetheless be payable by the Guarantor forthwith on demand by the Collateral
Agent.
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8. 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 Beneficiaries 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
Beneficiary or affiliate to or for the credit or the account of the Guarantor
against the obligations of the Guarantor under its Guarantee, irrespective of
whether or not such Beneficiary shall have made any demand thereunder and
although such obligations may be unmatured. The rights of each Beneficiary under
this subsection are in addition to all other rights and remedies (including
other rights of setoff) that such Beneficiary may have.
9. Continuing Guarantee. This Guarantee is a continuing guarantee,
shall be binding on the Guarantor and its successors and assigns, for the
benefit of the Beneficiaries and their respective successors and assigns, and
shall be enforceable by the Collateral Agent or the Beneficiaries. If all or
part of any Beneficiary's interest in any Guaranteed Obligation is assigned or
otherwise transferred, the transferor's rights under this Guarantee, to the
extent applicable to the obligation so transferred, shall automatically be
transferred with such obligation. The Guarantor may not transfer or assign any
or all of its rights or obligations hereunder without the prior written consent
of the Banks.
10. Limitation on Obligations of Guarantor. The obligations of the
Guarantor under this Guarantee shall be limited to an aggregate amount equal to
the largest amount that would not render such Guarantee invalid or unenforceable
or subject to avoidance under any provisions of applicable law.
11. Representations and Warranties.(1) The Guarantor 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 that, on such date:
(a) The Guarantor is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
and has all requisite powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted, the
absence of which would have a material adverse effect on the ability of the
Guarantor to perform its obligations under this Guarantee;
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(1) Amend as necessary if Guarantor is not a corporation.
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(b) The execution, delivery and performance by the Guarantor of this
Guarantee (i) are within the Guarantor's corporate or organizational powers and
have been duly authorized by all requisite action, (ii) require no action by or
in respect of, or filing with, any governmental body, agency or official, (iii)
do not contravene any provision of applicable law or regulation or any provision
of the organizational documents of the Guarantor or any contractual restriction,
order, decree or other instrument binding upon the Guarantor or any of its
Subsidiaries, except, in the cases of clauses (ii) and (iii) above, any such
action, filing or contravention which would not have a material adverse effect
on the ability of the Guarantor to perform its obligations under this Guarantee;
(c) This Guarantee constitutes a valid and binding agreement of the
Guarantor, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditor's rights
generally, or by general principles of equity;
(d) There is no action, suit or proceeding pending against, or to the
knowledge of the Guarantor threatened against or affecting, the Guarantor or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could have a material adverse effect on the ability of the
Guarantor to perform its obligations under this Guarantee, except as disclosed
in NNL's reports filed on or before the date hereof pursuant to the Securities
and Exchange Act of 1934, as amended, or as set forth in the Disclosure
Materials, or which in any manner draws into question the validity of this
Guarantee.
12. 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 United States mail, addressed to it at its
address specified below, with first class or airmail postage prepaid:
(a) in the case of the Guarantor:
C/O Nortel Networks Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX
X0X 0X0
12
Attention: Corporate Secretary
Facsimile: 000-000-0000
MS: 036/NO/230
(b) 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
(c) in the case of any other Beneficiary, to the Collateral Agent to
be forwarded to such Beneficiary at its address or facsimile number or e-mail
address, if any, specified in or pursuant to the relevant Guaranteed Agreement.
Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the Collateral Agent
and the Guarantor in the manner specified.
13. No Implied Waivers; Remedies not Exclusive. No failure by the
Beneficiaries to exercise, and no delay in exercising and no course of dealing
with respect to, any right or remedy under any Guaranteed Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Beneficiaries of any right or remedy under any Guaranteed Agreement preclude any
other or further exercise thereof or the exercise of any other right or remedy.
