AMENDMENT NO. 1 TO U.S. GUARANTEE AND
SECURITY AGREEMENT
AMENDMENT dated as of December 12, 2002 among NORTEL NETWORKS LIMITED
("NNL"), NORTEL NETWORKS INC. ("NNI"), the SUBSIDIARIES listed on the signature
pages hereof, and JPMORGAN CHASE BANK, as collateral agent (the "COLLATERAL
AGENT").
W I T N E S S E T H:
WHEREAS, NNL, NNI, the Subsidiaries party thereto and JPMorgan Chase
Bank, as collateral agent, have entered into a U.S. Guarantee and Security
Agreement dated as of April 4, 2002 (the "U.S. SECURITY AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the U.S. Security Agreement
to include as secured obligations thereunder indemnity, guarantee and
reimbursement obligations with respect to certain letters of credit, letters of
guarantee, performance bonds, surety bonds, indemnity arrangements and similar
instruments and to make certain changes consequential to the termination of the
commitments under certain of the Credit Agreements, in each case as more fully
set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1 . Definitions; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the U.S. Security Agreement
shall have the meaning assigned to such term in the U.S. Security 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 U.S. Security Agreement shall from and after the date
hereof refer to the U.S. Security Agreement as amended hereby.
Section 2 . Amendments to Definitions. (a) Section 1(b) of the U.S. Security
Agreement is amended by adding the following definitions in appropriate
alphabetical order:
"ADDITIONAL COLLATERAL DATE" means, with respect to any additional
Subsidiary of NNL formed or acquired after the applicable dates referred to in
Section 30 or removed from Annex B hereto after such date in accordance with the
terms of this Agreement, the date which is 30 days after such Subsidiary is
formed or acquired or removed from Annex B hereto.
"ADDITIONAL COLLATERAL LIENS" means:
(a) any Lien, other than a Transaction Lien, on any property of
any Lien Grantor existing on the Security Amendment No. 1
Effective Date, so long as such Lien was permitted to be
incurred under the
Credit Agreements under which commitments were in effect at
the time of such incurrence;
(b) Liens imposed by law for taxes, assessments, governmental
charges or levies (and related interest and penalties), in
each case that are not yet delinquent or in default or are
being contested in good faith in appropriate proceedings;
(c) carriers', warehousemen's, mechanics', materialmen's,
landlord's, repairmen's and other like Liens imposed by law,
arising in the ordinary course of business and securing
obligations that are not overdue by more than 90 days or are
being contested in good faith in appropriate proceedings;
(d) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default;
(f) easements, zoning restrictions, rights-of-way, servitudes and
similar encumbrances on real property imposed by law or
arising in the ordinary course of business that do not secure
any monetary obligation and do not materially detract from the
value of the affected property or interfere with the ordinary
conduct of business of NNL or any Subsidiary of NNL;
(g) with respect to each Mortgaged Property or Leasehold Mortgaged
Property, "Permitted Encumbrances" (as defined in the Mortgage
or Leasehold Mortgage, as the case may be, relating to such
property);
(h) Liens of a bank, broker or securities intermediary on whose
records a deposit account or a securities account of NNL or
any Subsidiary of NNL is maintained securing the payment of
customary fees and commissions to the bank, broker or
securities intermediary or, with respect to a deposit account,
items deposited but returned unpaid;
(i) Subordinated Liens permitted under Section 32(b);
(j) Liens securing obligations in an aggregate amount which shall
not at any time exceed $25,000,000; and
(k) Liens consisting of put/call arrangements on any Collateral
not expressly prohibited by the terms of any Credit Agreement;
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provided that, except as provided in clauses (a), (d) and (e) above, the term
"Additional Collateral Liens" shall not include any Lien that secures
obligations for borrowed money or with respect to deposits or advances of any
kind, obligations evidenced by bonds, debentures, notes or similar instruments
or guarantees of any of the foregoing.
"CANADIAN SECURITY AGREEMENT" means the Canadian guarantee and security
agreement dated as of April 4, 2002 among NNL, NNI, the Subsidiaries party
thereto and JPMorgan Chase Bank, as Collateral Agent, as amended from time to
time.
"CANADIAN SUBSIDIARY" means, with respect to any Person, any Subsidiary
of such Person (which may be a corporation, limited liability company,
partnership or other legal entity) organized under the laws of Canada or one of
the Provinces or Territories of Canada.
"COLLATERAL AND GUARANTEE REQUIREMENT" means the requirement that:
(a) the Collateral Agent shall have received from each Subsidiary
of NNL required to become a party to any Security Document in
order to comply with Section 30 or Section 31, as the case may
be, a supplement to such Security Document, in the form
specified therein (or substantially equivalent document
approved by the Collateral Agent in its reasonable
discretion), duly executed and delivered on behalf of such
Subsidiary;
(b) all outstanding Equity Interests in any Material Subsidiary of
NNL (other than NNI) shall have been pledged to the extent
required hereunder or under any other applicable Security
Document and the Collateral Agent shall have received all
certificates or other instruments representing such Equity
Interests, together with stock powers or other instruments of
transfer with respect thereto endorsed in blank to the extent
required hereunder or under any other applicable Security
Document;
(c) all documents and instruments, including UCC financing
statements, financing statements (and the Quebec equivalent
thereof) under Canadian personal property security legislation
and Mortgages (subject to Section 31(c)), required by law or
reasonably requested by the Collateral Agent to be filed,
registered or recorded to create the Liens in the real and
personal, movable and immovable property of NNL and its
Subsidiaries as required hereunder or under any other Security
Document and perfect or record such Liens, in each case to the
extent, and with the priority, required by the applicable
Security Document, shall have been filed, registered or
recorded or delivered to the Collateral Agent for
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filing, registration or recording (and all mortgage recording
taxes or similar taxes and recording fees with respect to real
estate (collectively, "REAL ESTATE FEES") shall have been paid
(or funds reasonably estimated by NNL to be sufficient to pay
such Real Estate Fees shall have been paid to the Collateral
Agent));
(d) the Collateral Agent shall have received with respect to each
Mortgaged Property, (i) counterparts of a Mortgage, duly
executed and delivered by the record owner of such Mortgaged
Property, (ii) a title report, commitment to issue title
insurance or title opinion, together with copies of all
related documents, issued by a nationally recognized title
insurance company or law firm and (iii) such legal opinions
and other documents as the Collateral Agent or the Required
Secured Banks may reasonably request;
(e) subject to Section 31(c), each "Lien Grantor" (as defined in
any Security Document) and any Subsidiary Guarantor shall have
obtained all consents and approvals required to be obtained by
it in connection with the execution and delivery of all
Security Documents to which it is a party, the performance of
its obligations (including, if applicable, its guarantee)
thereunder and the granting of the Liens granted by it
thereunder; and
(f) (i) each "Lien Grantor" (as defined in any Security Document)
shall have taken all other action required of such Lien
Grantor under the Security Documents to perfect, register
and/or record the Liens granted by it thereunder and (ii) each
Subsidiary Guarantor shall have taken all other action
required of it under its Foreign Subsidiary Guarantee for the
validity or enforceability of such Foreign Subsidiary
Guarantee;
provided that if the Collateral Agent shall determine in its sole good faith
discretion that, with respect to any asset or "Lien Grantor" (as defined in any
Security Document) or Subsidiary Guarantor, satisfaction of any or all of the
conditions set forth above is impossible, impractical or unreasonably burdensome
(or has been substantially, but not fully, completed), the Collateral Agent may,
in its good faith discretion, consent to a waiver of any or all of such
conditions with respect to such asset or such "Lien Grantor" or Subsidiary
Guarantor (which waiver may, at the option of the Collateral Agent, be limited
in duration).
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of NNL in
accordance with GAAP in its consolidated financial statements if such statements
were prepared as of such date.
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"DESIGNATED CONTINGENT OBLIGATIONS" has the meaning specified in
Section 22(c).
"EDC" means Export Development Canada.
"EDC FACILITY" means all facilities made available by EDC to support
obligations of one or more of NNL, its Subsidiaries and its affiliates arising
under or relating to letters of credit, letters of guarantee, indemnity
arrangements, performance bonds, surety bonds, receivables purchases and similar
instruments or arrangements issued or entered into for the benefit of one or
more of NNL, its Subsidiaries or its affiliates, including (x) any such facility
existing on the Security Amendment No. 1 Effective Date and (y) any master
facility agreement with respect to any such support entered into between EDC,
NNL and any of NNL's Subsidiaries or affiliates.
"5-YEAR AGREEMENTS" means the 0000 XXX 5-Year Agreement and the 2000
NNI 5-Year Agreement.
"FOREIGN COLLATERAL" means all "Collateral" as defined in the Foreign
Security Documents.
"FOREIGN SECURITY DOCUMENTS" means the Foreign Subsidiary Guarantees,
the NNI Foreign Pledge Agreements, the NNL Foreign Pledge Agreements and all
other supplemental or additional security agreements, control agreements or
similar instruments delivered pursuant thereto.
"FOREIGN SUBSIDIARY" means a Subsidiary (which may be a corporation,
limited liability company, partnership or other legal entity) organized under
the laws of a jurisdiction outside the United States and Canada, and conducting
substantially all its operations outside the United States and Canada.
"FOREIGN SUBSIDIARY GUARANTEE" means each document listed on Annex C
under the heading "Foreign Subsidiary Guarantees" and each other guarantee in
form and substance reasonably satisfactory to the Collateral Agent pursuant to
which a Material Subsidiary shall have guaranteed the obligations of NNL or NNI
under the Loan Documents, as amended, restated, supplemented or replaced from
time to time.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, applied on a basis consistent (except for
changes concurred in by NNL's independent public accountants) with the most
recent audited consolidated financial statements of NNL and its Consolidated
Subsidiaries delivered to the Collateral Agent.
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"LEASEHOLD MORTGAGE" means each document listed on Annex C under the
heading "Leasehold Mortgages", as such document may be amended, restated,
supplemented or replaced from time to time.
"LEASEHOLD MORTGAGED PROPERTY" means each parcel of real property and
any improvements located thereon and rights appurtenant thereto leased by a
"Lien Grantor" (as defined in any Security Document) that is subject to a
Leasehold Mortgage.
"MORTGAGE" means each document listed on Annex C under the heading
"Mortgages", as such document may be amended, restated, supplemented or replaced
from time to time, and each other mortgage, deed of trust, charge, debenture,
hypothec or other security document granting a Lien on or in any Mortgaged
Property to secure the Secured Obligations. Each Mortgage shall be substantially
in the form of the Mortgages listed in Annex C (as amended on the Security
Amendment No.1 Effective Date), with such changes as are reasonably recommended
by counsel to the Collateral Agent in each jurisdiction in the United States or
Canada in which a Mortgaged Property is located, or in such other form as such
counsel reasonably recommends, in each case to the extent necessary or
appropriate to comply with local law or convention.
"MORTGAGED PROPERTY" means each parcel of real property and any
improvements located thereon and rights appurtenant thereto owned by a Lien
Grantor that is either (i) subject to a Mortgage listed on Annex C or (ii)
subject to a Transaction Lien granted after the Security Amendment No. 1
Effective Date pursuant to Section 30 or Section 31.
"NNI FOREIGN PLEDGE AGREEMENT" means each document listed on Annex C
under the heading "NNI Foreign Pledge Agreement", as such document may be
amended, restated, supplemented or replaced from time to time.
"NNL FOREIGN PLEDGE AGREEMENT" means each document listed on Annex C
under the heading "NNL Foreign Pledge Agreements", as such document may be
amended, restated, supplemented or replaced from time to time.
"PERMITTED INVESTMENTS" means investments in:
(i) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the
United States or Canada (or by any agency thereof to the
extent such obligations are backed by the full faith and
credit of the United States or Canada, as the case may be), in
each case maturing within one year from the date of
acquisition thereof;
(ii) commercial paper maturing within one year from the date of
acquisition thereof and having, at such date of acquisition,
the
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highest credit rating obtainable from S&P, Xxxxx'x or Dominion
Bond Rating Services Limited;
(iii) certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the
United States or any State thereof or Canada which has a
combined capital and surplus and undivided profits of at least
$500,000,000;
(iv) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (i) above
and entered into with a financial institution satisfying the
criteria described in clause (iii) above; and
(v) any other investments made in compliance with Corporate
Procedure No. 303.30 of NNC with respect to cash investments
and safe custody arrangements, substantially as in effect on
December 20, 2001.
"PURCHASE MONEY MORTGAGE" means, with respect to any Lien Grantor, (i)
a mortgage on or security interest in property existing at the time of
acquisition thereof by such Lien Grantor and not incurred in contemplation of
such acquisition and (ii) any mortgage on or security interest in any property
acquired, constructed or improved by such Lien Grantor incurred after the date
hereof which is related solely to, and is created or assumed contemporaneously
with, or within 180 days after, such acquisition, or completion of such
construction or improvement, to secure or provide for the payment of the
purchase price thereof or the cost of construction or improvement thereon
incurred after the date hereof (including the cost of any underlying real
property); provided that in the case of any such acquisition, construction or
improvement, the mortgage or security interest shall not apply to any property
previously owned by such Lien Grantor other than, in the case of any such
construction or improvement, any real property, theretofore substantially
unimproved for the purposes of such Lien Grantor, on which the property so
constructed, or the improvement, is located and other than a fixture on the real
property on which the property so constructed, or the improvement, is located;
and provided further that the amount secured by the mortgage or security
interest shall not exceed the purchase price thereof or the cost of construction
or improvement thereon plus reasonable fees and expenses with respect thereto.
"SECURITY AMENDMENT NO. 1 EFFECTIVE DATE" means the date on which all
of the conditions to effectiveness of Amendment No. 1 to this Agreement are
satisfied.
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"SUBSIDIARY GUARANTOR" means NNI, NNFI, any "Subsidiary Guarantor" as
defined in the Canadian Security Agreement and any Subsidiary of NNL that is
party to a Foreign Subsidiary Guarantee.
"TERMINATED" or "TERMINATION" means, with respect to any 5-Year
Agreement, that (i) all commitments to extend credit under such 5-Year Agreement
shall have been terminated or expired, (ii) all Non-Contingent Secured
Obligations arising under such 5-Year Agreement shall have been paid in full and
(iii) no Contingent Secured Obligation shall remain outstanding under such
5-Year Agreement other than any indemnity claims that have not been asserted on
or prior to the date on which the conditions set forth in clauses (i) and (ii)
have been satisfied.
(b) Section 1(b) of the U.S. Security Agreement is amended by amending
each of the following definitions to read in its entirety as follows:
"BANKS" means the banks party to the 5-Year Agreements.
"BANK TERMINATION DATE" means the first date on which all of the
following conditions are satisfied:
(i) all commitments to extend credit under the 5-Year
Agreements and the EDC Facility shall have expired or been terminated
and the EDC Facility shall not be in effect;
(ii) all Non-Contingent Secured Obligations either (x) arising
under the 5-Year Agreements or (y) arising under Designated Contingent
Obligations of the type described in Section 22(c)(iii) shall have been
paid in full; and
(iii) no Contingent Secured Obligation either (x) arising
under the 5-Year Agreements or (y) which are Designated Contingent
Obligations of the type described in Section 22(c)(iii) shall remain
outstanding, in each case other than any general indemnification
provisions (such as those set forth in Sections 8.03, 8.04 and 9.03 of
the 0000 XXX 5-Year Agreement) and the like, as to which no claim has
been asserted on or prior to such date;
provided that the condition in clause (i) shall not apply to the EDC Facility,
and the conditions in clauses (ii) and (iii) shall not apply to Designated
Contingent Obligations of the type described in Section 22(c)(iii), in each case
if the Lien Grantors have granted to the Collateral Agent, for the benefit of
EDC, a first priority perfected security interest in assets owned by the Lien
Grantors satisfactory to EDC in its sole discretion; it being understood that,
so long as no Specified Event of Default under the EDC Facility has occurred and
is continuing, granting a first priority perfected security interest in cash in
U.S. or Canadian
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dollars as reasonably calculated by EDC in an amount equal to or exceeding 100%
of the aggregate face amount of all Designated Contingent Obligations of the
type described in Section 22(c)(iii), plus the amount of any remaining
commitments under the EDC Facility plus an amount deemed by EDC, acting
reasonably, to be sufficient to cover any fees, expenses or other amounts
thereunder shall be deemed to be satisfactory to EDC if such cash is delivered
to EDC or maintained in a Deposit Account or Securities Account in the United
States or Canada with a bank or Securities Intermediary with a rating from each
of Xxxxx'x and S&P of at least "A" on its senior, unsecured long-term debt and
the documents therefor are acceptable to EDC.
"CAPITAL MARKETS EVENT" means the issuance or incurrence by NNL or any
Material Subsidiary of any (i) indebtedness for borrowed money in respect of
debt securities issued in a public offering or a private placement or (ii)
syndicated lines of credit or other credit facilities. For the purpose of this
definition, the indebtedness of any Person shall include the debt of others
which is (x) secured by (or for which the holder of such debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the debt secured thereby has been
assumed, or (y) guaranteed by such Person.
"COLLATERAL" means all property, except for Real Property Collateral,
whether now owned or hereafter acquired, on which a Lien is granted or purports
to be granted to the Collateral Agent pursuant to, and has not been released in
accordance with, the Security Documents. When used with respect to a specific
Lien Grantor, the term "Collateral" means any of the foregoing Collateral in
which such a Lien is so granted or purports to be so granted by such Lien
Grantor and has not been so released.
"CREDIT AGREEMENTS" means the EDC Facility and, so long as the 5-Year
Agreements shall not have been Terminated, the 5-Year Agreements; and any
reference to the "principal amount" of or outstanding under any Credit Agreement
includes the outstanding principal or face amount of obligations, contingent or
otherwise, of NNL and its Subsidiaries under the EDC Facility.
"EVENT OF DEFAULT" means the occurrence and continuance of any "Event
of Default" as defined in any Credit Agreement (with respect to the 5-Year
Agreements, after giving effect to Section 33).
"GUARANTEED OBLIGATIONS" means (i) with respect to NNI, (1) the NNL
Bank Obligations, (2) the NNL Bond Obligations, (3) the NNL Hedging Obligations,
(4) the NNFI Hedging Obligations, (5) any Designated Capital Markets Debt (other
than Designated Capital Markets Debt of NNI) and (6) Designated Bank Debt (other
than Designated Bank Debt of NNI) and (ii) with respect to NNFI, (1) the NNI
Bank Obligations, (2) the NNI Hedging Obligations, (3) the NNL Bank Obligations,
(4) the NNL Bond Obligations, (5) the NNL
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Hedging Obligations, (6) any Designated Capital Markets Debt (other than
Designated Capital Markets Debt of NNFI) and (7) any Designated Bank Debt (other
than Designated Bank Debt of NNFI).
"MATERIAL SUBSIDIARY" means any Subsidiary of NNL other than those set
forth on Annex B hereto, as the same may be amended from time to time by NNL,
with the consent of the Collateral Agent (not to be unreasonably withheld) (i)
to include Subsidiaries of NNL which cannot be (for legal or contractual
reasons), or for which, in the good faith discretion of NNL and the Collateral
Agent, it would be unduly burdensome (whether because of law, collateral value
or otherwise) to be, "Lien Grantors" or "Subsidiary Guarantors" (as defined in
any Security Document), or (ii) to exclude Subsidiaries of NNL then set forth on
such Annex B; provided that the Subsidiaries of NNL listed on Annex B hereto
shall in no event, if aggregated and considered as a single Subsidiary, account
for more than 13.2% of consolidated revenues of NNL and its Subsidiaries
(excluding the revenues of the joint ventures identified in Annex B hereto) set
forth in the most recent audited consolidated financial statements of NNL and
its Consolidated Subsidiaries delivered to EDC and the Banks or made available
to the public.
"NNFI SECURED OBLIGATIONS" means (i) all obligations of NNFI under
Section 2 of this Agreement, (ii) the NNFI Hedging Obligations, (iii) any
Designated Bank Debt of NNFI and (iv) any Designated Capital Markets Debt of
NNFI.
"NNI CREDIT AGREEMENTS" means the 2000 NNI 5-year Agreement.
"NNI SECURED OBLIGATIONS" means (i) the NNI Bank Obligations, (ii) the
NNI Hedging Obligations, (iii) any Designated Bank Debt of NNI and (iv) any
Designated Capital Markets Debt of NNI.
"NNL CREDIT AGREEMENTS" means the 0000 XXX 5-Year Agreement.
"PERMITTED LIENS" means (i) the Transaction Liens and (ii) Additional
Collateral Liens.
"REQUIRED SECURED BANKS" means (i) EDC and (ii) so long as the 5-Year
Agreements shall not have been Terminated, Banks having at least 51% of the
aggregate amount, without duplication, of (x) the "Commitments" under each of
the 5-Year Agreements and (y) the aggregate unpaid principal amount of the
"Loans" under each of the 5-Year Agreements; provided that, if at any time there
are no loans outstanding under the 5-Year Agreements, then, solely for the
purpose of exercising, or requesting or demanding the Collateral Agent to
exercise, any rights or remedies available to the Secured Parties upon the
occurrence of an "Event of Default" under the EDC Facility, "Required Secured
Banks" at such time shall exclude the Banks.
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"SECURITY DOCUMENTS" means this Agreement, the Canadian Security
Agreement, the Security Agreement Supplements, the Commodity Account Control
Agreements, the Deposit Account Control Agreements, the Issuer Control
Agreements, the Securities Account Control Agreements, the Intellectual Property
Security Agreements and all other supplemental or additional security
agreements, control agreements or similar instruments delivered pursuant to any
Credit Agreement or any other Security Document (other than any such agreement
or instrument with respect to real property).
"SPECIFIED EVENT OF DEFAULT" means (a) so long as the 5-Year Agreements
shall not have been Terminated, an event described in Section 6.01(a), (f), or
(g) of the 5-Year Agreements or any Event of Default caused by a breach of any
financial covenant contained in the 5-Year Agreements and (b) any event
described in the EDC Facility as a "Specified Event of Default".
"SUBSIDIARY LIEN GRANTORS" means each Subsidiary of NNI or NNL listed
on the signature pages hereof under the caption "Subsidiary Lien Grantors" and
each Subsidiary of NNI or NNL that shall, at any time after the date hereof,
become a "Subsidiary Lien Grantor" pursuant to Section 21.
"TOTAL COLLATERAL" means all the "Collateral", "Mortgaged Property",
"Leasehold Mortgaged Property" and "Trust Property" as defined in any Security
Document, taken as a whole, and including in addition, for purposes of this
definition, Foreign Subsidiary Guarantees.
Section 3. Amendment to Grant of Transaction Liens. Section 3 of the
U.S. Security Agreement is amended by deleting "and" immediately preceding
clause L of the proviso thereto and inserting ",", by adding immediately after
the word "effect" at the end of clause L of the proviso thereto the following
new clauses:
", (M) any asset of such Lien Grantor for so long as such
asset is subject to a Purchase Money Mortgage and (N) any fixed asset
in which such Lien Grantor's sole interest is as lessee under a capital
lease of such asset (as determined in accordance with GAAP)"
Section 4. Amendment of Application of Proceeds Provision. Section 15
of the U.S. Security Agreement is amended by adding immediately after "2001
Indenture" at the end of clause (a)(1) thereof the words "or any amounts owing
to EDC under the EDC Facility and consisting of reimbursement obligations with
respect to fees and expenses incurred by EDC".
Section 5. Amendment of Release of Collateral Provisions. Section 20 of the
U.S. Security Agreement is amended by deleting paragraphs (b), (c), (d), (e),
(f) and (g) thereof in their entirety and inserting immediately after paragraph
(a) the following new paragraphs:
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(b) Concurrently with any sale, exchange, assignment, lease or other
disposition of any item of Collateral by any Lien Grantor (except a lease or a
sale, exchange, assignment or other disposition (x) to another Lien Grantor
whose "Secured Obligations" hereunder include "Secured Obligations" of the Lien
Grantor effecting such sale or other disposition or (y) that results in the
creation of one or more Liens, other than solely one or more Additional
Collateral Liens) not expressly prohibited by any Credit Agreement or by this
Agreement, the Transaction Liens on the assets sold or otherwise disposed of
(but not in any Proceeds arising from such sale or other disposition) will cease
immediately without any action by the Collateral Agent or any other Secured
Party; provided that no Specified Event of Default shall have occurred and be
continuing or would result therefrom.
(c) Upon any Collateral of any Lien Grantor becoming Transferred
Receivables or Related Transferred Rights, the Transaction Lien thereon (but not
in any Proceeds thereof) shall cease, and shall be deemed to have ceased
immediately prior to such Collateral becoming Transferred Receivables or Related
Transferred Rights, without any action by the Collateral Agent or any other
Secured Party; provided that no Specified Event of Default shall have occurred
and be continuing or would result therefrom. The Collateral Agent shall be fully
protected in relying on a certificate of the relevant Lien Grantor stating that
any Collateral qualifies as Transferred Receivables or Related Transferred
Rights.
(d) Upon any Collateral of any Lien Grantor consisting of cash, cash
equivalents or Permitted Investments becoming the subject of a hedging
transaction not expressly prohibited by the terms of any Credit Agreement, the
Transaction Lien thereon (but not in any Proceeds of such Lien Grantor's rights
under such hedging transaction or Proceeds of any such hedge) will cease
immediately without any action by the Collateral Agent or any other Secured
Party; provided that no Specified Event of Default shall have occurred and be
continuing or would result therefrom.
(e) Upon any Collateral of any Lien Grantor consisting of Investment
Property subject to a put/call arrangement not expressly prohibited by the terms
of any Credit Agreement being transferred to any Person other than another Lien
Grantor as a result of the exercise of such put/call arrangement, the
Transaction Lien thereon (but not in any Proceeds thereof) will cease
immediately without any action by the Collateral Agent or any other Secured
Party; provided that no Specified Event of Default shall have occurred and be
continuing or would result therefrom.
(f) Upon any Collateral of any Lien Grantor becoming subject to any
Sale and Leaseback Transaction not prohibited under the terms of any Credit
Agreement, the Transaction Lien thereon (but not in any Proceeds of such Sale
and Leaseback Transaction) will cease immediately without any action by the
Collateral Agent or any other Secured Party; provided that no Specified Event of
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Default shall have occurred and be continuing or would result therefrom. For the
purpose of this paragraph (f), "SALE AND LEASEBACK TRANSACTION" means any
arrangement whereby any Lien Grantor shall directly or indirectly sell or
otherwise transfer any property, real or personal, used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the
same purpose or purposes as the property sold or transferred.
(g) Upon any Collateral of any Lien Grantor consisting of cash or cash
equivalents or Permitted Investments becoming subject to a Lien (a "THIRD PARTY
LIEN") securing (i) the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds, indemnity arrangements
and guarantees and other obligations of a like nature, in each case in the
ordinary course of business or (ii) obligations under letters of credit and
letters of guarantee issued to support (x) trade or performance obligations or
(y) obligations under operating leases, in the case of this paragraph (ii),
incurred in the ordinary course of business and for legitimate business purposes
(any such Collateral, "RELEASED CASH COLLATERAL"), the Transaction Lien thereon
(but not any Proceeds thereof other than, to the extent they might otherwise
constitute Proceeds, any amounts constituting payment on or with respect to any
Released Cash Collateral, or any investments made with such Released Cash
Collateral, in each case (x) made after the release of the Transaction Lien
thereon in accordance with this paragraph (g) and (y) only to the extent that
such Released Cash Collateral (or investments made with such Released Cash
Collateral) remain subject to the Third Party Lien) will cease immediately
without any action by the Collateral Agent or any other Secured Party; provided
that no Specified Event of Default shall have occurred and be continuing or
would result therefrom.
(h) In addition to the foregoing, at any time before the Transaction
Liens terminate, the Collateral Agent may (i) release any Collateral (but not
all or any substantial part of the Total Collateral) with the prior written
consent of the Required Secured Banks, (ii) release all or any substantial part
of the Total Collateral with the prior written consent of EDC and, so long as
the 5-Year Agreements shall not have been Terminated, all the Banks, (iii) amend
this Agreement so that the Secured Obligations of any Lien Grantor exclude the
obligations of such Lien Grantor under any 5-Year Agreement with the prior
written consent of all Banks party to such 5-Year Agreement or (iv) amend this
Agreement so that the Secured Obligations of any Lien Grantor exclude the
obligations of such Lien Grantor with respect to any Designated Bank Debt held
by EDC with the prior written consent of EDC.
(i) Upon any termination of a Transaction Lien or release of
Collateral, or change in the Secured Obligations of any Lien Grantor, the
Collateral Agent will promptly, at the expense of the relevant Lien Grantor,
execute and deliver to such Lien Grantor such documents as such Lien Grantor
shall reasonably request to evidence the termination of such Transaction Lien or
13
the release of such Collateral, or change in the Secured Obligations, as the
case may be, and shall deliver to such Lien Grantor any documents or
instruments, including without limitation stock certificates, evidencing any
Collateral no longer subject to any Transaction Liens in each case subject only
to (i) the delivery of the certificate referred to in paragraph (c) above and
(ii) evidence reasonably satisfactory to the Collateral Agent that the
Collateral purported to be released under (b), (d), (e), (f) or (g) in fact
qualifies for such release (which evidence may take the form of a certificate to
that effect from NNL and NNI, and the Collateral Agent shall be fully protected
in relying on any such certificate).
Section 6 . Additional Lien Grantors. Section 21 of the U.S. Security
Agreement is amended to read in its entirety as follows:
SECTION 21. Additional Lien Grantors. Any Person may become a party
hereto by signing and delivering to the Collateral Agent a Security Agreement
Supplement, whereupon such Person shall become a "Lien Grantor" as defined
herein.
Section 7 . Inclusion of Additional Secured Obligations. Section 22 of
the U.S. Security Agreement is amended by deleting paragraphs (b) and (c)
thereof and replacing them with the following new paragraphs:
(b) NNI or NNL may from time to time designate any indebtedness
constituting a Capital Markets Event ("DESIGNATED CAPITAL MARKETS DEBT") as an
additional Secured Obligation for the purposes hereof by delivering to the
Collateral Agent a certificate signed by a financial officer that (i) identifies
such indebtedness and the material terms thereof and (ii) states that the
obligations thereunder are designated as Secured Obligations for the purposes
hereof provided that the amount of Designated Capital Markets Debt designated
under this Agreement and any other Security Document shall at no time exceed
$2,700,000,000 (excluding any refinancing of debt securities outstanding on the
Security Amendment No. 1 Effective Date, provided that such refinancing is
completed within 90 days of the maturity of such debt securities).
(c) NNL or NNI may from time to time designate as an additional Secured
Obligation:
(i) any indebtedness for borrowed money incurred or guaranteed
by NNL or any Material Subsidiary to any Bank or any wholly-owned
subsidiary of any Bank or any other financial institution ("DESIGNATED
INDEBTEDNESS");
(ii) any obligations, contingent or otherwise (including
reimbursement or indemnity obligations) owed by any Lien Grantor to any
Bank or any wholly-owned subsidiary of any Bank or any other financial
institution (which term includes any insurance company) with respect to
14
letters of credit, letters of guarantee, performance bonds, surety
bonds or equivalent contingent instruments (other than instruments to
support obligations under indebtedness for borrowed money) issued in
the ordinary course of business; and
(iii) any indemnity, reimbursement or guarantee obligations
owed by any Lien Grantor to EDC arising under the EDC Facility (the
obligations referred to in (ii) and (iii), the "DESIGNATED CONTINGENT
OBLIGATIONS" and, together with Designated Indebtedness, "DESIGNATED
BANK DEBT"),
in each case by delivering to the Collateral Agent a certificate signed by a
financial officer of NNI or NNL, as the case may be, that (A) identifies such
obligations and the material terms thereof and (B) states that such indebtedness
or other obligation is designated as a Secured Obligation; provided that (x) the
aggregate amount of indebtedness described in Section 22(c)(i) designated as
"Designated Indebtedness" under this Agreement and any other Security Document
shall at no time exceed $300,000,000 in aggregate principal amount and (y) the
aggregate amount of obligations described in Section 22(c)(ii) and Section
22(c)(iii) and designated as "Designated Contingent Obligations" under this
Agreement and any other Security Document shall at no time exceed $1,100,000,000
in aggregate maximum possible outstanding principal and face amount.
Section 8 . Additional Collateral, Guarantee and Negative Pledge
Covenants. The U.S. Security Agreement is amended by adding immediately after
Section 29 thereof the following new Sections:
SECTION 30. Additional Subsidiaries. If any additional Subsidiary of
NNL is formed or acquired after (x) if such additional Subsidiary is a U.S.
Subsidiary, January 15, 2002, (y) if such Subsidiary is a Canadian Subsidiary,
January 31, 2002 and (z) otherwise, February 28, 2002, NNL will, within five
Business Days after such Subsidiary is formed or acquired, notify the Collateral
Agent thereof. If such additional Subsidiary formed or acquired after the
applicable date set forth in the immediately preceding sentence is a Material
Subsidiary, or if any Subsidiary of NNL becomes a Material Subsidiary as a
result of a modification to Annex B, then:
(i) if such Subsidiary is (1) a Subsidiary of NNI and (2) not
a U.S. Subsidiary, NNI will on or prior to the Additional Collateral
Date cause all Equity Interests in such Material Subsidiary directly
owned by NNI or any Subsidiary of NNI that is a U.S. Subsidiary to be
added to the Collateral subject to an NNI Foreign Pledge Agreement (or
substantially equivalent document approved by the Collateral Agent in
its reasonable discretion); provided that NNI and NNI's Subsidiaries
will not be required to pledge the Equity Interests of any such
Subsidiary to the extent Equity
15
Interests of any such Subsidiary representing more than 66% of all
voting power of all Equity Interests in such Subsidiary would be
subject to such pledge. NNI may, instead of complying with the
foregoing sentence, deliver a Foreign Subsidiary Guarantee, whereupon
such Material Subsidiary will become a "Subsidiary Guarantor" for
purposes of the Security Documents;
(ii) if such Subsidiary is (1) a Subsidiary of NNL (other than
NNI), (2) not a Subsidiary of NNI and (3) not a Canadian Subsidiary,
NNL will, on or prior to the Additional Collateral Date, cause any
Equity Interest in such Material Subsidiary owned by NNL or any
Subsidiary (other than a Subsidiary of NNI that is not a U.S.
Subsidiary) to be added to the Collateral subject to an NNL Foreign
Pledge Agreement (or substantially equivalent document approved by the
Collateral Agent in its reasonable discretion). NNL may, instead of
complying with the foregoing sentence, deliver a Foreign Subsidiary
Guarantee, whereupon such Material Subsidiary will become a "Subsidiary
Guarantor" for purposes of the Security Documents;
(iii) if such Subsidiary is (1) a Subsidiary of NNI, (2) a
U.S. Subsidiary and (3) not a direct Subsidiary of a Foreign
Subsidiary, NNI will, on or prior to the Additional Collateral Date,
cause any Equity Interest in such Material Subsidiary owned by NNI or
any Subsidiary of NNI to be added to the Collateral subject to this
Agreement;
(iv) if such Subsidiary is (1) a Subsidiary of NNL, (2) a
Canadian Subsidiary and (3) not a direct Subsidiary of a non-Canadian
Subsidiary, NNL will, on or prior to the Additional Collateral Date,
cause any Equity Interest in such Material Subsidiary owned by NNL or
any Subsidiary of NNL to be added to the Collateral subject to the
Canadian Security Agreement; and
(v) if such Material Subsidiary is organized under the laws of
a jurisdiction in the United States or Canada and is not prohibited by
applicable law or regulation from securing the Secured Obligations (as
defined in clause (iv) of the definition thereof), NNL shall, on or
prior to the Additional Collateral Date, promptly cause such Material
Subsidiary to become a party to the Canadian Security Agreement or this
Agreement, as applicable, whereupon such Material Subsidiary will
become a "Lien Grantor" and, if applicable, "Subsidiary Guarantor" for
the purpose of the Security Documents and, during a Collateral Period
and subject to Section 31(c), cause the Collateral and Guarantee
Requirement to be satisfied with respect to such Material Subsidiary.
SECTION 31. Further Assurances. (a) During the Collateral Period and
subject to Section 31(c), each Lien Grantor will execute and deliver any and all
16
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings, mortgages, deeds of trust and other documents),
that may be required under any applicable law, or that the Collateral Agent, EDC
or the Required Secured Banks may reasonably request, to cause the Collateral
and Guarantee Requirement to be and remain satisfied, all at NNL's expense. NNL
will provide to the Collateral Agent, from time to time upon request, evidence
reasonably satisfactory to the Collateral Agent as to the perfection and
priority of the Transaction Liens created or intended to be created by the
Security Documents.
(b) Each of NNL and NNI will cause to be delivered to the Collateral
Agent Mortgages on real property located in the United States or Canada acquired
by it or any Material Subsidiary on or after the Security Amendment No. 1
Effective Date to the extent that each such owned real property has a fair
market value of $5,000,000 or more. Any documents required to be delivered to
the Collateral Agent pursuant to clauses (ii) and (iii) of paragraph (d) of the
definition of Collateral and Guarantee Requirement in connection with any such
Mortgages shall be substantially in the same form as previously delivered to the
Collateral Agent in connection with the existing Mortgages, and shall be
delivered within 30 days of acquisition of such real property. Each of NNL and
NNI represents and warrants that none of NNL, NNI and the Material Subsidiaries
has during the period commencing on December 20, 2001 and ending on the Security
Amendment No. 1 Effective Date acquired any real property, which, if acquired on
or after the Security Amendment No. 1 Effective Date, would be required to be
subject to a Mortgage in accordance with this Section 31(b).
(c) If the Collateral Agent shall determine in its sole good faith
discretion that, with respect to any asset or "Lien Grantor" under any Security
Document or Subsidiary Guarantor, satisfaction of any or all of the requirements
set forth in this Section 31 or Section 30 is impossible, impractical or
unreasonably burdensome (or has been substantially, but not fully, completed),
the Collateral Agent may, in its good faith discretion, consent to a waiver of
any or all of such requirements with respect to such asset or Lien Grantor or
Subsidiary Guarantor (which waiver (x) may, at the option of the Collateral
Agent, be limited in duration and (y) shall in any event be granted and be
unlimited in duration if such Collateral is De Minimis Collateral). "DE MINIMIS
COLLATERAL" means any Equity Interests in any Foreign Subsidiary so long as such
Equity Interests, together with all other Equity Interests that constitute or
are proposed to constitute "De Minimis Collateral", constitute the Equity
Interests of Persons that (together with their consolidated subsidiaries,
without duplication) in the aggregate have consolidated revenues that are less
than 5% of the consolidated revenues of NNL and its Subsidiaries, as set forth
in the most recent audited consolidated financial statements of NNL and its
consolidated subsidiaries delivered to EDC and, prior to the Termination of the
5-Year Agreements, the Banks, or made publicly available. Without limiting any
other
17
obligations of any Lien Grantor set forth in this Agreement, each Lien
Grantor agrees that it will use its commercially reasonable efforts to ensure
that the pledges with respect to any Equity Interests that constitute De Minimis
Collateral are validly created and perfected (i.e. made enforceable against the
Lien Grantor and third parties). Promptly after any such waiver by the
Collateral Agent, the Collateral Agent shall inform EDC and the Banks of such
waiver in reasonable detail.
SECTION 32. Negative Pledge. (a) No Lien Grantor will create or permit
to exist any Lien on any Collateral now owned or hereafter acquired by it, or,
except to the extent contemplated by Section 20(c), assign or sell any income,
revenues (including accounts receivable) or rights, in each case in respect of
any Collateral, except Permitted Liens.
(b) The parties hereto agree that, in addition to the Transaction
Liens, any Designated Contingent Obligation owed to EDC may also be secured by a
separate Lien (the "SUBORDINATED LIEN") on all or any portion of the Collateral,
if such Lien is subordinated and second in priority to the Transaction Liens,
which Subordinated Lien shall be created under separate security documents,
provided that, until such time as the 5-Year Agreements shall have been
Terminated, the security documents relating to any Subordinated Lien shall
contain provisions with respect to subordination and voting which are no less
favorable to the Banks than those set forth in Annex D hereto, with such changes
as the Collateral Agent shall approve (the "SUBORDINATION PROVISIONS"). If
advised by counsel to the Collateral Agent that doing so is necessary in order
to ensure the enforceability of the Subordination Provisions, the Collateral
Agent shall be a party to any security document containing any such provision so
long as such document contains exculpatory and indemnity provisions satisfactory
to the Collateral Agent in its discretion; provided that the Collateral Agent's
consent shall not be required for any waiver, amendment, change or variation of
any such security document which does not affect the Subordination Provisions,
any rights or obligations of the Collateral Agent or any exculpatory or
indemnity provision benefiting the Collateral Agent, unless counsel to the
Collateral Agent advises that such consent is necessary to ensure the
enforceability of the Subordination Provisions.
SECTION 33. Events of Default under 5-Year Agreements. Each of the
parties hereto agree that, in addition to the other "Events of Default" set
forth in the 5-Year Agreements, on and after the Security Agreement No. 1
Effective Date, an "Event of Default" shall be deemed to have occurred under the
5-Year Agreements if:
(a) any Lien Grantor shall fail to observe or perform any covenant or
agreement contained in any Security Document (except any covenant or agreement
(i) set forth in any Foreign Security Document or (ii) to the extent, and solely
to the extent, that such covenant or agreement relates to Foreign Collateral)
and such Lien Grantor does not remedy the failure on or before 45 days after
18
notice thereof has been given to NNI and NNL by the Collateral Agent at the
request of any Bank;
(b) any Lien purported to be created under any Security Document (other
than any Foreign Security Document) relating to one or more items of Collateral
(other than Foreign Collateral) with an aggregate value determined by the
Collateral Agent in its sole discretion (which determination may be based solely
upon information furnished by NNL or the Collateral Agent) to exceed $5,000,000
fails to be, or is asserted by any Lien Grantor not to be, a valid and, to the
extent required by the Security Documents, perfected Lien on such Collateral,
with the priority required by the applicable Security Document, except (x) as a
result of a sale or other disposition of the applicable Collateral in a
transaction permitted under the Credit Agreements and the Security Documents
(other than the Foreign Security Documents) or (y) as a result of the Collateral
Agent's failure to maintain possession of any stock certificates, promissory
notes or other documents delivered to it under the Security Documents and the
relevant Lien Grantor shall not have remedied such failure on or before 45 days
after the day on which such Lien Grantor first becomes aware of such failure or
the relevant Lien Grantor shall not have withdrawn such assertion within 45 days
after such assertion is first made;
(c) the guarantee by NNI hereunder fails to constitute a valid and
binding agreement of NNI, or any Lien Grantor so asserts in writing, and such
failure shall not have been remedied on or before 45 days after the day on which
NNI first becomes aware of such failure, or such Lien Grantor shall not have
withdrawn such assertion within 45 days after such assertion is first made; or
(d) at any time an "Event of Default" as defined in the EDC Facility shall have
occurred and either (i) Designated Contingent Obligations owing to EDC have been
cash collateralized as a result of such Event of Default or (ii) EDC has taken
any action, or has requested or demanded that the Collateral Agent take any
action, for the purpose of exercising any rights or remedies available to the
Secured Parties upon the occurrence of an "Event of Default" as defined in such
EDC Facility (including the right to have Designated Contingent Obligations cash
collateralized); provided that at such time, the aggregate principal amount of
all Designated Contingent Obligations which have been cash collateralized as
described in clause (i) above, plus the aggregate principal amount of all
Designated Contingent Obligations with respect to which any action of the type
described in clause (ii) above shall have been taken, in each case since the
Security Amendment No.1 Effective Date, shall be equal to or greater than
$100,000,000;
provided that none of the above events set forth in paragraphs (a), (b) or (c)
above shall constitute an "Event of Default" or a "Default" for the purpose of
Section 3.02(d) of the 5-Year Agreements.
19
Section 9 . New Annexes and Schedules. The Security Agreement is
amended by deleting Schedule 3 and adding immediately after Schedule 2 thereto,
Schedule 3, Annex B, Annex C, Annex D, Annex E, Annex F, Annex G and Annex H
attached hereto as Schedule 3, Annex B, Annex C, Annex D, Annex E, Annex F,
Annex G and Annex H thereto, respectively.
Section 10 . Miscellaneous Amendments. (a) Section 4(e) of the U.S.
Security Agreement is amended by inserting after "on the date of this Agreement"
in the first and second sentences thereof the words "or the date on which such
Equity Interests are pledged, in the case of Subsidiaries which become Lien
Grantors after date of this Agreement".
(b) Section 5 of the U.S. Security Agreement is amended by deleting
paragraph (b) thereof and replacing it with the following new paragraph:
"(b) [intentionally omitted]".
(c) Section 8(a) of the U.S. Security Agreement is amended by inserting
after "Lien Grantor" in the second sentence thereof the words "(other than cash
which is subject to a Lien incurred in reliance on Section 20(g))".
(d) Section 9(d) of the U.S. Security Agreement is amended by adding
the words "or (z) a Specified Event of Default under the EDC Facility has
occurred and is continuing" in the fifth line of Section 8(d) immediately after
the word accelerated.
(e) Section 13 of the U.S. Security Agreement is amended by deleting
the words "and, if applicable, applied in accordance with the prepayment
provisions of the 2001 364-Day Agreements".
(f) Section 16 of the U.S. Security Agreement is amended by deleting
"Credit Agreements" where it appears in the penultimate sentence thereof and
replacing it with "5-Year Agreements, if they shall not have been Terminated, or
2% plus the overnight federal funds rate if the 5-Year Agreements shall have
been Terminated".
(g) Section 19 of the U.S. Security Agreement is amended by adding the
following sentence at the end of paragraph (a): "The Collateral Agent
acknowledges and agrees that, in taking such actions and exercising such powers,
it is acting as agent for each of the Banks and EDC".
