EXHIBIT 99.3
EXECUTION COPY
MASTER INDEMNITY AGREEMENT dated the 14th day of February, 2003 and
entered into by
NORTEL NETWORKS LIMITED
(the "Principal")
and
EXPORT DEVELOPMENT CANADA
("EDC")
WHEREAS the Principal has entered into a master facility agreement
dated the 14th day of February, 2003 with EDC (the "Facility
Agreement") pursuant to which EDC has agreed to provide certain types
of support to the Principal under the Small Bonds Facility, the
Receivables Bonding Facility and the General Support Facility through
the issuance of guarantee bonds and other instruments so as to enable
the Principal, or other affiliated entities designated by the
Principal, to obtain assistance from financial institutions;
NOW THEREFORE in consideration of the premises, the agreement of EDC
under the Facility Agreement to provide support to the Principal and
other good and valuable consideration, receipt of which the Principal
hereby acknowledges, the Principal covenants and agrees with EDC as
follows:
1. DEFINITIONS
Capitalized words and phrases used in this Indemnity Agreement shall
have the meaning attributed to them herein or where they are not
specifically defined herein shall have the same meaning as given to
them in the Facility Agreement.
In this Indemnity Agreement the plural includes the singular and vice
versa.
References to any agreement or other instrument are deemed to include
such agreement or other instrument as it may be modified, amended,
supplemented or restated in accordance with its terms.
"BENEFICIARY" means any Person with whom EDC has entered into an EDC
Support Agreement in order to provide Support;
"BUSINESS DAY" means any day excluding Saturday, Sunday and any other
day which is a legal holiday in Ottawa, Canada;
"EDC SUPPORT AGREEMENT" AND "EDC SUPPORT AGREEMENTS" means any
agreements entered into by EDC that provide Support on behalf of the
Principal or any of its affiliates pursuant to the Small Bonds
Facility, the Receivables Bonding Facility or the General Support
Facility but does not include any reinsurance agreements that EDC may
enter into in order to reinsure itself with respect to any of the risks
assumed by EDC under any EDC Support Agreements;
"INDEMNITY AGREEMENT" means this Master Indemnity Agreement dated the
14th day of February, 2003;
"LIBOR" means the rate per annum (calculated on the basis of a 360-day
year) for one month deposits of CDN$, Euro, Sterling or US$, as the
case may be, appearing on the Telerate Page 3750 at approximately 11:00
a.m., London time, on the day that is two (2) London banking days
preceding the first day of the period for which interest must be
determined, or if such page is not available, on a similar quote from a
comparable source.
2. LIABILITY OF THE PRINCIPAL
(a) In consideration of the Support to be provided by EDC under
the Small Bonds Facility pursuant to the Facility Agreement,
the Principal hereby unconditionally and irrevocably agrees to
indemnify EDC, against all claims and demands made against EDC
under or with respect to the EDC Support Agreements executed
with respect to the Small Bonds Facility, including any amount
that EDC pays under such EDC Support Agreements, and against
all costs (including the costs of enforcing the indemnity
under this Section 2(a)), expenses and damages incurred by
EDC, directly or indirectly, and arising or resulting from
such claims or demands. The Principal also agrees, as part of
its indemnification obligations under this Section 2(a), to
pay interest to EDC at Libor plus such margin per annum as is
separately agreed in writing by EDC and the Principal on any
amount for which indemnification is to be provided under this
Section 2(a) (including the said costs and expenses), such
interest to accrue from the date of demand by EDC to the date
of payment both before and after demand and judgment.
(b) In consideration of the Support to be provided by EDC under
the Receivables Bonding Facility and the General Support
Facility pursuant to the Facility Agreement, the Principal
hereby unconditionally and irrevocably agrees to indemnify EDC
against all claims and demands made against EDC under or with
respect to the EDC Support Agreements executed with respect to
the Receivables Bonding Facility or the General Support
Facility, as applicable, including any amount that EDC pays
under such EDC Support Agreements or any unpaid
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amount owed to EDC as a result of the exercise by EDC of any
put or similar right in respect of any such EDC Support
Agreements, and against all costs (including the costs of
enforcing the indemnity under this Section 2(b)), expenses and
damages incurred by EDC, directly or indirectly, and arising
or resulting from such claims or demands. The Principal also
agrees, as part of its indemnification obligations under this
Section 2(b), to pay interest to EDC at Libor plus such margin
per annum as is separately agreed in writing by EDC and the
Principal on any amount for which indemnification is to be
provided under this Section 2(b) (including the said costs and
expenses), such interest to accrue from the date of demand by
EDC to the date of payment both before and after demand and
judgment.
(c) Payments due to EDC hereunder shall be made to EDC in the
currency in which the relevant payment or payments under the
EDC Support Agreements for which indemnification is being
sought under Section 2(a) or Section 2(b), as applicable, were
made by EDC and, in the case of costs and expenses, in the
currency in which such costs and expenses were incurred.