14. Amendments and Waivers. Neither this Guarantee 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 the Collateral Agent may
only (a) 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 and, if
such release is to occur on or after the Refinancing Effective Date with respect
to any Credit Agreement, all the Banks under the Replacement Agreement with
respect to such Credit Agreement (subject to any exclusion set forth in such
Credit Agreement) and (b) amend this Guarantee so that the Guaranteed
Obligations excludes the obligations under any Credit Agreement with the prior
written consent of all Banks party to such Credit Agreement.
15. Additional Guaranteed Obligations. (a) The Guarantor may from time
to time designate any indebtedness constituting a Capital Markets Event as
13
an additional Guaranteed Obligation 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 Guaranteed Obligations; 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; provided further that if a designation of indebtedness
constituting a Capital Markets Event shall have been made pursuant to (and in
accordance with the terms of) (x) Section 22(b) of the U.S. Security Agreement
or (y) Section 21(b) of the Canadian Security Agreement, then such designated
indebtedness shall constitute a Guaranteed Obligation of the Guarantor without
any further action on the part of the Guarantor.
(b) So long as the Guarantor is a Material Subsidiary of NNL, the
Guarantor 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 NNI or NNL 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 or refinancings thereof as an additional
Guaranteed Obligation 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
Guaranteed Obligations; provided that the aggregate amount of indebtedness
(without duplication) designated as "Designated Bank Debt" under this Guarantee
and any other security document or guarantee entered into by NNL, NNI and their
respective Material Subsidiaries for the benefit of the Beneficiaries will not
exceed $300,000,000 in aggregate principal amount; provided further that if a
designation of indebtedness for borrowed money shall have been made pursuant to
(and in accordance with the terms of) (x) Section 22(c) of the U.S. Security
Agreement or (y) Section 21(c) of the Canadian Security Agreement, then such
designated indebtedness shall constitute a Guaranteed Obligation of the
Guarantor without any further action on the part of the Guarantor.
16. Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due from the Guarantor hereunder or under
any of the Guaranteed Agreements in the currency expressed to be payable herein
or therein (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
14
other currency at the Collateral Agent's New York office on the Domestic
Business Day, as hereinafter defined, preceding that on which final judgment is
given. The obligations of the Guarantor in respect of any sum due to any Bank or
the Collateral Agent hereunder or under any of the Guaranteed Agreements 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 such Bank or the Collateral Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Bank or the Collateral Agent
(as the case may be) may in accordance with normal banking procedures purchase
such Specified Currency with such other currency; if the amount of Specified
Currency so purchased is less than the sum originally due to such Bank or the
Collateral Agent, as the case may be, in the Specified Currency, the Guarantor
agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Bank or the
Collateral Agent, as the case may be, against such loss and if the amount of
Specified Currency so purchased by the Collateral Agent exceeds the sum due to
the Collateral Agent, as the case may be, the Collateral Agent shall remit such
excess to the Guarantor. For the purposes of this section, "DOMESTIC BUSINESS
DAY" means any day except a Saturday, Sunday, or other day on which commercial
banks in New York City are required or authorized by law to close.
17. Taxes. (a) Each payment to be made by the 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 and subject to the
conditions set forth in Sections 17(d) and 17(f), 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 Beneficiaries as a result of a
present or former connection between the Collateral Agent or any such
Beneficiary 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 Beneficiary
having executed, delivered or performed its obligations or received a payment
under, or enforced, as provided herein) (collectively "TAXES").
(b) If any Taxes or amounts in respect thereof must be deducted or
withheld from any amounts payable or paid by the Guarantor, then (i) the
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 would
15
have been received by the relevant Beneficiary from the obligor in respect of
the payment being guaranteed hereunder (after taking account of Taxes applicable
to additional amounts payable under this Section) and (ii) the Guarantor shall
pay the full amount deducted or withheld in respect of Taxes to the relevant
taxation authority in accordance with applicable law. Within thirty (30) days of
each payment by the 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.
