EXHIBIT 10.7
CONFORMED COPY
NNL FOREIGN PLEDGE AGREEMENT
dated as of
April 4, 2002
among
NORTEL NETWORKS LIMITED,
NORTEL NETWORKS INTERNATIONAL CORPORATION
and
JPMORGAN CHASE BANK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
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SECTION 1. Definitions ....................................................... 2
SECTION 2. Pledge of Equity Interest .........................................13
SECTION 3. General Representations, Warranties and Covenants..................15
SECTION 4. Additional Covenants ..............................................18
SECTION 5. Equity Interests ..................................................18
SECTION 6. Cash Collateral Accounts ..........................................19
SECTION 7. Operation of Cash Collateral Accounts .............................20
SECTION 8. Right to Vote Securities ..........................................20
SECTION 9. Certain Cash Distributions ........................................21
SECTION 10. Remedies Upon Event of Default or Specified Event of
Default .................................................................21
SECTION 11. Application of Proceeds ..........................................22
SECTION 12. Fees and Expenses ................................................25
SECTION 13. Authority to Administer Collateral ...............................25
SECTION 14. Limitation on Duty in Respect of Collateral ......................26
SECTION 15. General Provisions Concerning the Collateral Agent................26
SECTION 16. Termination of Pledges; Release of Collateral ....................29
SECTION 17. Additional Lien Grantors .........................................30
SECTION 18. Additional Secured Obligations ...................................31
SECTION 19. Notices ..........................................................32
SECTION 20. No Implied Waivers; Remedies Not Exclusive .......................33
SECTION 21. Successors and Assigns ...........................................33
SECTION 22. Amendments and Waivers ...........................................33
SECTION 23. Choice of Law ....................................................33
SECTION 24. Judgement Currency ...............................................34
SECTION 25. Severability .....................................................34
SCHEDULES:
SCHEDULE 1 Equity Interests in Material Subsidiaries Owned by Lien
Grantors
EXHIBITS:
EXHIBIT A Pledge Agreement Supplement
NNL FOREIGN PLEDGE AGREEMENT
AGREEMENT dated as of April 4, 2002 among NORTEL NETWORKS LIMITED (with
its successors, "NNL"), NORTEL NETWORKS
INTERNATIONAL CORPORATION ("NNIC") and JPMORGAN CHASE BANK, as Collateral Agent
(with its successors, the "COLLATERAL AGENT").
WHEREAS, NNL, as borrower, certain financial institutions and ▇.▇.
▇▇▇▇▇▇ Bank Canada, formerly known as The Chase Manhattan Bank successor by
merger to the ▇▇▇▇▇▇ Guaranty Trust Company of New York, Toronto Branch, as
Administrative Agent, are parties to a 364-Day Credit Agreement dated as of
April 12, 2000 (as amended from time to time, the "2000 NNL 364-DAY AGREEMENT");
and
WHEREAS, NNL, as borrower, certain financial institutions, Credit
Suisse First Boston ("CSFB"), as Syndication Agent, and JPMorgan Chase Bank,
formerly known as The Chase Manhattan Bank successor by merger to the ▇▇▇▇▇▇
Guaranty Trust Company of New York, Toronto Branch, as Administrative Agent are
parties to a 5-Year Credit Agreement dated as of April 12, 2000 (as amended from
time to time, the "2000 NNL 5-YEAR AGREEMENT"); and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions, and JPMorgan Chase Bank, formerly known as The Chase Manhattan
Bank successor by merger to the ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent, are parties to a 364-Day Credit Agreement dated as of
April 12, 2000 (as amended from time to time, the "2000 NNI 364-DAY AGREEMENT");
and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions and JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank
successor by merger to the ▇▇▇▇▇▇ Guaranty Trust Company of New York, as
Administrative Agent, are parties to a 5-Year Credit Agreement dated as of April
12, 2000 (as amended from time to time, the "2000 NNI 5-YEAR AGREEMENT"); and
WHEREAS, NNL, as borrower, certain financial institutions, CSFB, as
Syndication Agent, and JPMorgan Chase Bank formerly known as The Chase Manhattan
Bank, Toronto Branch, as Administrative Agent, are parties to a 364-Day Credit
Agreement dated as of June 14, 2001 (as amended from time to time, the "2001 NNL
364-DAY AGREEMENT"); and
WHEREAS, NNI, as borrower, NNL, as guarantor, certain financial
institutions, CSFB, as Syndication Agent, and JPMorgan Chase Bank formerly known
as The Chase Manhattan Bank, as Administrative Agent, are parties to a 364-Day
Credit Agreement dated as of June 14, 2001 (as amended from time to time, the
"2001 NNI 364-DAY Agreement"); and
WHEREAS, the parties hereto have agreed that this Agreement shall be in
effect only during any Collateral Period (as defined below); and
WHEREAS, pursuant to the ▇▇▇▇ ▇▇▇ 364-Day Agreement and the 2001 NNI
364-Day Agreement (together, the "2001 364-DAY AGREEMENTS"), on the first day of
any Collateral Period NNL and any Canadian Subsidiary of NNL (as defined below)
are required to enter into a Foreign Pledge Agreement in the form hereof;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions.
(a) Additional Definitions. The following additional terms, as used
herein, have the following meanings:
"1988 INDENTURE" means the Indenture dated as of November 30, 1988
among NTL, and its successors, the subsidiary guarantors party thereto and The
Toronto-Dominion Bank Trust Company as trustee, as amended from time to time.
"1996 INDENTURE" means the Indenture dated as of February 15, 1996
among NTL, and its successors, the subsidiary guarantors party thereto and The
Bank of New York as trustee, as amended from time to time.
"2000 INDENTURE" means the Indenture dated as of December 15, 2000
among 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.
"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.
"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.
"2008 NOTES" means the 4.25% Convertible Senior Notes due 2008 issued
by NNC and guaranteed by NNL pursuant to the 2001 Indenture.
"2023 NOTES" means the 6 7/8% Notes due 2023 issued by NTL pursuant to
the 1988 Indenture.
"2026 NOTES" means the 7.875% Notes due 2026 issued by Northern Telecom
Capital Corporation and guaranteed by NTL pursuant to the 1996 Indenture.
"ADDITIONAL COLLATERAL DATE" means the first date on which the failure
to satisfy the Additional Collateral Requirement with respect to any Additional
Subsidiary would constitute an Event of Default under any Credit Agreement.
"ADDITIONAL COLLATERAL REQUIREMENT" means, with respect to any
Additional Subsidiary, the requirement set forth in any Credit Agreement that
either (x) any Equity Interest in such Additional Subsidiary owned by NNL or any
Canadian Subsidiary of NNL be added to the collateral subject to a pledge
agreement in form and substance reasonably satisfactory to the Collateral Agent
or (y) such Additional Subsidiary deliver a Foreign Subsidiary Guarantee.
"ADDITIONAL SUBSIDIARY" means any Subsidiary formed or acquired on or
after February 28, 2002 (1) which is a Material Subsidiary, (2) which is a
Subsidiary of NNL, (3) which is not a Subsidiary of NNI, (4) which is not a U.S.
Subsidiary and (5) with respect to which the Additional Collateral Requirement
is required to be satisfied; provided that on and after the Refinancing
Effective Date with respect to any Credit Agreement, "Additional Subsidiary" for
the purpose of this Agreement will also include any Subsidiary formed or
acquired on or after the Refinancing Effective Date with respect to which the
Additional Collateral Requirement is required to be satisfied (for the avoidance
of doubt, if with respect to any Subsidiary, the Additional Collateral
Requirement shall have been met pursuant to any Security Document other than the
Pledge Documents, then such Subsidiary shall not be an Additional Subsidiary for
the purpose hereof.)
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"ASSET SALE" means any "Asset Sale" referred to in Section 5.13(g) of
the 2001 364-Day Agreements; provided that, on and after the Refinancing
Effective Date with respect to any Credit Agreement, "Asset Sale" for purposes
of this Agreement will also include any "asset sale" (or similar term) as
defined in any Replacement Agreement with respect to such Credit Agreement which
is stated to constitute an Asset Sale for the purpose of this Agreement.
"BANK TERMINATION DATE" means the first date on which all of the
following conditions are satisfied: (i) all commitments to extend credit under
any Credit Agreement shall have expired or been terminated, (ii) all
Non-Contingent Secured Obligations arising under any of the Credit Agreements
shall have been paid in full, and (iii) no Contingent Secured Obligation shall
remain outstanding under any of the Credit Agreements, other than any indemnity
claims that have not been asserted on or prior to such date.
"BANKS" means the "Banks" under each of the Credit Agreements.
"BONDS" means, collectively, the 2002 Notes, the 2003 Notes, the 2006
Notes, the 2006 NNCC Notes, the 2008 Notes, the 2023 Notes and the 2026 Notes.
"BUSINESS DAY" means a day on which chartered banks are open for
over-the-counter business in the jurisdiction of incorporation or principal
place of business of the applicable Lien Grantor and excludes Saturdays, Sundays
and statutory holidays therein; provided that for the purpose of Section 4(f),
"Business Day" shall mean a day on which chartered banks are open for
over-the-counter business in New York, Ontario and the principal place of
business of the applicable Lien Grantor and the applicable issuer of the Equity
Interest being Pledged and excludes Saturdays, Sundays and statutory holidays
therein.
"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.
"CANADIAN SUBSIDIARY" means, with respect to any Person, any
Subsidiary (which may be a corporation, limited liability company, partnership
or other legal entity) organized under the laws of Canada or one of the
Provinces or Territories of Canada.
"CAPITAL MARKETS EVENT" has the meaning set forth in any Credit
Agreement.
"CASH COLLATERAL ACCOUNT" has the meaning given to it in Section 6.
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"CASH DISTRIBUTIONS" means dividends, interest and other distributions
and payments (including proceeds of liquidation, sale or other disposition) made
or received in cash upon or with respect to any Collateral.
"COLLATERAL" means all property, whether now owned or hereafter
acquired, on which a Lien is granted or purports to be granted to the Collateral
Agent pursuant to the Pledge Documents. When used with respect to a specific
Lien Grantor, the term "Collateral" means any of the foregoing Collateral in
which such Lien is granted or is purported to be granted by such Lien Grantor.
"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.
"CONTINGENT SECURED OBLIGATION" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including any Secured Obligation that is: (i) an obligation under a Designated
Hedging Agreement to make payments that cannot be quantified at such time, (ii)
any other obligation (including any guarantee) that is contingent in nature at
such time or (iii) an obligation to provide collateral to secure any of the
foregoing types of obligations.
"CREDIT AGREEMENTS" means the NNI Credit Agreements and the NNL Credit
Agreements.
"DEBT RATING" means any rating by Moody's or S&P with respect to the
senior unsecured non-credit enhanced long-term debt of NNL.
"DESIGNATED BANK DEBT" means any indebtedness for borrowed money
designated pursuant to (and in accordance with the terms of) (i) Section 18(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 indebtedness constituting a
Capital Markets Event designated pursuant to (and in accordance with the terms
of) (i) Section 18(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 22(a) of the U.S.
Security Agreement or(ii) Sections 21(a) of the Canadian Security Agreement.
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"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 Agreement 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.
"EQUITY INTEREST" means (i) in the case of a corporation, any shares of
its capital stock, (ii) in the case of a limited liability company, any
membership interest therein, (iii) in the case of a partnership, any partnership
interest (whether general or limited) therein, (iv) in the case of any other
business entity, any participation or other interest in the equity or profits
thereof or (v) any warrant, option, interest or other right to acquire, in any
form whatsoever, any Equity Interest described in this definition.
"EVENT OF DEFAULT" means an "Event of Default" under any Credit
Agreement.
"FOREIGN SUBSIDIARY GUARANTEE" means a guarantee in form and substance
reasonably satisfactory to the Collateral Agent pursuant to which a Material
Subsidiary of NNI or NNL guarantees, among other things, the obligations of NNL
under the Loan Documents.
"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.
"ILLIQUID COLLATERAL" means all Collateral other than the Liquid
Collateral.
"INDENTURE TRUSTEES" means (i) The Toronto-Dominion Bank Trust Company,
as trustee under the 1988 Indenture, (ii) The Bank of New York, as trustee under
the 1996 Indenture, (iii) Citibank, N.A., as trustee under the 2000 Indenture
and (iv) Bankers Trust Company, as trustee under the 2001 Indenture and their
respective successors in such capacity.
"INDENTURES" means, collectively, the 1988 Indenture, the 1996
Indenture, the 2000 Indenture and the 2001 Indenture.
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"INVESTMENT GRADE DATE" means the first day when the Debt Rating is BBB
(stable outlook) or higher by S&P and Baa2 (stable outlook) or higher by
Moody's.
"LIEN" means, with respect to any asset, (i) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (ii) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (iii) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LIEN GRANTORS" means NNL, Nortel Networks International Corp and the
Subsidiary Lien Grantors.
"LIQUID COLLATERAL" means the (i) Cash Collateral Accounts and (ii) all
Cash Distributions on the Pledged Equity Interests.
"LIQUID INVESTMENT" means a Permitted Investment (other than commercial
paper) that matures within 30 days after it is first included in the Collateral.
"LOAN DOCUMENTS" means the Credit Agreements (including the notes
thereunder) and the Security Documents.
"MATERIAL SUBSIDIARY" has the meaning set forth in the ▇▇▇▇ ▇▇▇ 364-Day
Agreement.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NNC" means Nortel Networks Corporation, a Canadian corporation, and
its successors.
"NNFI" means Nortel Networks U.S. Finance Inc.
"NNFI HEDGING OBLIGATIONS" 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
7
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 ▇▇▇▇ ▇▇▇ 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 COMPANIES" means, collectively, NNL, any of its Subsidiaries
(including without limitation NNI and any NNI Subsidiaries) and their respective
affiliates.
"NNL CREDIT AGREEMENTS" means the ▇▇▇▇ ▇▇▇ 364-Day Agreement, the ▇▇▇▇
▇▇▇ 5-Year Agreement and the ▇▇▇▇ ▇▇▇ 364-Day Agreement.
"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.
"NNL SUBSIDIARY" means any Subsidiary of NNL other than NNI or any
Subsidiary of NNI.
"NON-CONTINGENT SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
8
"NTL" means Northern Telecom Limited, a Canadian corporation, and its
successors.
" 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
highest credit rating obtainable from S&P, Moody's 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 the Amendment
No. 2 Effective Date (as defined in the ▇▇▇▇ ▇▇▇ 364-Day
Agreement).
"PERMITTED LIENS" means (i) the Transaction Liens and (ii) any other
Liens on the Collateral permitted to be created or assumed or to exist pursuant
to each Credit Agreement.
"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.
9
"PLEDGE" means the Liens granted by the Lien Grantors under the Pledge
Documents.
"PLEDGE AGREEMENT SUPPLEMENT" means a Pledge Agreement
Supplement, substantially in the form of Exhibit A, signed and delivered to the
Collateral Agent for the purpose of adding a Subsidiary as a party hereto
pursuant to Section 17 and/or adding additional property to the Collateral.
"PLEDGE DOCUMENTS" means this Agreement, the Pledge Agreement
Supplement, and all other supplemental or additional security agreements,
control agreements or similar instruments required to be delivered hereunder.
"PLEDGED", when used in conjunction with any type of asset, means at
any time an asset of such type that is included (or that creates rights that are
included) in the Collateral at such time pursuant to the terms of this
Agreement. For example, "Pledged Equity Interest" means an Equity Interest that
is included in the Collateral at such time.
"POST-PETITION INTEREST" means, with respect to any obligation of any
Person, any interest that accrues after the commencement of any case,
proceeding, petition, filing, assignment or other action relating to the
bankruptcy, insolvency or reorganization of such Person (or would accrue but for
the operation of applicable bankruptcy or insolvency laws), whether or not such
interest is allowed or allowable as a claim in any such proceeding.
"PROCEEDS" means all proceeds of, and all other profits, products,
rents or receipts, in whatever form, arising from the collection, sale,
exchange, assignment, or other disposition of, or other realization upon, any
Collateral, including all claims of the relevant Lien Grantor against third
parties for loss of, damage to, or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect
of, any Collateral and any condemnation or requisition payments.
"RATIO" means, with respect to any Secured Bond Obligation, at any
time, the ratio of (i) the principal amount of such Secured Bond Obligation to
(ii) the principal amount outstanding under the Credit Agreements at such time.
"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.
10
"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 Agreement 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
364-Day Agreements and, solely if such date occurs on or after the Refinancing
Effective Date with respect to any Credit Agreement, the Banks party to the
Replacement Agreement with respect to any Credit Agreement (subject to any
exclusion set forth in such Credit Agreement or Replacement 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
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SECURED AGREEMENT", when used with respect to any Secured Obligation
of any Lien Grantor, refers to each instrument, agreement or other document that
sets forth obligations of each Lien Grantor and/or rights of the holder with
respect to such Secured Obligation.
"SECURED BOND OBLIGATIONS" means, at any date, the NNL Bond Obligations
and any Designated Capital Markets Debt containing provisions requiring that
such Designated Capital Markets Debt be equally and ratably secured at such date
with the debt under the Credit Agreements.
"SECURED OBLIGATIONS" means (i) the NNL Bank Obligations, (ii) the NNL
Bond Obligations, (iii) the NNL Hedging Obligations, (iv) the NNL Guaranteed
Obligations and (v) any Designated Capital Markets Debt of NNL.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITY DOCUMENTS" means this Agreement, the Canadian Security
Agreement, the U.S. Security Agreement and all supplemental or additional
security agreements or similar instruments delivered pursuant thereto or
pursuant
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to any NNL Credit Agreement or NNI Credit Agreement (other than any such
agreement or instrument with respect to real property).
"SHARES" means the 499 nominative non endorsable shares of $100 nominal
value each and with right to one vote per share, representing 99.8% of the
capital stock of Nortel Networks Argentina S.A. owned by NNL and the 1
nominative non endorsable share of $100 nominal value and with right to one
vote, representing 0.02% of the capital stock of Nortel Networks Argentina owned
by Nortel Networks International Corporation.
"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 Agreement 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 if Default" for purposes of this Agreement.
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of NNL.
"SUBSIDIARY LIEN GRANTOR" means each Subsidiary of NNL listed on the
signature pages hereof under the caption "Subsidiary Lien Grantor" and each
Subsidiary of NNL that shall, at any time after the date hereof, become a
"Subsidiary Lien Grantor" pursuant to Section 17.
"TOTAL COLLATERAL" means the "Collateral" as defined in any Credit
Agreement (assuming, for this purpose, that Collateral includes "Foreign
Subsidiary Guarantees" as defined in any Credit Agreement in effect at the time
of determination).
"TRANSACTION LIENS" means the Liens granted by the "Lien Grantors"
under, and as defined in, any of the Security Documents.
"U.S. SECURITY AGREEMENT" means the U.S. Guarantee and Security
Agreement dated as of the date hereof among NNL, NNI, JPMorgan Chase Bank and
the Subsidiaries party thereto.
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"U.S. SUBSIDIARY" means, with respect to any Person, any Subsidiary
(which may be a corporation, limited liability company, partnership or other
legal entity) organized under the laws of the United States or any State
thereof.
(c) 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.
(d) Terms Generally. The definitions of terms herein apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to be
followed by the phrase "WITHOUT LIMITATION". The word "WILL" shall be construed
to have the same meaning and effect as the word "SHALL". Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "HEREIN", "HEREOF" and "HEREUNDER", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to
Sections, Exhibits and Schedules shall be construed to refer to Sections of, and
Exhibits and Schedules to, this Agreement and (v) the word "PROPERTY" shall be
construed to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 2. Pledge of Equity Interest. (a) Each Lien Grantor, in order
to secure the Secured Obligation, creates in favor of the Collateral Agent a
senior first priority pledge pursuant to section 580 and subsequent sections of
the Commercial Code and grant to the Collateral Agent for the equal and ratable
benefits of the Secured Parties, effective on the first day of any Collateral
Period a continuous security interest on the Shares including all proceeds
renewals, accretions and substitutions thereof, as the case may be, whether now
owned or existing or hereafter acquired or arising and regardless of where
located. Pursuant to section 584 of the commercial code, the Lien Grantor hereby
delivers the Shares to the Collateral Agent and the Collateral Agent receives
such Shares,
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receipt whereof is hereby acknowledged. The Collateral Agent shall keep the
Shares until the Pledge is cancelled. The Pledge is granted on:
(i) all Equity Interests in any Subsidiary held directly by
such Lien Grantor and all of its rights and privileges with respect
thereto, and all income and profits thereon, all interest, dividends
and other payments and distributions with respect thereto;
(ii) all the capital contributions made and all and any of the
rights that it may now have or acquired in the future as regards the
issuer of the Shares, as a result of the capital contributions made;
(iii) such Lien Grantor's ownership interest in its Cash
Collateral Account and all cash held therein from time to time; and
(iv) all Proceeds of the Collateral described in the foregoing
clauses (i) and (ii);
The security interests granted by each Lien Grantor pursuant to this Section
2(a) shall terminate in accordance with Section 16.
(b) The Pledges are granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or transfer or in any way affect
or modify, any obligation or liability of any Lien Grantor with respect to any
of the Collateral or any transaction in connection therewith.
(c) If the Collateral is realized upon and the security interest in
the Collateral is not sufficient to satisfy all Secured Obligations, each Lien
Grantor acknowledges and agrees that such Lien Grantor shall continue to be
liable for any Secured Obligations remaining outstanding and Collateral Agent
shall be entitled to pursue full payment thereof.
(d) Each Lien Grantor and the Collateral Agent hereby acknowledge that
value has been given, such Lien Grantor has rights in the Collateral or, with
respect to any after acquired Collateral, will have rights in such Collateral
when so acquired.
SECTION 3. General Representations, Warranties and Covenants. Each
Lien Grantor represents and warrants, at the times set forth below, and
covenants, where indicated below, as follows.
(a) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that at such time, such Lien
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Grantor is a corporation duly organized, incorporated, amalgamated or continued,
as the case may be, and validly existing under the laws of its jurisdiction of
organization, incorporation, amalgamation or continuance, as the case may be, of
which such Lien Grantor shall on or prior to such date have given written notice
to the Collateral Agent.
(b) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, that Schedule 1 lists all Pledged Equity Interests in
Material Subsidiaries owned by such Lien Grantor on the date of delivery of
Schedule 1 and held directly by such Lien Grantor (i.e., not through a
Subsidiary, a securities intermediary or any other Person).
(c) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, that all Pledged Equity Interests owned by such Lien
Grantor at such time are owned by it free and clear of any Lien. Such Lien
Grantor represents and warrants, on the first day of the first Collateral Period
and on each Drawdown Date, that all shares of capital stock included in such
Pledged Equity Interests owned by such Lien Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. Such Lien Grantor
covenants that it will ensure that none of the Pledged Equity Interests owned by
such Lien Grantor are subject to any option to purchase or similar right of any
Person. Such Lien Grantor covenants that it will not become a party to or
otherwise bound by any agreement (except the Credit Agreements, the Security
Documents and the Indentures) which restricts in any manner the rights of any
present or future holder of any Pledged Equity Interest owned by such Lien
Grantor.
(d) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that at such time (i) no
financing statement, financing change statement, security agreement, mortgage or
similar or equivalent document or instrument covering all or part of the
Collateral owned by such Lien Grantor is on file or of record in any
jurisdiction in which such filing or recording would be effective to perfect or
record a Lien on such Collateral, except financing statements, financing change
statements, mortgages or other similar or equivalent documents with respect to
Permitted Liens and (ii) no Collateral owned by such Lien Grantor is in the
possession or under the control of any other Person having a claim thereto or
security interest therein, other than a Permitted Lien.
(e) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, that, when the actions which are required to be taken
in order to create and perfect a Pledge (make this Pledge enforceable against
the Lien Grantor and third parties) with respect to any Collateral, including
recording of the Pledge on the stock certificates of the Collateral, on the
stock ledgers of the
15
issuers thereof and the delivery of the stock certificates evidencing the
Collateral, have been taken, then at such time such Pledge (i) will have been
validly created, (ii) attaches to each item of such Collateral on such date (or,
if such Lien Grantor first obtains rights thereto on a later date, on such later
date), (iii) when so attached, will secure all the Secured Obligations of such
Lien Grantor and (iv) will constitute a perfected security interest in such
Collateral owned by such Lien Grantor prior to all Liens and rights of others
therein, except Permitted Liens.
(f) Each Lien Grantor represents and warrants, on each Drawdown Date,
that on such date the Pledges (i) have been validly created, (ii) attached to
each item of such Collateral on such date (or, if such Lien Grantor first
obtains rights thereto on a later date, on such later date), (iii) when so
attached, secure all the Secured Obligations of such Lien Grantor and (iv) will
constitute a perfected security interests in the Collateral owned by such Lien
Grantor prior to all Liens and rights of others therein, except Permitted Liens;
provided that (i) if this representation and warranty shall not be true on any
Drawdown Date with respect to any Equity Interests as a result of the Collateral
Agent not performing in a timely manner its obligations under Section 5(d) with
respect to such Equity Interests prior to such Drawdown Date, the representation
with respect to such Equity Interests shall be deemed required to be made not on
such Drawdown Date but on the fifteenth Business Day following compliance by the
Collateral Agent with such Section with respect to such Equity Interests and
(ii) if the Collateral Agent shall have determined in its good faith discretion
that creating or perfecting a security interest in any Collateral (making such
security interest enforceable against the Lien Grantor and third parties) by
such Drawdown Date is impossible, impracticable or unreasonably burdensome, the
Collateral Agent may, in its good faith discretion, consent to a waiver of
compliance with this representation and warranty on such Drawdown Date (which
waiver (x) may at the option of the Collateral Agent be limited in duration, (y)
shall in any event be granted and be unlimited in duration if such Collateral is
De Minimus Collateral). "DE MINIMUS COLLATERAL" means, at any Drawdown Date, any
Equity Interests so long as such Equity Interests, together with all other
Equity Interests that are proposed to constitute "De Minimus Collateral" on such
Drawdown Date, 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 the
Banks or made publicly available. Without limiting any other 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 Minimus Collateral are validly
created and perfected (made enforceable against the Lien Grantor and third
parties).
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(g) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that except for (i) the
filing of such PPSA financing statements or financing change statements and the
publication of the Pledges in the RPMRR, if applicable, and (ii) recording of
the Pledge on the stock certificates of the Collateral, on the stock ledgers of
the issuers thereof and the delivery of the stock certificates evidencing the
Collateral, no registration, recordation or filing with or consent or approval
of any governmental body, agency or official is required in connection with the
execution or delivery of the Pledge Documents or is necessary for the validity
or enforceability thereof or for the perfection thereof (including, if
applicable, under the PPSA) or the due recordation of the Pledges granted by
such Lien Grantor or for the enforcement of the Pledges granted by such Lien
Grantor (it being understood that any disposition of Collateral constituting
securities is subject to applicable securities laws.)
(h) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that, at such time, no
Pledged Equity Interest is held through a securities intermediary.
(i) Each Lien Grantor represents and warrants that, on the first day
of the first Collateral Period and on each Drawdown Date, no Equity Interest in
any Subsidiary of such Lien Grantor which is (1) a Material Subsidiary, (2) not
a Subsidiary of NNI, (3) not a Canadian Subsidiary, (4) not a U.S. Subsidiary
and (5) not party to a Foreign Subsidiary Guarantee which is in full force and
effect on such date is directly held by any NNL Company other than a Lien
Grantor or a "Lien Grantor" as defined in any Security Document pursuant to
which such "Lien Grantor" has granted a lien (subject to the exceptions, if any,
set forth in and to the extent required by such Security Documents) on all of
the Equity Interest it holds in such Subsidiary.
SECTION 4. Additional Covenants.. Each Lien Grantor covenants that such
Lien Grantor will not effect any Asset Sale with respect to any Collateral if at
such time a Specified Event of Default has occurred and is continuing.
SECTION 5. Equity Interests. Each Lien Grantor represents and warrants,
at the times set forth below, and each Lien Grantor and, with respect to Section
5(d) only, the Collateral Agent, covenants, where indicated below, as follows:
(a) Certificated Securities. On the first day of the first Collateral
Period and on each Drawdown Date, such Lien Grantor represents and warrants
that, as of such date, such Lien Grantor has delivered to the Collateral Agent
as Collateral hereunder all certificates representing any Pledged certificated
Securities
17
("PLEDGED CERTIFICATED SECURITIES") owned as of such date by such Lien Grantor.
Such Lien Grantor covenants that whenever such Lien Grantor acquires any
certificate representing a Pledged Certificated Security described in the
immediately preceding sentence, such Lien Grantor will as promptly as
practicable deliver such certificate to the Collateral Agent as Collateral
hereunder.
(b) Perfection as to Certificated Securities. Such Lien grantor
represents and warrants on the first day of the Collateral Period and on each
Drawdown Date, that to the extent perfection is governed by the laws of the
Republic of Argentina, the Pledge of the Pledged Certificated Securities is
perfected by (a) execution of this Agreement: (b) possession of the Certificated
Securities by the Collateral Agent; (c) notification by the Lien Grantors to the
issuer of the Pledged Certificated Securities regarding execution of this Pledge
Agreement and the authority conveyed to the Collateral Agent to notify the
issuer of the Pledged Certificated Securities of the need to register the Pledge
on the Pledged Certificated Securities and on the corporate stock ledger on the
first day of the Collateral Period; (d) effective notification by the Collateral
Agent to the issuer of the Pledged Certificated Securities of the need to
register the Pledge on the Pledged Certificated Securities and on the corporate
stock ledger on the first day of the Collateral Period and (e) registration by
the issuer of the Pledged Certificated Securities of the Pledge on the Pledged
Certificated Securities on such issuer's stock ledger.
(c) Delivery of Pledged Certificates. Each Lien Grantor covenants that
all Pledged Certificates, when delivered to the Collateral Agent, will be in
form and substance reasonably satisfactory to the Collateral Agent.
(d) Further Assurances. The Lien Grantor covenants that it will, and
authorizes the Collateral Agent to, at the Lien Grantor's expense and in such
manner and form as the Collateral Agent may reasonably require, execute,
deliver, file and record any financing statement, financing change statement,
specific assignment or other paper and take all other action and enter into such
other agreements as may be necessary or desirable or that the Collateral Agent
may reasonably request, in order to create, preserve, perfect or validate any
Pledge or to enable the Collateral Agent to exercise and enforce its rights
hereunder with respect to any of the Collateral. Upon request of any Lien
Grantor and receipt by the Collateral Agent of evidence reasonably satisfactory
to it of the need for such action, the Collateral Agent shall deliver to such
Lien Grantor any stock certificates evidencing any Pledged Equity Interests for
the sole purpose of perfecting the Pledge with respect thereto.
SECTION 6. Cash Collateral Accounts. (a) If and when required for
purposes hereof, the Collateral Agent will establish with respect to each Lien
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Grantor an account (its "CASH COLLATERAL ACCOUNT"), in the name of the
applicable Lien Grantor maintained at a bank or financial institution acceptable
to the Collateral Agent. The Cash Collateral Accounts shall be pledged to, and
subject to the control of, the Collateral Agent in a manner satisfactory to the
Collateral Agent. Such Lien Grantor hereby pledges and grants to the Collateral
Agent as security for its Secured Obligations a security interest in all amounts
held in the Cash Collateral Account from time to time and all Proceeds thereof.
Each Cash Collateral Account shall be operated as provided in this Section 7 and
Section 8 and subject to the terms of the Civil Code.
(b) The Collateral Agent shall deposit the following amounts, as and
when received by it, in each Lien Grantor's Cash Collateral Account: (i) each
Cash Distribution required by Section 9 to be deposited therein (ii) and each
amount realized or otherwise received by the Collateral Agent with respect to
assets of such Lien Grantor upon any exercise of remedies pursuant to any Pledge
Document upon the occurrence and during the continuance of (x) with respect to
Illiquid Collateral, an Event of Default and (y) with respect to Liquid
Collateral, a Specified Event of Default.
(c) The Collateral Agent shall maintain such records and/or establish
such sub-accounts as shall be required to enable it to identify the amounts held
in each Cash Collateral Account from time to time pursuant to Section 6(b).
(d) Unless (x) an Event of Default shall have occurred and be
continuing and the Required Secured Banks shall have instructed the Collateral
Agent to stop withdrawing amounts from the Cash Collateral Accounts pursuant to
this subsection 6(d) or (y) the maturity of any of the Bonds or the indebtedness
outstanding under the Credit Agreements shall have been accelerated, any Cash
Distributions or other amounts deposited in the Cash Collateral Account shall,
at the relevant Lien Grantor's request, (A) be withdrawn and applied to pay
Secured Obligations that are then due and payable or (B) if no Event of Default
has occurred and is continuing, be withdrawn and returned to such Lien Grantor.
SECTION 7. Operation of Cash Collateral Accounts. (a) All Cash
Distributions received with respect to Permitted Investments held in a Cash
Collateral Account shall be deposited therein promptly upon receipt thereof.
(b) So long as no Specified Event of Default shall have occurred and be
continuing, funds held in any Cash Collateral Account may, until withdrawn, be
invested and reinvested in Permitted Investments; provided that if a Specified
Event of Default shall have occurred and be continuing, the Collateral Agent may
select such Permitted Investments.
19
(c) If a Specified Event of Default shall have occurred and be
continuing, the Collateral Agent may (i) retain all cash and investments then
held in any Cash Collateral Account, (ii) liquidate any or all investments held
therein and/or (iii) withdraw any amounts held therein and apply such amounts as
provided in Section 11.
(d) If a Specified Event of Default shall have occurred and be
continuing, and immediately available cash on deposit in any Cash Collateral
Account is not sufficient to make any distribution or withdrawal to be made
pursuant hereto, the Collateral Agent will cause to be liquidated, as promptly
as practicable, such investments held in or credited to such Cash Collateral
Account as shall be required to obtain sufficient cash to make such distribution
or withdrawal and, notwithstanding any other provision hereof, such distribution
or withdrawal shall not be made until such liquidation has taken place.
SECTION 8. Right to Vote Securities. (a) Unless an Event of Default
shall have occurred and be continuing, each Lien Grantor will have the right,
from time to time, to vote and to give consents, ratifications and waivers with
respect to any Pledged Equity Interest owned by it and the Collateral Agent
will, upon receiving a written request from such Lien Grantor, promptly deliver
to such Lien Grantor or as specified in such request such proxies, powers of
attorney, consents, ratifications and waivers in respect of any such Pledged
Equity Interest that is registered in the name of the Collateral Agent or its
nominee, in each case as shall be specified in such request and be in form and
substance reasonably satisfactory to the Collateral Agent. Unless an Event of
Default shall have occurred and be continuing, the Collateral Agent will have no
right to take any action which the owner of a Pledged Equity Interest is
entitled to take with respect thereto, except the right to receive payments and
other distributions to the extent provided herein.
(b) If an Event of Default shall have occurred and be continuing, the
Collateral Agent will have the right to the extent permitted by law to vote, to
give consents, ratifications and waivers and to take any other action with
respect to the Pledged Equity Interests, with the same force and effect as if
the Collateral Agent were the absolute and sole owner thereof, and each Lien
Grantor will take all such action as the Collateral Agent may reasonably request
from time to time to give effect to such right.
SECTION 9. Certain Cash Distributions. Cash Distributions with respect
to Permitted Investments held in a Cash Collateral Account shall be deposited
and held therein, or withdrawn therefrom, as provided in Section 6 and Section
7. If a Specified Event of Default shall have occurred and be continuing, Cash
Distributions (other than amounts less than $3,000,000) with respect to any
Pledged Equity Interest (whether held in the name of a Lien Grantor or in the
name of the Collateral Agent or its nominee) shall be deposited, as soon as
20
practicable upon receipt thereof, in a "Pledged Deposit Account" (as defined in
the Canadian Security Agreement) of the relevant Lien Grantor if such account
exists at such time and otherwise in a Cash Collateral Account (provided that if
the Collateral Agent has not established at such time a Cash Collateral Account
with respect to such Lien Grantor, such Lien Grantor shall be required to
deposit such Cash Distributions as soon as practicable after such an account is
established) and, if applicable, applied in accordance with the prepayment
provisions of the 2001 364-Day Agreements and any other applicable Credit
Agreements.
SECTION 10. Remedies Upon Event of Default or Specified Event of
Default. If (x) with respect to Illiquid Collateral, an Event of Default shall
have occurred and be continuing, or (y) with respect to Liquid Collateral, a
Specified Event of Default shall have occurred and be continuing, the Collateral
Agent may exercise (or cause its sub-agents to exercise) any or all of the
remedies available to it (or to such sub-agents) under the Pledge Documents with
respect to Illiquid Collateral or Liquid Collateral, as applicable. Without
limiting the generality of the foregoing, if (x) with respect to Illiquid
Collateral, an Event of Default shall have occurred and be continuing, or (y)
with respect to Liquid Collateral, a Specified Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise on behalf of the
Secured Parties all the rights of a secured party under the Republic of
Argentina (including the ▇▇▇▇▇▇▇ de Valores de Buenos Aires S.A.), with respect
to Illiquid Collateral or Liquid Collateral, as applicable, and, in addition,
the Collateral Agent may, to the maximum extent permitted by applicable law, if
a Specified Event of Default shall have occurred and be continuing, without
being required to give any notice, except as herein provided or as may be
required by mandatory provisions of law, withdraw all cash held in the Cash
Collateral Accounts and apply such cash as provided in Section 11 and, if there
shall be no such cash or if such cash shall be insufficient to pay all the
Secured Obligations in full, take possession of, sell, or otherwise dispose of
(x) if an Event of Default has occurred and is continuing, the Illiquid
Collateral or any part thereof and (y) if a Specified Event of Default shall
have occurred and be continuing, the Liquid Collateral or any part thereof.
Notice of any such sale or other disposition shall be given to the relevant Lien
Grantor as required by Section 13.
SECTION 11. Application of Proceeds. (a) The Collateral Agent may (i)
if a Specified Event of Default shall have occurred and be continuing, apply any
cash held in the Cash Collateral Accounts and (ii) if (x) with respect to
Illiquid Collateral, an Event of Default shall have occurred and be continuing
or (y) with respect to Liquid Collateral, a Specified Event of Default shall
have occurred and be continuing, apply the proceeds of any sale or other
disposition of all or any part of the Illiquid Collateral or Liquid Collateral,
as applicable, in either case in the following order of priorities:
21
(1) to pay the expenses of such sale or other disposition,
including reasonable compensation to agents of and counsel for
the Collateral Agent, and all reasonable expenses, liabilities
and advances incurred or made by the Collateral Agent in
connection with the Security Documents, and any other amounts
then due and payable to the Collateral Agent pursuant to
Section 12 or any amounts owing to any Indenture Trustee under
(x) Section 5.05 of each of the 1988 Indenture, the 1996
Indenture and the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and (y) Section 6.10 of the
2001 Indenture;
(2) to pay the due and unpaid principal, face amount or
termination amount of the Secured Obligations ratably, on the
basis of the principal or face amount of such Secured
Obligations (or, with respect to Contingent Secured
Obligations, provide for the payment thereof pursuant to
Section 11(b)), until payment in full of the principal of all
Secured Obligations shall have been made (or, with respect to
Contingent Secured Obligations, so provided for);
(3) to pay ratably the due and unpaid interest accrued on the
Secured Obligations in accordance with the provisions of the
applicable Secured Agreement, as applicable;
(4) to pay all other due and unpaid Secured Obligations and
all due and unpaid commitment fees and participation fees
under each Credit Agreement ratably (or, with respect to
Contingent Secured Obligations, provide for the payment
thereof pursuant to Section 11(b)), until payment in full of
all such other Secured Obligations and fees shall have been
made (or, with respect to Contingent Secured Obligations, so
provided for); and
(5) to pay to the relevant Lien Grantor, or as a court of
competent jurisdiction may direct, any surplus then remaining
from the proceeds of the Collateral owned by it,
The Collateral Agent may make such distributions hereunder in cash or
in kind or, on a ratable basis, in any combination thereof.
(b) If at any time any portion of any monies collected or received by
the Collateral Agent would, but for the provisions of this Section 11(b), be
payable pursuant to Section 11(a) in respect of a Contingent Secured Obligation,
the Collateral Agent shall not apply any monies to pay such Contingent Secured
Obligation but instead (x) notify the holder of such Contingent Secured
Obligation and (y) with respect to the holder of such Contingent Secured
Obligations excluding the holder of any Secured Bond Obligation, request the
22
holder thereof, at least 10 days before each proposed distribution hereunder, to
notify the Collateral Agent as to the maximum amount of such Contingent Secured
Obligation if then ascertainable (e.g., in the case of a letter of credit, the
maximum amount available for subsequent drawings thereunder). If the holder of
such Contingent Secured Obligation (excluding the holder of any Secured Bond
Obligation) does not notify the Collateral Agent of the maximum ascertainable
amount thereof at least two Business Days before such distribution, such holder
will not be entitled to share in such distribution. If such holder does so
notify the Collateral Agent as to the maximum ascertainable amount thereof, or
if such holder is the holder of any Secured Bond Obligation (regardless of
whether such holder has provided any notice to the Collateral Agent), the
Collateral Agent will allocate to such holder a portion of the monies to be
distributed in such distribution, calculated as if such Contingent Secured
Obligation were outstanding in such maximum ascertainable amount. However, the
Collateral Agent will not apply such portion of such monies to pay such
Contingent Secured Obligation, but instead will hold such monies and invest such
monies in Liquid Investments. All such monies and Liquid Investments and all
proceeds thereof will constitute Collateral hereunder, but will be subject to
distribution in accordance with this Section 11(b) rather than Section 11(a).
The Collateral Agent will hold all such monies and Liquid Investments and the
net proceeds thereof in trust until all or part of such Contingent Secured
Obligation becomes a Non-Contingent Secured Obligation, whereupon the Collateral
Agent at the request of the relevant Secured Party will apply the amount so held
in trust to pay such Non-Contingent Secured Obligation; provided that, if the
other Secured Obligations theretofore paid pursuant to the same clause of
Section 11(a) (i.e., clause (2) or (4)) were not paid in full, the Collateral
Agent will apply the amount so held in trust to pay the same percentage of such
Non-Contingent Secured Obligation as the percentage of such other Secured
Obligations theretofore paid pursuant to the same clause of Section 11(a). If
(i) the holder of such Contingent Secured Obligation shall advise the Collateral
Agent that no portion thereof remains in the category of a Contingent Secured
Obligation and (ii) the Collateral Agent still holds any amount held in trust
pursuant to this Section 11(b) in respect of such Contingent Secured Obligation
(after paying all amounts payable pursuant to the preceding sentence with
respect to any portions thereof that became Non-Contingent Secured Obligations),
such remaining amount will be applied by the Collateral Agent in the order of
priorities set forth in Section 11(a).
(c) With respect to any Secured Bond Obligation, whether or not a
Contingent Secured Obligation, including, without limitation, the principal
outstanding of and interest on such Secured Bond Obligation, an amount (the
"DETERMINED AMOUNT") with respect to such Secured Bond Obligation shall be
required to be paid or held by the Collateral Agent with respect to each of
Sections 13 (a)(1), 13(a)(3) and 13(a)(4) (each, a "LEVEL") equal to (x) the
Ratio multiplied by (y) the sum of (A) the proceeds of any sale or other
disposition of
23
Collateral that are, in fact, being applied by the Collateral Agent to amounts
owed under the Credit Agreements at the applicable Level, plus (B) the proceeds
of such Collateral proposed to be held by the Collateral Agent pursuant to
Section 11(b) to cover the Contingent Secured Obligations relating to the Credit
Agreements at such Level in accordance with Section 11(b). Notwithstanding the
foregoing, if the amount to be applied to the Secured Bond Obligations at any
Level would be greater if the Ratio were calculated by reference to a Secured
Obligation (other than the principal under the Credit Agreements) that
constitutes "Funded Debt" under any Indenture, such Secured Obligation shall be
used in order to determine the amount to be applied to the Secured Bond
Obligations at such Level. Section 11 of this Agreement (including this Section
11(c)) is intended to comply with the equal and ratable negative pledge
provisions of the Indentures and shall be construed to give effect to such
intention. The Collateral Agent shall be obligated to offer to pay to the
relevant Indenture Trustee any portion of the Determined Amounts that are, in
fact, due and payable at such time as such Determined Amounts are calculated,
and the Collateral Agent shall deposit any remaining portion of such Determined
Amounts and any amounts not accepted by the relevant Indenture Trustee, in a
segregated account solely for the benefit of the holders of the relevant Secured
Bond Obligation (and all amounts on deposit in such account shall be invested in
Liquid Investments).
(d) In making the payments and allocations required by this Section 11,
the Collateral Agent may rely upon information supplied to it pursuant to
Section 15(f). All distributions made by the Collateral Agent pursuant to this
Section 11 shall be final (except in the event of manifest error) and the
Collateral Agent shall have no duty to inquire as to the application by any
Secured Party of any amount distributed to it.
SECTION 12. Fees and Expenses. Each Lien Grantor will forthwith upon
demand pay to the Collateral Agent: (a) the amount of any taxes that the
Collateral Agent may have been required to pay by reason of the Transaction
Liens or to free any Collateral from any other Lien thereon, (b) the amount of
any and all reasonable out-of-pocket expenses, including transfer taxes and
reasonable fees and expenses of counsel and other experts, that the Collateral
Agent may incur in connection with (i) the administration or enforcement of the
Security Documents, including such reasonable out-of-pocket expenses as are
incurred to preserve the value of the Collateral or the validity, perfection,
rank or value of any Transaction Lien, (ii) the collection, sale or other
disposition of any Collateral or (iii) the exercise by the Collateral Agent of
any of its rights or powers under the Security Documents; (c) the amount of any
fees that any Lien Grantor shall have agreed in writing to pay to the Collateral
Agent and that shall have become due and payable in accordance with such written
agreement and (d) the amount required to indemnify the Collateral Agent for, or
hold it harmless and defend it against, any loss, liability or expense
(including the reasonable fees and out-of-pocket
24
expenses of its counsel and any experts or sub-agents appointed by it hereunder)
incurred or suffered by the Collateral Agent in connection with the Security
Documents, except to the extent that such loss, liability or expense arises from
the Collateral Agent's gross negligence or wilful misconduct or a breach of any
duty that the Collateral Agent has under this Agreement (after giving effect to
Section 14 and Section 15). Any such amount not paid to the Collateral Agent as
soon as practicable will bear interest for each day thereafter until paid at a
rate per annum equal to the sum of 2% plus the highest rate applicable to the
base rate loans under the Credit Agreements. If any transfer tax, documentary
stamp tax, withholding tax or other tax is payable in connection with any
transfer or other transaction provided for in the Security Documents, the Lien
Grantors will pay such tax and provide any required tax stamps to the Collateral
Agent or as otherwise required by law.
SECTION 13. Authority to Administer Collateral. Each Lien Grantor
irrevocably appoints the Collateral Agent its true and lawful attorney, with
full power of substitution, in the name of such Lien Grantor, any Secured Party
or otherwise, for the sole use and benefit of the Secured Parties, but at NNL's
expense, to the extent permitted by law to exercise, at any time and from time
to time while (x) an Event of Default with respect to Illiquid Collateral and
(y) a Specified Event of Default with respect to Liquid Collateral shall have
occurred and be continuing, all or any of the following powers with respect to
all or any of such Lien Grantor's Collateral:
(a) to demand, ▇▇▇ for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof;
(b) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(c) to sell or otherwise dispose of the same or the proceeds or avails
thereof, as fully and effectually as if the Collateral Agent were the absolute
owner thereof; and
(d) to extend the time of payment of any or all thereof and to make any
allowance or other adjustment with reference thereto,
provided that, except in the case of Collateral that threatens to decline
speedily in value or is of a type customarily sold on a recognized market (as to
which only such notice (if any) as is required to be given by mandatory
provision of applicable law shall be given) the Collateral Agent will give the
relevant Lien Grantor at least ten days' prior written notice (or such longer
period of notice as shall be required by mandatory provision of applicable law)
of the time and place
25
of any public sale thereof or the time after which any private sale or other
intended disposition thereof will be made.
For the purposes of holding any security granted by any of the NNL
Companies pursuant to the laws of the Republic of Argentina, JPMorgan Chase Bank
is hereby appointed by each of the NNL Companies a party hereto and accepted by
all of the Banks as the holder of an irrevocable power of attorney or for all
present and future Banks and JPMorgan Chase Bank hereby accepts such
appointment. By executing an assignment agreement, any future Bank shall be
deemed to ratify the power of attorney granted to JPMorgan Chase Bank hereunder.
SECTION 14. Limitation on Duty in Respect of Collateral. Beyond the
exercise of reasonable care in the custody and preservation thereof, the
Collateral Agent will have no duty as to any Collateral in its possession or
control or in the possession or control of any sub-agent or bailee selected by
it in good faith or any income therefrom or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Collateral
Agent will be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession or control if such Collateral
is accorded treatment substantially equal to that which it accords its own
property, and will not be liable or responsible for any loss or damage to any
Collateral, or for any diminution in the value thereof, by reason of any act or
omission of any sub-agent or bailee selected by the Collateral Agent in good
faith, except to the extent that such liability arises from the Collateral
Agent's gross negligence or wilful misconduct.
SECTION 15. General Provisions Concerning the Collateral Agent.
(a) Authority. The Collateral Agent is authorized to take such actions
and to exercise such powers as are delegated to the Collateral Agent by the
terms of the Security Documents, together with such actions and powers as are
reasonably incidental thereto.
(b) Rights and Powers as a Secured Party. The bank serving as the
Collateral Agent shall, in its capacity as a Secured Party, have the same rights
and powers as any other Secured Party and may exercise the same as though it
were not the Collateral Agent. Such bank and its affiliates may accept deposits
from, lend money to and generally engage in any kind of business with any NNL
Company as if it were not the Collateral Agent hereunder.
(c) Limited Duties and Responsibilities. The Collateral Agent shall not
have any duties or obligations under the Security Documents except those
expressly set forth therein. Without limiting the generality of the foregoing,
(i) the Collateral Agent shall not be subject to any fiduciary or other implied
26
duties, regardless of whether an Event of Default has occurred and is
continuing, (ii) the Collateral Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Security Documents that the
Collateral Agent is required in writing to exercise by the Required Secured
Banks (or such other number or percentage of the Banks as shall be necessary
under the relevant circumstances), and (iii) except as expressly set forth in
the Loan Documents, the Collateral Agent shall not have any duty to disclose,
and shall not be liable for any failure to disclose, any information relating to
any NNL Company that is communicated to or obtained by the bank serving as
Collateral Agent or any of its affiliates in any capacity. The Collateral Agent
shall not be liable for any action taken or not taken by it with the consent or
at the request of the Required Secured Banks or in the absence of its own gross
negligence or wilful misconduct. The Collateral Agent shall not be responsible
for the existence, genuineness or value of any Collateral or for the validity,
perfection, priority or enforceability of any Transaction Lien, whether impaired
by operation of law or by reason of any action or omission to act on its part
under the Security Documents, in either case absent its own gross negligence or
wilful misconduct. The Collateral Agent shall be deemed not to have knowledge of
any Event of Default unless and until written notice thereof is given to the
Collateral Agent by any Lien Grantor or a Secured Party, and the Collateral
Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with any
Security Document, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith other than by it, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Security Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Security Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in any Security Document.
(d) Authority to Rely on Certain Writings, Statements and Advice. The
Collateral Agent shall be entitled to rely on, and shall not incur any liability
for relying on, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. The Collateral Agent also may rely on
any statement made to it orally or by telephone and believed by it to be made by
the proper Person, and shall not incur any liability for relying thereon. The
Collateral Agent may consult with legal counsel (who may be counsel for any NNL
Company), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountant or expert. The Collateral Agent may rely
conclusively on advice from the applicable Indenture Trustee as to whether at
any time the maturity of any Bonds has been accelerated.
27
(e) Sub-Agents and Related Parties. The Collateral Agent may perform
any of its duties and exercise any of its rights and powers through one or more
sub-agents appointed by it in good faith. The Collateral Agent and any such
subagent may perform any of its duties and exercise any of its rights and powers
through its directors, officers, employees and agents (the "RELATED PARTIES").
The exculpatory provisions of Section 14 and this Section 15 shall apply to any
such sub-agent, the Related Parties of the Collateral Agent.
(f) Information as to Secured Obligations and Actions by Secured
Parties. For all purposes of the Security Documents, including determining the
amounts of the Secured Obligations and whether a Secured Obligation is a
Contingent Secured Obligation or not, or whether any action has been taken under
any Secured Agreement, the Collateral Agent will be entitled to rely on
information from (i) its own records for information as to the Banks, their
Secured Obligations and actions taken by them, (ii) the relevant Indenture
Trustee for information as to the Secured Obligations outstanding under any
Indenture and actions taken by the holders thereof, (iii) any Secured Party for
information as to its Secured Obligations and actions taken by it, to the extent
that the Collateral Agent has not obtained such information from the foregoing
sources and (iv) NNL, to the extent that the Collateral Agent has not obtained
information from the foregoing sources.
(g) The Collateral Agent may refuse to act on any notice, consent,
direction or instruction from any Secured Parties or any agent, trustee or
similar representative thereof that, in the Collateral Agent's opinion, (i) is
contrary to law or the provisions of any Security Document, (ii) may expose the
Collateral Agent to liability (unless the Collateral Agent shall have been
indemnified, to its reasonable satisfaction, for such liability by the Secured
Parties that gave such notice, consent, direction or instruction) or (iii) is
unduly prejudicial to Secured Parties not joining in such notice, consent,
direction or instruction.
(h) Resignation; Successor Collateral Agent. Subject to the appointment
and acceptance of a successor Collateral Agent as provided in this subsection,
the Collateral Agent may resign at any time by notifying the Banks and NNL. Upon
any such resignation, the Required Secured Banks shall have the right to appoint
a successor Collateral Agent reasonably acceptable to NNL. If no successor shall
have been so appointed by the Required Secured Banks and shall have accepted
such appointment within 30 days after the retiring Collateral Agent gives notice
of its resignation, then the retiring Collateral Agent may, on behalf of the
Secured Parties, appoint a successor Collateral Agent reasonably acceptable to
NNL which shall be a bank with an office in New York, New York or Toronto,
Ontario, or an affiliate of any such bank. Upon acceptance of its appointment as
Collateral Agent hereunder by a successor, such successor shall succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
28
Collateral Agent hereunder, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder. The fees payable by NNL to
a successor Collateral Agent shall be the same as those payable to its
predecessor unless otherwise agreed by NNL and such successor. After the
Collateral Agent's resignation hereunder, the provisions of this Section 15 and
Section 14 shall continue in effect for the benefit of such retiring Collateral
Agent, its sub-agents and their respective Related Parties in respect of any
actions taken or omitted to be taken by any of them while the retiring
Collateral Agent was acting as Collateral Agent.
SECTION 16. Termination of Pledges; Release of Collateral. (a) The
Pledges granted by each Lien Grantor shall terminate on the earlier of (i) any
Investment Grade Date and (ii) the Bank Termination Date.
(b) On the first day on which a Foreign Subsidiary Guarantee is in full
force and effect with respect to a Material Subsidiary, any Pledge with respect
to any Equity Interest held in such Material Subsidiary will cease immediately
without any action by the Collateral Agent or any other Secured Party.
(c) Concurrently with any sale, exchange, assignment, lease or other
disposition by any Lien Grantor (except a lease or a sale, exchange, assignment
or other disposition to another Lien Grantor whose "Secured Obligations"
hereunder include "Secured Obligations" of the Lien Grantor effecting such sale
or other disposition) of the Collateral permitted by the Credit Agreements and
not expressly prohibited by this Agreement, the Pledge thereof (but not in any
Proceeds arising from such sale or disposition) will cease immediately without
any action by the Collateral Agent or any other Secured Party.
(d) Upon any Collateral of any Lien Grantor consisting of cash, cash
equivalents or Permitted Investments becoming the subject of a hedging
transaction permitted under the terms of the Credit Agreements, the Pledge
thereof (but not in any Proceeds of such Lien Grantor's rights under such
hedging transaction) will cease immediately without any action by the Collateral
Agent or any other Secured Party; provided that, if the transaction pursuant to
which such Collateral becoming the subject of a hedging transaction is an Asset
Sale no Specified Event of Default shall have occurred and be continuing.
(e) Upon any Collateral of any Lien Grantor consisting of Securities
subject to a put/call arrangement permitted by the terms of the Credit
Agreements being transferred to any person other than another Lien Grantor as a
result of the exercise of such put/call arrangement, the Pledge thereof (but not
in any Proceeds of such transfer) will cease immediately without any action by
the Collateral Agent or any other Secured Party; provided that, if the
transaction pursuant to
29
which such Collateral being so transferred is an Asset Sale, no Specified Event
of Default shall have occurred and be continuing.
(f) In addition to the foregoing, at any time before the Pledges
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 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
exclusions set forth in such Credit Agreement) or (iii) amend this Agreement so
that the Secured Obligations of any Lien Grantor excludes the obligations under
any Credit Agreement with the prior written consent of all Banks party to such
Credit Agreement.
(g) Upon any termination of a Pledge 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 Pledge or the release of such Collateral, or
change in the Secured Obligations, as the case may be, and shall deliver to such
Lien Grantor any documents or instruments, including without limitation stock
certificates, evidencing any Collateral no longer subject to any Pledges.
SECTION 17. Additional Lien Grantors. Any Person may become a party
hereto by signing and delivering to the Collateral Agent a Pledge Agreement
Supplement, whereupon such Person shall become a "SUBSIDIARY LIEN GRANTOR" and a
"LIEN GRANTOR" as defined herein. Any Subsidiary which is (1) a Subsidiary of
NNL, (2) not a Subsidiary of NNI and (3) a Canadian Subsidiary shall become a
"Subsidiary Lien Grantor" and a "Lien Grantor" hereunder if required by the
provisions of any of Credit Agreement.
SECTION 18. Additional Secured Obligations. (a) Any Lien Grantor may
from time to time designate any indebtedness constituting a Capital Markets
Event as (i) an additional Secured Obligation or (ii) as an additional
Guaranteed Obligation (other than for Designated Capital Markets Debt of such
Lien Grantor) by delivering to the Collateral Agent a certificate signed by a
financial officer that (i) identifies such indebtedness and the material terms
thereof and (ii) states that the obligations thereunder are designated as
Secured Obligations and Guaranteed Obligations; 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 no Lien Grantor may
30
designate any indebtedness constituting a Capital Markets Event owed by (i) NNI
or (ii) any U.S. Subsidiary of NNI in either case as a Guaranteed Obligation of
such Lien Grantor if such Lien Grantor is a non-U.S. Subsidiary of NNI in the
case of (i) immediately above or a non-U.S. Subsidiary of such U.S. Subsidiary
in the case of (ii) immediately above; 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 Secured Obligation or a Guaranteed
Obligation (as applicable) of each Lien Grantor without any further action on
the part of any Lien Grantor.
(b) Any Lien Grantor that is a Material Subsidiary of NNL or NNI may
from time to time designate any indebtedness for borrowed money (other than
indebtedness constituting a Capital Markets Event) owed by any Material
Subsidiary of NNL or NNI to any Bank or any wholly-owned subsidiary of any Bank
or any other financial institution and outstanding on December 20, 2001 or
incurred pursuant to a commitment to extend credit in effect on such date or any
extensions, renewals, replacements and refinancings thereof as (i) an additional
Secured Obligation or (ii) as an additional Guaranteed Obligation (other than
for Designated Bank Debt of such Lien Grantor) by delivering to the Collateral
Agent a certificate signed by a financial officer that (i) identifies such
indebtedness and the material terms thereof and (ii) states that the obligations
thereunder are designated as Secured Obligations and Guaranteed Obligations;
provided that the aggregate amount of indebtedness (without duplication)
designated as "Designated Bank Debt" under this Agreement and any other security
or guarantee document entered into by NNL, NNI and their Material Subsidiaries
for the benefit of the Secured Parties will not exceed $300,000,000 in aggregate
principal amount, provided further, that no Lien Grantor may designate any such
indebtedness owed by any U.S. Subsidiary of NNI as a Guaranteed Obligation of
such Lien Grantor if such Lien Grantor is a non-U.S. Subsidiary of such U.S.
Subsidiary of NNI; 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 Secured Obligation or a Guaranteed Obligation (as applicable) of
each Lien Grantor without any further action on the part of any Lien Grantor.
SECTION 19. 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
31
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered Canada or United States mail, addressed to it at its
address specified below, with first class or airmail postage prepaid:
(a) in the case of any Lien Grantor listed on the signature pages
hereof:
if to Nortel Networks International Corporation:
Nortel Networks International Corporation
▇▇▇▇▇▇▇ ▇. de Alveor
▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
if to Nortel networks Limited
Nortel Networks Limited
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: Dra. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Tel: (5411) ▇▇▇▇-▇▇▇▇
Fax: (5411) ▇▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
in either case with a copy to:
Nortel Networks Limited
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Attention: Corporate Secretary
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
MS: 036/NO/230
(b) in the case of any other Lien Grantor, its address, facsimile
number or e-mail address set forth in its Pledge Agreement Supplement;
(c) in the case of the Collateral Agent:
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
32
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
(d) in the case of any other Secured Party, to the Collateral Agent to
be forwarded to such Secured Party at its address or facsimile number or e-mail
address, if any, specified in or pursuant to the relevant Secured Agreement.
Any party may change its address, facsimile number and/or e-mail
address for purposes of this Section 19 by giving notice of such change to the
Collateral Agent and the Lien Grantors in the manner specified above.
SECTION 20. No Implied Waivers; Remedies Not Exclusive. No failure by
the Collateral Agent or any Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right or remedy under
any Pledge Document shall operate as a waiver thereof; nor shall any single or
partial exercise by the Collateral Agent or any Secured Party of any right or
remedy under any Loan Document preclude any other or further exercise thereof or
the exercise of any other right or remedy. The rights and remedies specified in
the Loan Documents are cumulative and are not exclusive of any other rights or
remedies provided by law.
SECTION 21. Successors and Assigns. This Agreement is for the benefit
of the Collateral Agent and the Secured Parties. If all or any part of any
Secured Party's interest in any Secured Obligation is assigned or otherwise
transferred in accordance with the transfer provisions applicable thereto, the
transferor's rights hereunder, to the extent applicable to the obligation so
transferred, shall be automatically transferred with such obligation. This
Agreement shall be binding on the Lien Grantors and their respective successors
and assigns.
SECTION 22. Amendments and Waivers. Neither this Agreement nor any
provision hereof may be waived, amended, modified or terminated except pursuant
to an agreement or agreements in writing entered into by the parties hereto,
with the consent of the Required Secured Banks; provided that any such agreement
that effects a release of any Collateral or amends the definition of Secured
Obligations shall be made in accordance with Section 16(f). No such waiver,
amendment or modification shall affect the rights of a Secured Party (other than
a Bank) hereunder more adversely than it affects the comparable rights of the
Bank hereunder, without the consent of such Secured Party.
SECTION 23. Choice of Law. This Agreement shall be entered into,
construed and performed subject to the laws of the Republic of Argentina. The
validity, interpretation and effect of this Agreement shall be governed
exclusively by the laws of the Republic of Argentina. Any and all disputes
arising out of or in connection with the interpretation, performance and
non-performance of this
33
agreement, including the validity hereof shall be submitted to the exclusive
jurisdiction of the competent Ordinary Commercial courts of ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ of Argentina.
SECTION 24. Judgement Currency. If for the purpose of obtaining
judgment in any court it is necessary to convert a sum due from a Lien Grantor
in the currency expressed to be payable in any Loan Document (the "SPECIFIED
CURRENCY") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Collateral Agent
could purchase the specified currency with such other currency at the Collateral
Agent's Toronto office on the domestic Business Day preceding that on which
final judgment is given. The obligations of the Lien Grantor in respect of any
sum due to the Collateral Agent hereunder shall, notwithstanding any judgment in
a currency other than the specified currency, be discharged only to the extent
that on the domestic Business Day following receipt by the Collateral Agent of
any sum adjudged to be so due in such other currency the Collateral Agent may in
accordance with normal banking procedures purchase the specified currency with
such other currency; if the amount of the specified currency so purchased is
less than the sum originally due to the Collateral Agent, in the specified
currency, the Lien Grantor agrees, to the fullest extent that it may effectively
do so, as a separate obligation and notwithstanding any such judgment, to
indemnify the Collateral Agent, against such loss, and if the amount of the
specified currency so purchased exceeds the sum originally due to the Collateral
Agent, in the specified currency, then the Collateral Agent agrees to remit such
excess to the Lien Grantor.