(d) The Principal agrees that its liability hereunder shall not be
varied or discharged by reason of the EDC Support Agreements
or any of them, or any related document, being or becoming, in
whole or in part, illegal, unenforceable, void or discharged,
or by reason of any negligence on the part of EDC except to
the extent that such negligence constitutes gross negligence
or wilful misconduct in which case the liability of the
Principal hereunder shall be varied or discharged, but only to
the extent that such gross negligence or wilful misconduct:
(i) was the direct and primary cause of a claim or demand
being made against EDC under an EDC Support Agreement; or (ii)
increased the liability of the Principal hereunder. The
Principal's liability hereunder shall not otherwise be varied,
discharged or released except by full payment to EDC of all
amounts payable to EDC hereunder. Without limiting the
foregoing, the Principal's liability hereunder shall continue
with respect to and include any amounts that EDC may be
required to pay pursuant to the terms of an EDC Support
Agreement that deem such EDC Support Agreement to continue to
be effective or to be reinstated after the date on which EDC's
liability under such EDC Support Agreement would otherwise
have expired.
(e) Any computation of interest hereunder shall take into account
the actual number of days occurring in the period for which
interest is payable and on the basis of a 360-day year. For
the purposes of the Interest Act (Canada), (i) the interest
rate payable, expressed as an annual rate, shall be equivalent
to the applicable rate based on a year of 360 days, multiplied
by the actual number of days in the calendar year in which the
period for which such interest is payable (or compounded)
ends, and divided by 360, (ii) the principle of deemed
reinvestments of interest does not apply to any such interest
calculation and (iii)
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the rate of interest specified in this Indemnity Agreement is
intended to be a nominal rate and not an effective rate or
yield.
3. EDC MAY ACT IN ITS DISCRETION
(a) The Principal absolutely and irrevocably authorizes EDC to:
(i) pay immediately at EDC's absolute and sole discretion, in
whole or in part, any amounts which, in EDC's reasonable
opinion, are required to be paid pursuant to the requirements
of any EDC Support Agreement; and (ii) enter into any
agreement with a Beneficiary for the purpose of discharging,
in whole or in part, EDC's obligations under an EDC Support
Agreement. EDC will give written notice to the Principal no
less than one (1) Business Day prior to making any payment
under an EDC Support Agreement or entering into any such
agreement with a Beneficiary.
(b) The Principal waives any requirement that EDC make demand
upon, or seek to enforce remedies against, any Person before
making demand for payment hereunder, or seeking to enforce any
of its rights hereunder, or enforcing any security therefor,
and EDC shall not be bound to exhaust its recourse against any
Person or any collateral it may hold (or that may be held on
its behalf), before demanding or being entitled to a payment
hereunder.
(c) EDC will not enter into, or consent to any amendments to the
provisions of, or issue any substitute for, or renew, any EDC
Support Agreement without the prior written consent of the
Principal provided that in no event shall any failure of EDC
to obtain such consent release the Principal from any
liability or obligations hereunder except to the extent that
such failure may result in the Principal incurring a liability
hereunder that it would not otherwise have incurred or
incurring a greater liability hereunder than it would
otherwise have incurred.
4. UNDERTAKINGS OF THE PRINCIPAL
(a) Without prejudice to the Principal's rights under Section 2(d)
hereof and to the fullest extent permitted by law, the
Principal hereby waives any right of counterclaim, right of
set-off or deduction and the benefit of all privileges and
defences which now or hereafter may be available to the
Principal, including the benefit of discussion and division,
and the Principal waives diligence, presentment, demand,
protest and notice of every kind except as specifically
required hereunder or under any other Facility Document.
(b) If requested by EDC, the Principal will assign to EDC, by
instruments satisfactory to EDC and to the extent that the
Principal is not legally or contractually prohibited from
doing so, any rights that the Principal may have against any
party
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to recover any sums demanded and paid under an EDC Support
Agreement until all such sums owed to EDC by the Principal
under this Indemnity Agreement with respect to such EDC
Support Agreement have been paid to EDC in full.
(c) The Principal agrees that its obligations under this Indemnity
Agreement (other than those under Section 2(b)) shall
constitute part of the Designated Contingent Obligations and
Designated Bank Debt for the purposes of the Security
Documents and that the EDC Support Agreements executed with
respect to the Small Bond Facility constitute part of the EDC
Facility as defined in the Security Agreements. The Principal
further agrees that it will designate all such obligations as
Secured Obligations (for purposes of the U.S. Security
Agreement) and as Secured Obligations and Guaranteed
Obligations (for purposes of the Canadian Security Agreement)
and therefore as Designated Contingent Obligations and
Designated Bank Debt for the purposes of the Security
Documents.
(d) The Principal agrees that its obligations under this Indemnity
Agreement (other than those under Section 2(a)) shall
constitute part of the Designated Contingent Obligations and
Designated Bank Debt for the purposes of the Security
Documents and that the EDC Support Agreements executed with
respect to the Receivables Bonding Facility or the General
Support Facility, as applicable, constitute part of the EDC
Facility as defined in the Security Agreements. The Principal
further agrees that it will designate all such obligations as
Secured Obligations (for purposes of the U.S. Security
Agreement) and as Secured Obligations and Guaranteed
Obligations (for purposes of the Canadian Security Agreement)
and therefore as Designated Contingent Obligations and
Designated Bank Debt for the purposes of the Security
Documents.
(e) Unless all sums owed by the Principal to EDC under this
Indemnity Agreement with respect to a particular EDC Support
Agreement have been paid in full, the Principal agrees that
(i) its right to receive payments or distributions of any kind
shall be, and it shall cause any such rights of its affiliates
to be, subordinate to the rights of EDC and (ii) it shall, and
it shall cause its affiliates to, hold in trust for, and pay
over to, EDC any payments or distributions of any kind
received by the Principal or any such affiliate, in each case,
in respect of any claim that the Principal or any such
affiliate may make as a creditor in the bankruptcy or
liquidation of the Person whose non-payment or whose call on
an instrument that was, in either case, covered by the terms
of such EDC Support Agreement resulted in a payment by EDC
under such EDC Support Agreement and further resulted in such
sums being owed to EDC hereunder.
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5. REPRESENTATIONS OF THE PRINCIPAL
The Principal represents and warrants to EDC that it is duly
incorporated and validly subsisting under the laws of its place of
incorporation and that this Indemnity Agreement has been duly
authorized, executed and delivered by it and is valid and binding on
it.
6. APPLICATION OF RECOVERIES
Any sums recovered in respect of a payment made pursuant to an EDC
Support Agreement shall be first applied to the costs and expenses
incurred by EDC to effect such recovery and then retained by EDC to the
extent that any monies are due to EDC from the Principal pursuant to
this Indemnity Agreement, provided that any monies remaining thereafter
shall, subject to applicable law, be paid to the Principal.
7. RIGHTS UNIMPAIRED
EDC's rights and remedies under this Indemnity Agreement are cumulative
and are in addition to, and not in substitution for, any rights or
remedies provided by law, in equity or otherwise and any waiver by EDC
of the strict observance or performance of, or compliance with, any
term of this Indemnity Agreement shall not be deemed to be a waiver of
any other term or of any subsequent default or breach.
8. TERMINATION OR SUSPENSION OF EDC SUPPORT AGREEMENTS
EDC will not exercise any rights that it may have under any EDC Support
Agreement to notify the Beneficiary thereof that such EDC Support
Agreement has been terminated or suspended unless: (i) an Event of
Default or a Specified Event of Default has occurred; or (ii) any call
has been made on any Instrument issued on behalf of the Principal or
any Subsidiary, whether or not such Instrument is subject to the
Facility Agreement, which, together with any other calls for
performance on any such Instruments after the date of the Facility
Agreement, aggregates in excess of US $100,000,000; or (iii) the debt
rating by ▇▇▇▇▇'▇ or S&P with respect to senior secured long-term debt
of the Principal shall have ceased to exist or shall have been
downgraded to less than "B3" by ▇▇▇▇▇'▇ or to less than "B minus" by
S&P; and in each and every such case, the Principal acknowledges that
EDC shall be entitled to exercise any such rights. EDC agrees to
provide written notice to the Principal contemporaneously with any
written notice provided to any Beneficiary under this Section 8;
provided that failure to give any such notice to the Principal shall
not affect EDC's ability to terminate or suspend any such EDC Support
Agreement in the circumstances described in this Section 8.
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9. GOVERNING LAW
This Indemnity Agreement shall be deemed to be made under and shall be
governed by and be construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.
10. NOTICE
Any demand or notice to be given hereunder shall be given in writing to
the other party and shall be sent by facsimile or prepaid registered
mail and shall be deemed to have been received, if sent by facsimile,
on the day following the transmission thereof and if sent by prepaid
registered mail on the fifth (5) day after mailing, excluding
Saturdays, Sundays and those statutory holidays upon which the offices
of the addressee are normally closed for business. The addresses and
facsimile numbers of the parties for the purposes of giving notice
hereunder are as follows, or as may be notified in writing to the other
party:
for EDC:
Export Development Canada
▇▇▇ ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
for the Principal:
Nortel Networks Limited
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Assistant Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11. SUCCESSORS AND ASSIGNS
This Indemnity Agreement is binding upon the Principal and its
successors and permitted assigns and shall enure to the benefit of EDC
and its successors and assigns.
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12. COUNTERPARTS
This Indemnity Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all such separate
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Principal and EDC have duly executed and
delivered this Indemnity Agreement as of the date first above written.
NORTEL NETWORKS LIMITED
Per: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Treasurer
Per: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Secretary
EXPORT DEVELOPMENT CANADA
Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Financial Services Manager,
Telecom Team
Per: /s/ YVES L'HEUREUX
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Name: Yves L'Heureux
Title: Senior Financial Services Manager,
Telecom Team
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