(h) Section 19 of the U.S. Security Agreement is amended by (x)
deleting clause (ii) of the second sentence in paragraph (c) thereof in its
entirety and replacing it with "(ii) the Collateral Agent shall not be required
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers (x) which are expressly contemplated by the
Security
20
Documents and (y) which it has been instructed to exercise by the
Required Secured Banks (or EDC and such other number or percentage of Banks as
shall be necessary under the relevant circumstances) and", (y) inserting "to
which it is party" after "Loan Documents" in clause (iii) of the second sentence
of paragraph (c) thereof and (z) inserting "EDC," immediately before "the Banks"
in the first sentence of paragraph (h) thereof.
(i) Section 26 of the U.S. Security Agreement is amended by (x)
replacing the reference to "20(f)" therein with "Section 20(h)", (y) inserting
"or EDC" after "Bank" in the parenthetical in the second sentence and (z)
replacing the second occurrence of "Bank" in the second sentence with "Banks or
EDC, as the case may be.".
Section 11 . Consent to Amendments. Each Bank whose signature appears
on the consent pages to this Amendment hereby consents to the amendment of (i)
the U.S. Security Agreement set forth herein, (ii) the Canadian Security
Agreement set forth in Amendment No. 1 to the Canadian Security Agreement dated
as of the date hereof between NNL, NNI, the Subsidiaries party thereto and
JPMorgan Chase Bank, as collateral agent, a copy of which is attached hereto as
Annex A, (iii) certain Foreign Subsidiary Guarantees set forth in Amendment No.1
to those Foreign Subsidiary Guarantees between Nortel Networks (Ireland)
Limited, Nortel Networks (U.K.) Limited, Nortel Networks (Asia) Limited and
JPMorgan Chase Bank, as collateral agent, the form of which is attached hereto
as Annex E, (iv) certain Mortgages and Leasehold Mortgages substantially as set
forth in Annex F (in the case of Mortgages or Leasehold Mortgages with respect
to property located in the U.S.) or Annex G (in the case of Mortgages or
Leasehold Mortgages with respect to property located in Canada) and (v) certain
Quebec pledge agreements dated as of January 31, 2002, substantially as set
forth in Annex H. For the purpose of Section 11(iv), "MORTGAGES" and "LEASEHOLD
MORTGAGES" shall have the meaning set forth in the U.S. Security Agreement as
amended hereby.
Section 12 . Representations of NNL and NNI. (a) Each of NNL and NNI
represents and warrants that (i) the representations and warranties set forth in
Article 4 of the 5-Year Agreements (as defined in the U.S. Security Agreement as
amended hereby) will be true and correct as of the Security Amendment No. 1
Effective Date as defined in the U.S. Security Agreement as amended hereby and
(ii) no Default will have occurred and be continuing on such date. For the
purpose of this Section 12(a), "DEFAULT" means any condition or event which
constitutes an "Event of Default" (as defined in the U.S. Security Agreement as
amended hereby) or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default (as defined in the
U.S. Security Agreement as amended hereby).
(b) Each Lien Grantor represents and warrants that each of the
representations and warranties set forth in Sections 4 through 11 of the U.S.
21
Security Agreement is true as applied to such Lien Grantor on the date specified
therein. For the purpose of the foregoing sentence, references to "Drawdown
Date" shall be deemed to include a reference to the Security Amendment No. 1
Effective Date as defined in the U.S. Security Agreement as amended hereby.
(c) Each Lien Grantor represents and warrants that the information
contained in Section (A)(1) and (2) of the Perfection Certificates delivered by
such Lien Grantor pursuant to Section 4(i) of the U.S. Security Agreement, as
such information may have been amended or supplemented pursuant to new or
revised Perfection Certificates delivered to the Collateral Agent on or prior to
the Security Amendment No. 1 Effective Date (as defined in the U.S. Security
Agreement as amended hereby) is correct and complete as of such date.
Section 13 . Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
Section 14 . Counterparts; Effectiveness. (a) 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.
(b) This Amendment shall become effective as of the date on which the
Collateral Agent shall have received:
(i) duly executed counterparts hereof signed by each of the
Lien Grantors which are parties hereto, the Collateral Agent and the
Required Secured Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, the Collateral Agent
shall have received telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
(ii) evidence satisfactory to the Collateral Agent that no
loans are outstanding under the Credit Agreements set forth in Schedule
1 hereto (the "364-DAY AGREEMENTS") and no interest has accrued and is
unpaid thereunder;
(iii) evidence satisfactory to the Collateral Agent that all
fees and other amounts payable for the account of the banks and agents
party to the 364-Day Agreements including, to the extent invoiced prior
to such date, all out-of-pocket expenses (including, without
limitation, legal fees and expenses) required to be reimbursed or paid
by NNL or NNI thereunder, have been paid in full;
(iv) one or more opinions of counsel to the Company in form
and substance reasonably satisfactory to the Collateral Agent; and
22
(v) the filing of any amended financing statements required to
reflect the changes set forth in this Amendment, if reasonably
requested by the Collateral Agent or EDC.
(c) Upon the effectiveness of this Amendment, the commitments of the
banks under the 364-Day Agreements shall terminate in their entirely immediately
and automatically without further action by any party to the 364-Day Agreements.
23
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
NORTEL NETWORKS LIMITED
By:
--------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
NORTEL NETWORKS INC.
By:
-------------------------------------------
Name:
Title:
NORTEL NETWORKS HPOCS INC.
By:
-------------------------------------------
Name:
Title:
NORTEL NETWORKS OPTICAL COMPONENTS INC.
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS U.S. FINANCE INC.
By:
--------------------------------------------
Name:
Title:
24
NORTEL NETWORKS CAPITAL CORPORATION
By:
-------------------------------------------
Name:
Title:
QTERA CORPORATION
By:
-------------------------------------------
Name:
Title:
NORTEL GOVERNMENT SERVICES INC.
By:
-------------------------------------------
Name:
Title:
NORTHERN TELECOM INTERNATIONAL INC.
By:
------------------------------------------
Name:
Title:
NORTEL NETWORKS (CALA) INC.
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
25
JPMORGAN CHASE BANK, as
Collateral Agent
By:
-------------------------------------
Name:
Title:
26
BANKS
JPMORGAN CHASE BANK as Bank
By:
---------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:
-------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
-------------------------------------------
Name:
Title:
HSBC BANK PLC
By:
--------------------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK
BRANCH AND/OR CAYMAN
ISLANDS BRANCH
By:
--------------------------------------------
Name:
Title:
27
BNP PARIBAS
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By:
--------------------------------------------
Name:
Title:
By:
--------------------------------------------
Name:
Title:
BARCLAYS BANK PLC
By:
--------------------------------------------
Name:
Title:
28