SECTION 25. Severability. If any provision of any Security Document is
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (a) the other provisions of the Security Documents shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in favor of the Collateral Agent and the Secured Parties in order to
carry out the intentions of the parties thereto as nearly as may be possible and
(b) the invalidity or unenforceability of such provision in such jurisdiction
shall not affect the validity or enforceability thereof in any other
jurisdiction.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NORTEL NETWORKS LIMITED
By:/s/ K.B. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Title: Treasurer
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Title: Corporate Secretary
NORTEL NETWORKS INTERNATIONAL CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Title: Secretary
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Title: Assistant Secretary
JPMORGAN CHASE BANK,
as Collateral Agent
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Title: Vice President
SCHEDULE 1
PLEDGED EQUITY INTERESTS IN MATERIAL SUBSIDIARIES
OWNED BY LIEN GRANTORS
(AS OF THE DATE HEREOF)
JURISDICTION NUMBER OF
OF OWNER OF PERCENTAGE SHARES OR
ISSUER ORGANIZATION EQUITY INTEREST OWNED UNITS
-----------------------------------------------------------------------------------------------
Nortel Argentina Nortel Networks 99.8% 499
Networks de Limited
Argentina S.A.
Nortel Networks 0.2% 1
International
Corportaion
2
EXHIBIT A
TO PLEDGE AGREEMENT
PLEDGE AGREEMENT SUPPLEMENT
Pledge Agreement Supplement dated as of [THE DATE OF EXECUTION IF SUCH
DATE OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE ON THE FIRST DAY OF THE
FIRST COLLATERAL PERIOD FOLLOWING EXECUTION] between [NAME OF LIEN GRANTOR] (the
"CORPORATION") and JPMORGAN CHASE BANK, as Collateral Agent.
WHEREAS, Nortel Networks Limited, Nortel Networks International
Corporation, the Subsidiary Lien Grantors party thereto and JPMorgan Chase Bank,
as Collateral Agent, are parties to a NNL Pledge Agreement dated as of [THE
FIRST DAY OF THE COLLATERAL PERIOD] (as heretofore amended and/or supplemented,
the "PLEDGE AGREEMENT");
WHEREAS, the Corporation desires to become [IS] a party to the Pledge
Agreement as a Subsidiary Lien Grantor and Lien Grantor thereunder; and
WHEREAS, terms defined in the Pledge Agreement and not otherwise
defined herein have, as used herein, the respective meanings provided for
therein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
(a) The Corporation shall be a Subsidiary Lien Grantor and Lien Grantor
for all purposes under the Pledge Agreement and the documents executed in
connection therewith, and, as such, shall guarantee, to the extent set forth in
the Pledge Agreement, the Guaranteed Obligations.
(b) The Corporation shall (i) be bound by all covenants, agreements,
acknowledgments and other terms and provisions applicable to it, as a Subsidiary
Lien Grantor and Lien Grantor pursuant to the Pledge Agreement and the documents
executed in connection therewith to the same extent, and in the same manner, as
if it (in its capacity as a Subsidiary Lien Grantor and Lien Grantor) were an
original party thereto and (ii) perform all obligations required of it pursuant
to the Pledge Agreement and such other documents in such capacity.
(c) The Pledge Agreement is incorporated into this Pledge Agreement
Supplement as if set out in full herein.
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(d) The Subsidiary Lien Grantor hereby acknowledges that it has
received and reviewed a copy (in execution form) of the Pledge Agreement
(including, without limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to therein (including,
without limitation, all amendments, supplements and other modifications
thereto).
(e) Grant of Pledges.
(i) In order to secure the Secured Obligations, the
Corporation grants to the Collateral Agent for the equal and ratable
benefit of the Secured Parties, effective on [THE DATE HEREOF (IF SUCH
DATE OCCURS DURING A COLLATERAL PERIOD) AND OTHERWISE ON THE FIRST DAY
OF ANY COLLATERAL PERIOD FOLLOWING EXECUTION HEREOF] a continuing
security interest in all the following property of the Corporation,
whether now owned or existing or hereafter acquired or arising and
regardless of where located (the "NEW COLLATERAL"):
[DESCRIBE PROPERTY BEING ADDED TO THE COLLATERAL]
The security interests granted by the Corporation pursuant hereto shall
terminate in accordance with Section 18 of the Pledge Agreement.
(ii) The foregoing Pledge is granted as security only and
shall not subject the Collateral Agent or any other Secured Party to,
or transfer or in any way affect or modify, any obligation or liability
of the Corporation with respect to any of the New Collateral or any
transaction in connection therewith.
(f) Delivery of Collateral. On [the date of execution hereof if such
date occurs during a Collateral Period and otherwise on the first day of the
first Collateral Period following execution hereof] and on each Drawdown Date,
the Corporation has complied with the provisions of Section 6 of the Pledge
Agreement with respect to Securities and Equity Interests, in each case if and
to the extent included in the New Collateral at such time.
(g) Party to Pledge Agreement. Upon executing and delivering this
Pledge Agreement Supplement to the Collateral Agent, the Corporation will become
a party to the Pledge Agreement and will thereafter have all the rights and
obligations of a Corporation thereunder and be bound by all the provisions
thereof as fully as if the Corporation were one of the original parties thereto.
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(h) Address of Lien Grantor. The address, facsimile number and e-mail
address of the Corporation for purposes of Section 21(b) of the Pledge Agreement
are:
[ADDRESS, FACSIMILE NUMBER AND E-MAIL ADDRESS OF LIEN GRANTOR]
(i) Representations and Warranties.(1)
(i) The Corporation represents and warrants, on [THE DATE OF
EXECUTION HEREOF IF SUCH DATE OCCURS DURING A COLLATERAL PERIOD AND
OTHERWISE ON THE FIRST DAY OF THE FIRST COLLATERAL PERIOD FOLLOWING
EXECUTION HEREOF] and on each Drawdown Date, that on such date it is a
corporation duly incorporated, amalgamated or continued, as the case
may be, validly existing and in good standing under the laws of its
jurisdiction of incorporation, amalgamation or continuance, as the case
may be, of which the Corporation has, on or prior to such date, given
written notice to the Collateral Agent.
(ii) The Corporation represents and warrants, on [THE DATE OF
EXECUTION HEREOF IF SUCH DATE OCCURS DURING A COLLATERAL PERIOD AND
OTHERWISE ON THE FIRST DAY OF THE FIRST COLLATERAL PERIOD FOLLOWING THE
EXECUTION HEREOF,] that execution and delivery of this Pledge Agreement
Supplement by the Corporation and the performance by it of its
obligations under the Pledge Agreement as supplemented hereby (i) are
within its corporate or other powers, have been duly authorized by all
necessary corporate or other action, (ii) except as disclosed in
writing to the Collateral Agent or its counsel on or prior to such date
by any NNL Company or its counsel, require no action by or in respect
of, or filing with, any governmental body, agency or official other
than filings for perfection of the Pledges on the New Collateral and
(iii) do not contravene, or constitute a default under, any provision
of applicable law or regulation or of its organizational documents, or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon it except with respect to (ii) and (iii) above,
any such action, filing or contravention which would not have a
material adverse effect on the ability of Corporation to perform its
obligations under this Pledge Agreement Supplement or the Pledge
Agreement.
(iii) The Corporation represents and warrants, on [THE LATER OF
THE DATE OF EXECUTION HEREOF IF SUCH DATE OCCURS DURING A COLLATERAL
PERIOD AND OTHERWISE ON THE FIRST DAY OF THE FIRST COLLATERAL PERIOD
FOLLOWING THE EXECUTION HEREOF], that the Pledge as supplemented hereby
will
--------------------------
(1) Modify as needed if the Lien Grantor is not a corporation.
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constitute a valid and binding agreement of the Corporation,
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, fraudulent conveyance or other
similar laws affecting creditors' rights generally and general
principles of equity.
(iv) Each of the representations and warranties set forth in
Section 4 and Section 6 of the Pledge is true as applied to the
Corporation and the New Collateral on the date required to be made
under the Pledge Agreement. For purposes of the foregoing sentence,
references in said Sections to a "Lien Grantor" shall be deemed to
refer to the Corporation, references to "Schedules to the Pledge
Agreement" shall be deemed to refer to the corresponding Schedules to
this Pledge Agreement Supplement [AND] references to "Collateral" shall
be deemed to refer to the New Collateral [, AND THE COLLATERAL PERIOD
SHALL BE DEEMED TO HAVE COMMENCED ON THE DATE OF EXECUTION HEREOF IF
SUCH DATE OCCURS DURING A COLLATERAL PERIOD AND OTHERWISE ON THE FIRST
DAY OF THE FIRST COLLATERAL PERIOD FOLLOWING EXECUTION HEREOF.]
(j) Governing Law. This Pledge Agreement Supplement shall be construed
in accordance with and governed by the laws of the Republic of Argentina.
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IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement Supplement to be duly executed by their respective authorized officers
as of the day and year first above written.
[THE CORPORATION]
By:
--------------------------------------------
Name:
Title:
Acknowledged and agreed to by the undersigned as of the first date written
above.
JPMORGAN CHASE BANK,
as Collateral Agent
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS LIMITED
By:
--------------------------------------------
Name:
Title:
NORTEL NETWORKS INTERNATIONAL CORPORATION
By:
--------------------------------------------
Name:
Title:
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