(c) The Guarantor agrees to indemnify the Collateral Agent for the
full amount of Taxes paid by the Collateral Agent in respect of which additional
amounts were required to be paid under Section 17(b) and were not paid and any
liabilities (including penalties, interest and expenses arising from the failure
of the Guarantor to pay such Taxes when due) arising therefrom or therewith, in
each case upon the 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.
(d) The obligation of the Guarantor under Sections 17(b) and 17(c) is
subject to the condition that any certification, identification, information,
documentation or other reporting requirement be complied with if such compliance
is required by law, regulation, administrative practice or an applicable treaty
as a precondition to exemption from, or reduction in the rate of, deduction or
withholding of any Taxes for which the Guarantor is required to pay additional
amounts pursuant to Sections 17(b) and 17(c).
(e) For any period in which the condition set forth in Section 17(d)
has not been met (unless such failure to meet such condition is due to change in
treaty, law, or regulation occurring subsequent to the date on which such
certificate originally was required to be provided and there has not been a
reasonable time to comply with requirements of such change pursuant to Section
17(d)) the Collateral Agent or any Beneficiary shall not be entitled to receive
additional amounts under Section 17(b) or indemnification under Section 17(c)
with respect to such Taxes imposed; provided that if the Collateral Agent or a
Beneficiary, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes because of its failure to deliver a
certificate required hereunder, the Guarantor shall take such steps as such
Beneficiary or Collateral Agent shall reasonably request to assist the
Collateral Agent to recover such Taxes.
(f) The obligations of the Guarantor under Sections 17(b) and 17(c)
are subject to the condition that the jurisdiction of the Applicable Lending
Office (if
16
any, as such term is defined in any applicable Credit Agreement) of any
Beneficiary that is a Bank is changed; provided that if, in the good faith
reasonable judgment of such Beneficiary, such change (i) will eliminate or
reduce any such additional payment which may thereafter accrue and (ii) is not
otherwise materially disadvantageous to such Beneficiary.
18. Choice of Law. (a) This Guarantee shall be construed in accordance
with and governed by the laws of the State of New York, except as otherwise
required by mandatory provisions of the law.
(b) The Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any relevant appellate
court, in any action or proceeding arising out of or relating to this Guarantee,
or for recognition or enforcement of any judgment, and each party hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in New York State court or, to
the extent permitted by law, in such Federal court. Each party hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Guarantee shall affect any right that
the Beneficiary may otherwise have to bring any action or proceeding relating to
this Guarantee against the Guarantor or its properties in the courts of any
jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guarantee in any court referred to in
subsection (b) of this Section. Each party hereto irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of any such suit, action or proceeding in any such court.
19. Appointment of Agent for Service of Process. (a) The Guarantor
hereby irrevocably designates, appoints, authorizes and empowers as its agent
for service of process, CT Corporation System at its offices currently located
at 000 0xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 to accept and acknowledge for and on
behalf of the Guarantor service of any and all process, notices or other
documents that may be served in any suit, action or proceeding relating hereto
in any New York State or Federal court sitting in The State of New York.
(b) In lieu of service upon its agent, the Guarantor consents to
process being served in any suit, action or proceeding relating hereto by
mailing a copy
17
thereof by registered or certified air mail, postage prepaid, return receipt
requested, to its address designated pursuant to Section 12. The Guarantor
agrees that such service (1) shall be deemed in every respect effective service
of process upon it in any such suit, action or proceeding and (2) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to it.
(c) Nothing in this Section shall affect the right of any party hereto
to serve process in any manner permitted by law, or limit any right that any
party hereto may have to bring proceedings against any other party hereto in the
courts of any jurisdiction or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction.
20. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTEE. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY 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 GUARANTEE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
21. Severability. If any provision of this Guarantee is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions of this Guarantee shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Collateral
Agent and the Beneficiaries 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.
18
[ ]
By:
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Name:
Title:
By:
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Name:
Title:
19
Agreed to and accepted by:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
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Name:
Title:
