Exhibit 99.1
U.S. GUARANTEE AND SECURITY AGREEMENT
dated as of
[first day of Collateral Period]
among
NORTEL NETWORKS LIMITED
NORTEL NETWORKS INC.
the SUBSIDIARIES
party hereto
and
JPMORGAN CHASE BANK,
as Collateral Agent
TABLE OF CONTENTS
PAGE
SECTION 1. Definitions ................................................. 2
SECTION 2. Guarantee ................................................... 18
SECTION 3. Grant of Transaction Liens .................................. 20
SECTION 4. General Representations, Warranties and Covenants ........... 22
SECTION 5. Additional Covenants ........................................ 27
SECTION 6. Recordable Intellectual Property ............................ 29
SECTION 7. Investment Property ......................................... 29
SECTION 8. Controlled Deposit Accounts ................................. 33
SECTION 9. Cash Collateral Accounts .................................... 33
SECTION 10. Operation of Collateral Accounts ........................... 34
SECTION 11. Transfer of Record Ownership ............................... 35
SECTION 12. Right to Vote Securities ................................... 35
SECTION 13. Certain Cash Distributions ................................. 37
SECTION 14. Remedies upon Event of Default or Specified Event of Default 37
SECTION 15. Application of Proceeds .................................... 38
SECTION 16. Fees and Expenses .......................................... 41
SECTION 17. Authority to Administer Collateral ......................... 42
SECTION 18. Limitation on Duty in Respect of Collateral ................ 43
SECTION 19. General Provisions Concerning the Collateral Agent ......... 43
SECTION 20. Termination of Transaction Liens; Release of Collateral .... 46
SECTION 21. Additional Lien Grantors ................................... 47
SECTION 22. Additional Secured Obligations ............................. 47
SECTION 23. Notices .................................................... 48
SECTION 24. No Implied Waivers; Remedies Not Exclusive ................. 49
SECTION 25. Successors and Assigns ..................................... 49
SECTION 26. Amendments and Waivers ..................................... 49
SECTION 27. Choice of Law .............................................. 50
SECTION 28. Waiver of Jury Trial ....................................... 50
SECTION 29. Severability ............................................... 50
SCHEDULES:
SCHEDULE 1 Equity Interests in Material Subsidiaries Owned by Lien
Grantors
SCHEDULE 2 Certain Other Investment Property Owned by Lien Grantors
SCHEDULE 3 Collateral Description
EXHIBITS:
EXHIBIT A Security Agreement Supplement
EXHIBIT B Copyright Security Agreement
EXHIBIT C Patent Security Agreement
EXHIBIT D Trademark Security Agreement
EXHIBIT E Perfection Certificate
EXHIBIT F Issuer Control Agreement
EXHIBIT G Securities Account Control Agreement
ii
U.S. GUARANTEE AND SECURITY AGREEMENT
AGREEMENT dated as of [first day of Collateral Period] among
NORTEL NETWORKS LIMITED (with its successors, "NNL"), NORTEL NETWORKS INC. (with
its successors, "NNI"), the SUBSIDIARIES party hereto 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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, NNI and its U.S. Subsidiaries (as defined below) are
required to enter into a U.S. Guarantee and Security 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) Terms Defined in UCC. As used herein, each of the following terms
has the meaning specified in the UCC:
Term UCC
---- ---
Account 9-102
Authenticate 9-102
Certificated Security 8-102
Chattel Paper 9-102
Commercial Tort Claim 9-102
Commodity Account 9-102
Commodity Contract 9-102
Commodity Customer 9-102
Commodity Intermediary 9-102
Deposit Account 9-102
Document 9-102
Electronic Chattel Paper 9-102
Entitlement Holder 8-102
Entitlement Order 8-102
Equipment 9-102
Financial Asset 8-102 & 103
General Intangibles 9-102
Instrument ▇-▇▇▇
▇▇▇▇▇▇▇▇▇ 9-102
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Investment Property 9-102
Issuer 5-102
Letter-of-Credit Right 9-102
Payment Intangible 9-102
Record 9-102
Securities Account 8-501
Securities Intermediary 8-102
Security 8-102 & 103
Security Entitlement 8-102
Supporting Obligations 9-102
Tangible Chattel Paper 9-102
Uncertificated Security 8-102
(b) Additional Definitions. The following additional terms, as used
herein, have the following meanings:
"BANK TERMINATION DATE" means the first date on which all of the
following conditions are satisfied: (i) all commitments to extend credit under
any Credit Agreement shall have expired or been terminated, (ii) all
Non-Contingent Secured Obligations 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.
"CAPITAL MARKETS EVENT" has the meaning set forth in either 2001
364-Day Agreement.
"CASH COLLATERAL ACCOUNTS" has the meaning specified in Section 9(a).
"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, and all condemnation
and insurance proceeds received with respect to Real Property Collateral.
"COLLATERAL" means all property, except for Real Property Collateral,
whether now owned or hereafter acquired, on which a Lien is granted or purports
to be granted to the Collateral Agent pursuant to this Agreement, the Security
Agreement Supplements, the Deposit Control Agreements, the Issuer Control
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Agreements, the Security Account Control Agreements, the Intellectual Property
Security Agreements and all other documents required to be delivered under any
of the foregoing. When used with respect to a specific Lien Grantor, the term
"Collateral" means any of the foregoing Collateral in which such a Lien is
granted or is purported to be granted (other than Real Property Collateral).
"COLLATERAL ACCOUNTS" means the Cash Collateral Accounts, the
Controlled Deposit Accounts and the Controlled Securities Accounts.
"COLLATERAL AGENT" means JPMorgan Chase Bank, in its capacity as
Collateral Agent under this Agreement and the other Security Documents, and its
successors in such capacity.
"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.
"COMMODITY ACCOUNT CONTROL AGREEMENT" means, with respect to any
Commodity Account as to which a Lien Grantor is the Commodity Customer, an
agreement by such Lien Grantor, the Collateral Agent and the relevant Commodity
Intermediary that the Commodity Intermediary will apply any value distributed on
account of the Commodity Contracts carried in such Commodity Account as directed
by the Collateral Agent without further consent by such Lien Grantor. Each such
agreement must be reasonably satisfactory in form and substance to the
Collateral Agent.
"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.
"CONTROL" has the following meanings: (i) when used with respect to any
Security or Security Entitlement, the meaning specified in UCC Section 8-106,
(ii) when used with respect to any Deposit Account, the meaning specified in UCC
Section 9-104, (iii) when used with respect to any Commodity Account or
Commodity Contract, the meaning specified in UCC Section 9-106(b), and (iv) when
used with respect to any right to payment or performance by the issuer or a
Nominated Person in respect of a letter of credit, the meaning specified in UCC
Section 9-107.
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"CONTROLLED COMMODITY ACCOUNT" means a Commodity Account as to which
(i) a Lien Grantor is the Commodity Customer and (ii) a Commodity Account
Control Agreement is in effect.
"CONTROLLED DEPOSIT ACCOUNT" means a Deposit Account (i) that is
subject to a Deposit Account Control Agreement or (ii) as to which the
Collateral Agent is the Depositary Bank's "customer" (as defined in UCC Section
4-104).
"CONTROLLED SECURITIES ACCOUNT" means a Securities Account that (i) is
maintained in the name of a Lien Grantor at an office of a Securities
Intermediary located in the United States and (ii) together with all Financial
Assets credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement among such Lien Grantor, the Collateral
Agent and such Securities Intermediary.
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence.
"COPYRIGHTS" means all the following: (i) all copyrights under the laws
of the United States or any other country (whether or not the underlying works
of authorship have been published), all registrations and recordings thereof,
all copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Copyright Security Agreement,
(ii) all renewals of any of the foregoing, (iii) all claims for, and rights to
▇▇▇ for, past or future infringements of any of the foregoing and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including damages and payments for past or
future infringements thereof.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"CREDIT AGREEMENTS" means the NNI Credit Agreements and the NNL Credit
Agreements.
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"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.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means, with respect to any Deposit
Account of any Lien Grantor, an agreement among such Lien Grantor, the
Collateral Agent and the relevant Depositary Bank, set forth in an Authenticated
Record, (i) that such Depositary Bank will comply with instructions originated
by the Collateral Agent directing disposition of the funds in such Deposit
Account without further consent by such Lien Grantor and (ii) subordinating to
the relevant Transaction Lien all claims of the Depositary Bank to such Deposit
Account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto).
"DEPOSITARY BANK" means a bank at which a Controlled Deposit Account is
maintained.
"DESIGNATED BANK DEBT" has the meaning specified in Section 22(c).
"DESIGNATED CAPITAL MARKETS DEBT" has the meaning specified in Section
22(b).
"DESIGNATED HEDGING AGREEMENT" has the meaning specified in Section
22(a).
"DRAWDOWN DATE" means any date during any Collateral Period on which an
extension of credit is made under either 2001 364-Day 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, (v) any warrant, option or other right to acquire any Equity Interest
described in this definition or (vi) any Security Entitlement in respect of any
Equity Interest described in this definition.
"EVENT OF DEFAULT" means an "Event of Default" under any Credit
Agreement.
"GUARANTEE" means the guarantee under Section 2 hereof.
"GUARANTEED OBLIGATIONS" means (i) with respect to NNI, the NNL Bank
Obligations, the NNL Bond Obligations, the NNL Hedging Obligations, the NNFI
Hedging Obligations and any Designated Capital Markets
6
Debt (ii) with respect to NNFI, the NNI Bank Obligations, the NNL Bond
Obligations, the NNL Bank Obligations, the NNI Hedging Obligations, the NNL
Hedging Obligations and any Designated Capital Markets Debt.
"GUARANTOR" means either of NNI or NNFI, as the context may require,
and "GUARANTORS" means both of them.
"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 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.
"INTELLECTUAL PROPERTY" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Copyrights under the laws of the United
States and (vi) Copyright Licenses, and all rights in or under any of the
foregoing.
"INTELLECTUAL PROPERTY FILING" means (i) with respect to any Patent or
Trademark, the filing of the applicable Patent Security Agreement or Trademark
Security Agreement with the United States Patent and Trademark Office, together
with an appropriately completed recordation form and (ii) with respect to any
Copyright, the filing of the applicable Copyright Security Agreement with the
United States Copyright Office, together with an appropriately completed
recordation form, in each case sufficient to record the Transaction Lien granted
to the Collateral Agent in such Material Recordable Intellectual Property.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means a Copyright Security
Agreement, a Patent Security Agreement or a Trademark Security Agreement.
7
"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.
"ISSUER CONTROL AGREEMENT" means an Issuer Control Agreement
substantially in the form of Exhibit F (with any changes that the Collateral
Agent shall have reasonably approved).
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) 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 (c) 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, NNI and the Subsidiary Lien Grantors.
"LIQUID COLLATERAL" means (a) Pledged Accounts, (b) Pledged Chattel
Paper, (c) Pledged Instruments, (d) the Cash Collateral Accounts, (e) the
Controlled Deposit Accounts, (f) the Controlled Securities Accounts, (g) the
Pledged Intellectual Property and (h) any Uncertificated Security evidencing
money market funds.
"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.
"LLC INTEREST" means a membership interest or similar interest in a
limited liability company.
"MATERIAL COMMERCIAL TORT CLAIM" means any Commercial Tort Claim in
excess of $10,000,000.
"MATERIAL GOVERNMENT CONTRACT" means a contract, between a Lien Grantor
and either (i) the federal government of the United States or any agency or
instrumentality thereof or (ii) a state or local government or any agency or
instrumentality thereof, that provides (or can reasonably be expected to
provide) for payments to such Lien Grantor in an aggregate amount exceeding (x)
for the purpose of the first sentence of Section 4(n), $50,000,000 and (y) for
the purpose of the second sentence of Section 4(n), $10,000,000.
8
"MATERIAL INTELLECTUAL PROPERTY" means, with respect to any Lien
Grantor, any Intellectual Property that is material to the business of the NNL
Companies taken as a whole, as such business is presently conducted or proposed
to be conducted.
"MATERIAL RECORDABLE INTELLECTUAL PROPERTY" means the Recordable
Intellectual Property notified in writing from time to time to the Collateral
Agent by any of the Lien Grantors in accordance with the provisions hereof.
"MATERIAL SUBSIDIARY" has the meaning set forth in the ▇▇▇▇ ▇▇▇ 364-Day
Agreement.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"1988 INDENTURE" means the Indenture dated as of November 30, 1988
among Northern Telecom Limited, 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 Northern Telecom Limited, and its successors, the subsidiary guarantors
party thereto and The Bank of New York as trustee, as amended from time to time.
"NNC" means Nortel Networks Corporation, a Canadian corporation, and
its successors.
"NNFI" 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 and extensions thereof.
"NNFI SECURED OBLIGATIONS" means (i) all obligations of NNFI under
Section 2 of this Agreement, (ii) the NNFI Hedging Obligations and (iii) any
Designated Bank Debt.
"NNI BANK OBLIGATIONS" means (i) all principal of and interest
(including, without limitation, any Post-Petition Interest) on any loan under,
or any note issued pursuant to, any NNI Credit Agreement, (ii) all other amounts
payable by NNI under any NNI Credit Agreement, (iii) all obligations of NNI
under Section 2 of this Agreement and (iv) any renewals or extensions of any of
the foregoing.
9
"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.
"NNI SECURED OBLIGATIONS" means (i) the NNI Bank Obligations, (ii) the
NNI Hedging Obligations and (iii) any Designated Bank Debt.
"NNI SUBSIDIARY" means any Subsidiary of NNI.
"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 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 HEDGING OBLIGATIONS" means (i) all obligations of NNL under any
Designated Hedging Agreement and (ii) any renewals or extensions thereof.
"NNL SECURED OBLIGATIONS" means (i) the NNL Bank Obligations, (ii) the
NNL Bond Obligations, (iii) the NNL Hedging Obligations, (iv) the NNI Hedging
Obligations, (v) the NNFI Hedging Obligations, (vi) any Designated Capital
Markets Debt and (vii) any Designated Bank Debt.
"NNL SUBSIDIARY" means any Subsidiary of NNL other than NNI or any
Subsidiary of NNI.
"NNTC" means Nortel Networks Trading Corporation.
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"NNTC AGREEMENT" means either (i) a pledge agreement in form and
substance reasonably satisfactory to the Collateral Agent, pursuant to which NNI
pledges all its Equity Interests in NNTC or (ii) a guarantee in form and
substance reasonably satisfactory to the Collateral Agent pursuant to which NNTC
shall have guaranteed the obligations of NNI under the Loan Documents.
"NOMINATED PERSON" means a Person whom the issuer of a letter of credit
(i) designates or authorizes to pay, accept, negotiate or otherwise give value
under such letter of credit and (ii) undertakes by agreement or custom and
practice to reimburse.
"NON-CONTINGENT SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"NTL" means Northern Telecom Limited, a Canadian corporation.
"OWN" refers to the possession of sufficient rights in property to
grant a security interest therein as contemplated by UCC Section 9-203, and
"ACQUIRE" refers to the acquisition of any such rights.
"PARTNERSHIP INTEREST" means a partnership interest, whether general or
limited.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence or
not.
"PATENTS" means (i) all letters patent and design letters patent issued
by the United States or any other country and all applications for letters
patent or design letters patent pending before the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Patent Security Agreement, (ii)
all reissues, divisions, continuations, continuations in part, revisions and
extensions of any of the foregoing, (iii) all claims for, and rights to ▇▇▇ for,
past or future infringements of any of the foregoing and (iv) all income,
royalties, damages and payments now or hereafter due or payable with respect to
any of the foregoing, including damages and payments for past or future
infringements thereof.
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"PATENT SECURITY AGREEMENT" means a Patent Security Agreement,
substantially in the form of Exhibit C, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"PERFECTION CERTIFICATE" means, with respect to any Lien Grantor, a
certificate substantially in the form of Exhibit E, completed and supplemented
with the schedules contemplated thereby to the satisfaction of the Collateral
Agent, and signed by an officer of such Lien Grantor.
"PERMITTED INVESTMENTS" means investments in:
(a) 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;
(b) 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;
(c) 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;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
(e) 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.
"PERMITTED RECEIVABLES FINANCING" means, with respect to any Lien
Grantor, any receivables securitization or financing permitted pursuant to the
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terms of the Credit Agreements to which such Lien Grantor is a party or by which
it is bound.
"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.
"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 and "Pledged letter of credit" means
a letter of credit that creates rights to payment or performance that are
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
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, lease,
exchange, assignment, licensing 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 with respect to
any Collateral.
"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.
"REAL PROPERTY COLLATERAL" means all real property (including leasehold
interests in real property).
"RECORDABLE INTELLECTUAL PROPERTY" means (i) Patents (other than
Patents described in clauses (iii) and (iv) of the definition thereof)
registered with the United States Patent and Trademark Office, (ii) Trademarks
(other than Trademarks described in clauses (v) and (vi) of the definition
thereof) registered with the United States Patent and Trademark Office and (iii)
Copyrights (other than Copyrights described in clauses (iii) and (iv) of the
definition thereof)
13
registered with the United States Copyright Office and all rights in or under
any of the foregoing.
"RELATED TRANSFERRED RIGHTS" means (i) Transferred Receivables, (ii)
rights to payment and collections in respect of such Transferred Receivables,
(iii) security interests or Liens and property subject thereto purporting to
secure or guarantee payment of such Transferred Receivables, (iv) guarantees,
letters of credit, acceptances, insurance and other arrangements from time to
time supporting or securing payment of such Transferred Receivables, (v) all
invoices, documents, books, records and other information with respect to such
Transferred Receivables or the obligors thereon, (vi) with respect to any such
Transferred Receivables, the transferee's interest in the product (including
returned product), the sale of which by such transferee gave rise to such
Transferred Receivables and (vii) all Proceeds of the items described in the
foregoing clauses.
"REQUIRED SECURED BANKS" means, at any time, Banks having at least 51%
of the aggregate amount, without duplication, of (i) the "Commitments" under
each of the 2001 364-Day Agreements and (ii) the aggregate unpaid principal
amount of the "Loans" under 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 collectively to each instrument, agreement or other
document that sets forth obligations of such 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) with respect to NNL, the NNL Secured
Obligations, (ii) with respect to NNI, the NNI Secured Obligations, (iii) with
respect to NNFI, the NNFI Secured Obligations and (iv) with respect to each
Subsidiary Lien Grantor other than NNFI, the NNI Bank Obligations, the NNI
Hedging Obligations, the NNL Bond Obligations, the NNL Bank Obligations, the NNL
Hedging Obligations, the NNFI Hedging Obligations, any Designated Capital
Markets Debt and any Designated Bank Debt.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
14
"SECURITIES ACCOUNT CONTROL AGREEMENT" means, when used with respect to
a Securities Account, a Securities Account Control Agreement substantially in
the form of Exhibit G (with any changes that the Collateral Agent shall have
reasonably approved) among the relevant Securities Intermediary, the relevant
Lien Grantor and the Collateral Agent to the effect that such Securities
Intermediary will comply with Entitlement Orders originated by the Collateral
Agent with respect to such Securities Account without further consent by the
relevant Lien Grantor.
"SECURITY AGREEMENT SUPPLEMENT" means a Security 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 21 and/or adding additional property to the Collateral.
"SECURITY DOCUMENTS" means this Agreement, the Security Agreement
Supplements, the Commodity Account Control Agreements, the Deposit Account
Control Agreements, the Issuer Control Agreements, the Securities Account
Control Agreements, the Intellectual Property Security Agreements and all other
supplemental or additional security agreements, control agreements or similar
instruments delivered pursuant to any NNL Credit Agreement or NNI Credit
Agreement (other than any such agreement or instrument with respect to Real
Property).
"SPECIFIED EVENT OF DEFAULT" means an event described in Section
6.01(a), (f) or (g) of the Credit Agreements, or any Event of Default caused by
a breach of any financial or debt covenant contained in either 2001 364-Day
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 the Company.
"SUBSIDIARY LIEN GRANTORS" means each Subsidiary of NNI or NNL listed
on the signature pages hereof under the caption "Subsidiary Lien Grantors" and
each Subsidiary of NNI or NNL that shall, at any time after the date hereof,
become a "Subsidiary Lien Grantor" pursuant to Section 21, in each case if such
Subsidiary is a U.S. Subsidiary and is not listed on Annex B to the 2001 364-Day
Agreements.
"SUPPORTING LETTER OF CREDIT" means a letter of credit that supports
the payment or performance of one or more items included in the Collateral.
15
"TOTAL COLLATERAL" means the "Collateral" as defined in the 2001
364-Day Agreements (assuming, for this purpose, that Collateral includes all
"Foreign Subsidiary Guarantees" as defined in the 2001 364-Day Agreements, in
effect at any time of determination).
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use any Trademark.
"TRADEMARKS" means: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and all other
source or business identifiers, and all general intangibles of like nature, and
the rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including
registrations and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, including those
described in Schedule 1 to any Trademark Security Agreement, (iv) all renewals
of any of the foregoing, (v) all claims for, and rights to ▇▇▇ for, past or
future infringements of any of the foregoing and (vi) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or future infringements
thereof.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"TRANSACTION LIENS" means the Liens granted by the Lien Grantors under
the Security Documents.
"TRANSFERRED RECEIVABLES" means any receivables that have been sold,
pledged, contributed or otherwise transferred in connection with a Permitted
Receivables Financing.
"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.
16
"2002 NOTES" means the 6-7/8% Notes Due 2002 issued by NTL pursuant to
the 1988 Indenture.
"2003 NOTES" means the 6% Notes Due 2003 issued by NTL pursuant to the
1988 Indenture.
"2008 NOTES" means the 4.25% Convertible Senior Notes due 2008 issued
by NNC and guaranteed by NNL pursuant to the 2001 Indenture.
"2006 NOTES" means the 6.125% Notes due 2006 issued by NNL pursuant to
the 2000 Indenture.
"2006 NNCC NOTES" means the 7.40% Notes due 2006 issued by NTL pursuant
to the 1996 Indenture.
"2023 NOTES" means the 6-7/8% Notes due 2023 issued by NTL pursuant to
the 1988 Indenture.
"2026 NOTES" means the 7.875% Notes due 2026 issued by Northern Telecom
Capital Corporation and guaranteed by NTL pursuant to the 1996 Indenture.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any Transaction Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
"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) Terms Generally. The definitions of terms herein (including those
incorporated by reference to the UCC or to another document) apply equally to
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words "INCLUDE", "INCLUDES" and "INCLUDING" shall be deemed to be
followed by the phrase "WITHOUT LIMITATION". The word "WILL" shall be construed
to have the same meaning and effect as the word "SHALL". Unless the context
requires otherwise, (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement,
17
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), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"HEREIN", "HEREOF" and "HEREUNDER", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Sections, Exhibits and Schedules
shall be construed to refer to Sections of, and Exhibits and Schedules to, this
Agreement and (e) 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.Guarantee.
(a) Guarantee. Each Guarantor unconditionally guarantees the full and
punctual payment of each of its Guaranteed Obligations when due (whether at
stated maturity, upon acceleration or otherwise). If any Guaranteed Obligation
of a Guarantor is not paid punctually when due, such Guarantor agrees that it
will forthwith on demand pay the amount not so paid at the place and in the
manner specified in the relevant Secured Agreement. This Guarantee shall be
effective with respect to each Guarantor as of the first day of any Collateral
Period, and shall be released in accordance with subsection 2(c) below.
(b) Guarantee Unconditional. The obligations of each Guarantor under
its Guarantee shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any Lien Grantor or any other
Person under any Secured Agreement, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
Secured Agreement;
(iii) any release, impairment, non-perfection or invalidity of
any direct or indirect security for any obligation of any Lien Grantor
or any other Person under any Secured Agreement;
(iv) any change in the corporate existence, structure or
ownership of any Lien Grantor or any other Person or any of their
respective subsidiaries, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting any Lien Grantor or any other
Person or any of their assets or any resulting release or discharge of
any obligation of any Lien Grantor or any other Person under any
Secured Agreement;
18
(v) the existence of any claim, set-off or other right that
such Guarantor may have at any time against any Lien Grantor, any
Secured Party or any other Person, whether in connection with the
Secured Agreements or any unrelated transactions; provided that nothing
herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
any Lien Grantor or any other Person for any reason of any Secured
Agreement, or any provision of applicable law or regulation purporting
to prohibit the payment of any Secured Obligation by any Lien Grantor
or any other Person; or
(vii) any other act or omission to act or delay of any kind by
any Lien Grantor, any other party to any Secured Agreement, any Secured
Party or any other Person, or any other circumstance whatsoever that
might, but for the provisions of this clause 2(b)(vii), constitute a
legal or equitable discharge of or defense to any obligation of such
Guarantor hereunder, but excluding payment in full of the Guaranteed
Obligations.
(c) Release of Guarantee. The Guarantee of each Guarantor will be
released on the earlier of (i) any Investment Grade Date and (ii) the Bank
Termination Date. If at any time any payment of a Guaranteed Obligation by a
Guarantor is rescinded or must be otherwise restored or returned upon the
insolvency or receivership of such Guarantor or otherwise, the Guarantee of such
Guarantor shall be reinstated with respect thereto as though such payment had
been due but not made at such time. The Collateral Agent may release any
Guarantor from its Guarantee in accordance with Section 26.
(d) Waiver by Guarantors. Each Guarantor irrevocably waives acceptance
hereof, presentment, demand (except for the demand requirement with respect to
such Guarantor under Section 2(a)), protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any other Person.
(e) Subrogation. If any Guarantor makes a payment with respect to a
Guaranteed Obligation hereunder, such Guarantor shall be subrogated to the
rights of the payee against the relevant obligor (other than such Guarantor)
(each, for purposes of this Section 2, a "relevant obligor") with respect to
such payment; provided that no Guarantor shall not enforce any payment by way of
subrogation against a relevant obligor or by reason of contribution against any
other guarantor of such Guaranteed Obligation, until the Bank Termination Date.
19
(f) Stay of Acceleration. If acceleration of the time for payment of
any Guaranteed Obligation by any relevant obligor is stayed by reason of the
insolvency or receivership of such relevant obligor or otherwise, all Guaranteed
Obligations otherwise subject to acceleration in accordance with their terms
shall nonetheless be payable by the relevant Guarantor forthwith on demand by
the Collateral Agent.
(g) Right of Set-Off. If a Specified Event of Default has occurred and
is continuing and any Guaranteed Obligation is not paid promptly when due after
a demand has been made, each of the relevant Secured Parties and their
respective affiliates is authorized, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Secured Party or affiliate to or for the credit or the account of any
Guarantor against the obligations of such Guarantor under its Guarantee,
irrespective of whether or not such Secured Party shall have made any demand
thereunder and although such obligations may be unmatured. The rights of each
Secured Party under this subsection 2(g) are in addition to all other rights and
remedies (including other rights of set-off) that such Secured Party may have.
(h) Continuing Guarantee. The Guarantee is a continuing guarantee,
shall be binding on each Guarantor and its successors and assigns, and shall be
enforceable by the Collateral Agent or the Secured Parties. If all or part of
any Secured Party's interest in any Guaranteed Obligation is assigned or
otherwise transferred, the transferor's rights under the Guarantee, to the
extent applicable to the obligation so transferred, shall automatically be
transferred with such obligation.
(i) Limitation on Obligations of Guarantors. The obligations of each
Guarantor under its Guarantee shall be limited to an aggregate amount equal to
the largest amount that would not render such Guarantee subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of applicable law.
SECTION 3. Grant of Transaction Liens.
(a) Each Lien Grantor, in order to secure its Secured Obligations,
grants to the Collateral Agent for the benefit of the Secured Parties, effective
on the first day of any Collateral Period, a continuing security interest in all
the following property of such Lien Grantor, as the case may be, whether now
owned or existing or hereafter acquired or arising and regardless of where
located:
(i) all Accounts;
(ii) all Chattel Paper;
20
(iii) all Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles (including any Equity Interests
in other Persons that do not constitute Investment Property);
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-Credit Rights;
(xi) all Material Commercial Tort Claims with respect to which
such Lien Grantor is the claimant arising out of Material Recordable
Intellectual Property;
(xii) all books and records (including customer lists, credit
files, computer programs, printouts and other computer materials and
records) of such Lien Grantor pertaining to any of its Collateral;
(xiii) such Lien Grantor's ownership interest in (1) its
Collateral Accounts, (2) all Financial Assets credited to its
Collateral Accounts from time to time and all Security Entitlements in
respect thereof, (3) all cash held in its Collateral Accounts from time
to time and (4) all other money in the possession of the Collateral
Agent; and
(xiv) all Proceeds of the Collateral described in the
foregoing clauses 3(a)(i) through 3(a)(xiii);
provided that, with respect to the security interests granted by each Lien
Grantor, the following property shall be excluded from the foregoing security
interests: (A) any Equity Interests held by any Lien Grantor in any Subsidiary
that is not a U.S. Subsidiary, (B) Equity Interests held by such Lien Grantor in
any Subsidiary that is not a Material Subsidiary, (C) Equipment leased by any
Lien Grantor under a lease that prohibits the granting of a Lien on such
Equipment, (D) any general intangibles or other rights arising under any
contract, instrument, license or other document if (but only to the extent that)
the grant of a security interest therein would constitute a violation of a valid
and enforceable restriction in favor of a third party (other than any NNL
Company) or would result in an enforceable
21
right to declare a default or an enforceable right to terminate or annul unless
and until all required consents shall have been obtained, it being understood
that no Lien Grantor is obliged to obtain such consent, (E) any Equity Interests
in or any debt of any Person (other than a Material Subsidiary) if the grant of
a security interest therein would constitute a violation of any shareholder
agreement or other agreement with respect to such Equity Interests or debt among
such Lien Grantors and any other holders of Equity Interests or debt of such
Person, (F) any assets of such Lien Grantor that constitute Transferred
Receivables and Related Transferred Rights on the date on which such Lien
Grantor becomes a party to this Agreement, (G) Letter-of-Credit Rights for which
the jurisdiction whose laws govern the liability of the Issuer or Nominated
Person with respect thereto is not a jurisdiction in the United States, (H)
Deposit Accounts for which the relevant Depository Bank's jurisdiction is not in
the United States, (I) with respect to NNL only, any asset of NNL which is not
located in the United States or any State thereof, it being understood that
accounts receivable and rights constituting General Intangibles (other than
Intellectual Property registered with the United States Patent and Trademark
Office or the United States Copyright Office) are not located in the United
States or any State thereof for the purpose of this clause (I), (J) with respect
to any Lien Grantor other than NNL, any asset of such Lien Grantor which is not
located in the United States or any State thereof, it being understood that
accounts receivable and rights constituting General Intangibles (including
Intellectual Property registered with the United States Patent and Trademark
Office or the United States Copyright Office) are located in the United States
or any State thereof for the purpose of this clause (J), (K) any Equity Interest
held by NNL in NNI and any Equity Interest held by NNI in NNFI, Arris Group,
Inc. or Elastic Networks Inc. and (L) any Equity Interest held by NNI in NNTC,
but only so long as an NNTC Agreement is in full force and effect.
The security interests granted by each Lien Grantor pursuant to this
Section 3(a) shall terminate in accordance with Section 20.
(b) With respect to each right to payment or performance included in
the Collateral from time to time, the Transaction Lien granted therein includes
a continuing security interest in (i) any Supporting Obligation that supports
such payment or performance and (ii) any Lien that (x) secures such right to
payment or performance or (y) secures any such Supporting Obligation.
(c) The Transaction Liens 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.
SECTION 4.General Representations, Warranties and Covenants. Each Lien
Grantor represents and warrants, at the time set forth below, and covenants,
where indicated below, as follows:
22
(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
Grantor is a corporation duly organized, validly existing and, except with
respect to NNL, in good standing under the laws of (x) with respect to NNL, its
jurisdiction of organization in effect on the first date of the Collateral
Period of which NNL gives prior written notice to the Collateral Agent and (y)
with respect to every other Lien Grantor, the jurisdiction identified as its
jurisdiction of organization in its Perfection Certificate or such other
jurisdiction in the United States (or any State thereof) of which such Lien
Grantor gives prior written notice to the Collateral Agent (and upon the giving
of such notice, the Perfection Certificate shall be deemed to have been amended
to reflect the information set forth in such notice).
(b) Each Lien Grantor (other than NNL) represents and warrants, on the
first day of the first Collateral Period, that Schedule 1 lists all Pledged
Equity Interests in Material Subsidiaries that are U.S. Subsidiaries owned by
such Lien Grantor on the date of delivery of such 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 Schedule 2 lists (i) all Pledged Securities not
credited to a Securities Account and owned by such Lien Grantor on the date of
delivery of such Schedule 2 (except (x) Securities evidencing Equity Interests
in Subsidiaries and Equity Interest constituting minority investments in
privately held companies and (y) with respect to NNL only, Securities of
non-U.S. issuers), (ii) each Securities Account to which Financial Assets are
credited in respect of which such Lien Grantor owns Security Entitlements
(except, with respect to NNL only, if the relevant Securities Intermediary's
jurisdiction is not in the United States or any State thereof), so long as
Financial Assets with a fair market value in excess of $5,000,000 are credited
to such Securities Account as of the date of delivery of such Schedule 2 and
(iii) all Commodity Accounts in respect of which such Lien Grantor is the
Commodity Customer (except, with respect to NNL only, if the relevant
Commodities Intermediary's jurisdiction is not the United States or any State
thereof) on the date of delivery of such Schedule 2.
(d) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, and on each Drawdown Date, that such Lien Grantor has
provided to the Collateral Agent a written notice setting forth the 100 most
valuable items of Intellectual Property owned by the NNL Companies at such time,
as reasonably determined by the Lien Grantors, acting in their reasonable
discretion.
(e) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, that all Pledged Equity Interests owned by such Lien
23
Grantor at such time are owned by it free and clear of any Lien other than (i)
the Transaction Liens and (ii) any tax liens, judgment liens, put/call
arrangements and Liens existing on the date of this Agreement that are Permitted
Liens. Each Lien Grantor covenants that it will cause all Pledged Equity
Interests owned by such Lien Grantor from time to time to be owned by it free
and clear of any Lien other than (i) the Transaction Liens and (ii) any tax
liens, judgment liens, put/call arrangements and Liens existing on the date of
this Agreement that are Permitted Liens. 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
at such time with respect to a Material Subsidiary of such Lien Grantor
(including shares of capital stock in respect of which such Lien Grantor owns a
Security Entitlement) 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 with respect to a Material Subsidiary of
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 and the
Indentures) which restricts in any manner the rights of any present or future
holder of any Pledged Equity Interest with respect to a Material Subsidiary of
such Lien Grantor with respect thereto.
(f) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period, that at such time such Lien Grantor owns or has rights
in all of its Collateral, free and clear of any Lien other than Permitted Liens.
The Lien Grantor covenants that it shall own or have rights in all of its
Collateral, free and clear of any Lien other than Permitted Liens.
(g) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that at each such time (i) no
financing 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 the United States in
which such filing or recording would be effective to perfect or record a Lien on
such Collateral, except financing 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.
(h) Each Lien Grantor represents and warrants, on the first day of the
first Collateral Period and on each Drawdown Date, that, to the extent
attachment and creation of the Transaction Liens is governed by the laws of a
jurisdiction in the United States (including the UCC), the Transaction Liens on
all Collateral owned by such Lien Grantor at such time (i) have been validly
created, (ii) attach to each item of such Collateral on the date hereof (or, if
such Lien Grantor first
24
obtains rights thereto on a later date, on such later date) and (iii) when so
attached, will secure all the Secured Obligations of such Lien Grantor.
(i) Each Lien Grantor (other than NNL) represents and warrants that, on
or prior to January 15, 2002, such Lien Grantor has delivered a Perfection
Certificate to the Collateral Agent. The information set forth therein is
correct and complete as of the date of delivery thereof.
(j) Each Lien Grantor represents and warrants, on the first day of each
Collateral Period and on each Drawdown Date, that when a UCC financing statement
describing the Collateral as set forth in Schedule 3 has been filed (x) with
respect to NNL only, (i) in the District of Columbia so long as NNL is not
incorporated in a jurisdiction in the United States or any State thereof and
(ii) in the appropriate filing office in the jurisdiction of incorporation of
NNL, if NNL is incorporated in a jurisdiction in the United States or any State
thereof, and (y) with respect to every other Lien Grantor, in the offices
specified in such Perfection Certificate (as amended pursuant to Section 4 (a))
as being such Lien Grantor's jurisdiction of organization (if such Lien Grantor
is a "registered organization" within the meaning of UCC) or chief executive
office (if such Lien Grantor is not a "registered organization" within the
meaning of the UCC), the Transaction Liens will constitute perfected security
interests in the Collateral owned by such Lien Grantor to the extent that a
security interest therein may be perfected by filing pursuant to the UCC, prior,
in the case of Collateral other than (x) fixtures, (y) Collateral with respect
to which Intellectual Property Filings must be made in order to perfect a Lien
thereon and (z) unregistered Copyrights, to the extent applicable law does not
permit unregistered Copyrights to be perfected by the filing of a UCC financing
statement, to all Liens and rights of others therein except Permitted Liens.
When, in addition to the filing of such UCC financing statements, the applicable
Intellectual Property Filings have been made with respect to such Lien Grantor's
Material Recordable Intellectual Property (including any future filings required
pursuant to Sections 5(a) and 6(a)), the Transaction Liens will constitute
perfected security interests in all right, title and interest of such Lien
Grantor in its Material Recordable Intellectual Property to the extent that
security interests therein may be perfected by such filings, prior to all Liens
and rights of others therein except Permitted Liens. Except for (i) the filing
of such UCC financing statements, (ii) such Intellectual Property Filings and
filings with respect to Intellectual Property (other than Material Recordable
Intellectual Property) to the extent applicable law does not permit a Lien
thereon to be perfected by the filing of a UCC financing statement and (iii)
with respect to motor vehicles, the delivery of the certificates of title with
respect thereto, no registration, recordation or filing with any U.S.
governmental body, agency or official is required in connection with the
execution or delivery of the Security Documents or is necessary for the validity
or enforceability thereof or for the perfection under the UCC or due recordation
of the Transaction Liens or for the enforcement of the Transaction Liens (it
being understood that any disposition of
25
Collateral constituting Investment Property is subject to applicable securities
laws).
(k) Each Lien Grantor (other than NNL) represents and warrants, on the
first day of the first Collateral Period, that as of such time such Lien Grantor
has taken all actions necessary under the UCC to perfect its interest in any
Accounts or Chattel Paper in an amount in excess of $3,000,000 (per Account or
obligation evidenced by Chattel Paper) purchased or otherwise acquired by it, as
against its assignors and creditors of its assignors. Such Lien Grantor
covenants that it will take all actions necessary under the UCC to perfect its
interest in any Accounts or Chattel Paper in an amount in excess of $3,000,000
(per Account or obligation evidenced by Chattel Paper) purchased or otherwise
acquired by it, as against its assignors and creditors of its assignors.
(l) 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 Lien
Grantor is the claimant with respect to any Material Commercial Tort Claim that
has not been made subject to the Transaction Liens; provided that such
representation is not made with respect to any Commercial Tort Claim arising in
a jurisdiction outside the United States. Such Lien Grantor covenants that if it
acquires a Material Commercial Tort Claim, such Lien Grantor will promptly sign
and deliver a Security Agreement Supplement granting a Security Interest in such
Commercial Tort Claim (which shall be described therein in specificity required
to satisfy Official Comment 5 to UCC Section 9-108) to the Collateral Agent for
the benefit of the Secured Parties.
(m) 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 Lien
Grantor is the beneficiary under any Letter of Credit in a maximum face amount
in excess of $10,000,000, other than a Supporting Letter of Credit with respect
to which the issuer thereof has not (i) been notified that such letter of credit
has been made subject to a Transaction Lien and (ii) acknowledged receipt of
such notice.
(n) 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
Grantor is not a party to any Material Government Contract, except as disclosed
in writing to the Collateral Agent on or prior to such time. Each Lien Grantor
covenants that, if a Specified Event of Default shall have occurred and be
continuing, such Lien Grantor will, promptly at the request of the Collateral
Agent, execute and deliver to the Collateral Agent with respect to Pledged
Material Government Contracts all assignments, notices of assignment and other
documents required to be filed with (x) any state or local government or agency
or (y) the federal government of the United States or any agency or
instrumentality thereof in accordance with the Assignment of Claims Act of 1940,
as amended, 31 U.S.C. Section 3727 and 41 U.S.C. Section 15 (the "ASSIGNMENT OF
CLAIMS
26
ACT"), in either case to insure compliance with the Assignment of Claims Act;
provided that no such execution and delivery shall be required with respect to
any Material Government Contract if (x) such Material Government Contract is
with the federal government of the United States or any agency or
instrumentality thereof and such assignment is not of a type meeting the
requirements of 31 U.S.C. Section 3727(c) of the Assignment of Claims Act, or a
comparable provision if such Section is amended.
SECTION 5. Additional Covenants. Each Lien Grantor covenants as
follows:
(a) To the extent permitted by applicable law, such Lien Grantor
authorizes the Collateral Agent to execute and file financing statements or
continuation statements without such Lien Grantor's signature appearing thereon.
Such Lien Grantor agrees that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. Such Lien Grantor constitutes the Collateral Agent its
attorney-in-fact to execute and file (i) all Intellectual Property Filings in
respect of Material Recordable Intellectual Property (ii) so long as a Specified
Event of Default shall have occurred and be continuing, Intellectual Property
Filings with respect to other Recordable Intellectual Property (other than
Trademarks) and (iii) other filings in the United States (other than
Intellectual Property Filings with respect to Trademarks) required or requested
for the purposes of creating, perfecting and preserving the Transaction Liens,
all acts of such attorney being hereby ratified and confirmed; and such power,
being coupled with an interest, shall be irrevocable until all the Transaction
Liens granted by such Lien Grantor terminate pursuant to Section 20. The
relevant Lien Grantor will pay the reasonable costs of, or incidental to, (i)
any Intellectual Property Filings in respect of Material Recordable Intellectual
Property (ii) so long as a Specified Event of Default shall have occurred and be
continuing, any Intellectual Property Filings with respect to other Recordable
Intellectual Property (other than Trademarks), any recording or filing of any
UCC financing or continuation statements or other documents recorded or filed
pursuant hereto.
(b) Such Lien Grantor will not effect any "Asset Sale" referred to in
Section 5.13(g) of either 2001 364-Day Agreement with respect to any Collateral
if at such time a Specified Event of Default has occurred and is continuing.
(c) Such Lien Grantor (other than NNL) will use commercially reasonable
efforts consistent with its customary commercial practice to cause to be
collected from its account debtors, when due, all amounts owing under its
Accounts (including delinquent Accounts, which will be collected in accordance
with such Lien Grantor's customary collection procedures) and will apply all
amounts collected thereon, forthwith upon receipt thereof, to the outstanding
balances of such Accounts. Subject to the rights of the Collateral Agent and the
27
other Secured Parties hereunder if a Specified Event of Default shall have
occurred and be continuing, such Lien Grantor may allow in the ordinary course
of business as adjustments to amounts owing under its Accounts (i) any extension
or renewal of the time or times for payment, or settlement for less than the
total unpaid balance, that such Lien Grantor finds appropriate in accordance
with sound business judgment and (ii) refunds or credits, all in the ordinary
course of its business and consistent with such Lien Grantor's historical
collection practices. The reasonable costs and out-of-pocket expenses (including
reasonable attorney's fees) of collection incurred by such Lien Grantor, and the
reasonable costs and out-of-pocket expenses incurred by the Collateral Agent,
shall be paid by such Lien Grantor.
(d) Upon the occurrence and during the continuance of a Specified Event
of Default, if payments with respect to any of such Lien Grantor's Pledged
Accounts are received in a lockbox or similar account and at such time such Lien
Grantor has any Controlled Deposit Account, such Lien Grantor (other than NNL)
will at all times cause such lockbox or similar account to be a Controlled
Deposit Account.
(e) If a Specified Event of Default shall have occurred and be
continuing, such Lien Grantor (other than NNL) will, if requested to do so by
the Collateral Agent, promptly notify (and such Lien Grantor authorizes the
Collateral Agent so to notify) each account debtor in respect of any of its
Pledged Accounts that such Accounts have been assigned to the Collateral Agent
hereunder, and that any payments due or to become due in respect of such
Accounts are to be made directly to the Collateral Agent or its designee.
(f) Such Lien Grantor (other than NNL) will promptly deliver to the
Collateral Agent as Collateral hereunder any Pledged Tangible Chattel Paper and
any Pledged Instruments owned by such Lien Grantor, indorsed to the order of the
Collateral Agent, or accompanied by duly executed instruments of assignment,
with signatures appropriately guaranteed, all in form and substance reasonably
satisfactory to the Collateral Agent; provided that no Lien Grantor shall be
required to deliver (i) any such Pledged Tangible Chattel Paper to the extent
that it was entered into or provided in connection with vendor financing and
(ii) any such Pledged Instrument to the extent the aggregate principal or face
amount of such Pledged Instrument of such Lien Grantor does not exceed
$10,000,000. Upon the delivery of any Pledged Tangible Chattel Paper or Pledged
Instrument owned by such Lien Grantor to the Collateral Agent, the Transaction
Lien on such Collateral will be perfected, subject to no prior Liens or rights
of others other than Permitted Liens. So long as no Specified Event of Default
shall have occurred and be continuing, the Collateral Agent will, promptly upon
request by the relevant Lien Grantor, make appropriate arrangements for making
any Pledged Tangible Chattel Paper or Pledged Instrument available to the
relevant Lien Grantor for purposes of presentation, collection or renewal (any
such arrangement to be effected, to the
28
extent deemed reasonably appropriate by the Collateral Agent, against trust
receipt or like document).
(g) No Lien Grantor shall be required to deliver to the Collateral
Agent any certificate of title with respect to any motor vehicle constituting
Collateral, or to stamp or otherwise ▇▇▇▇ any such certificate of title to
reflect the security interest therein granted to the Collateral Agent pursuant
to this Agreement.
SECTION 6. Recordable Intellectual Property. Each Lien Grantor
covenants as follows:
(a) On the date on which it becomes a party to this Agreement, such
Lien Grantor will sign and deliver to the Collateral Agent Intellectual Property
Security Agreements with respect to all Material Recordable Intellectual
Property then owned by it. Within 30 days after each March 31 and September 30
thereafter, and on or prior to any Drawdown Date, such Lien Grantor will sign
and deliver to the Collateral Agent any Intellectual Property Security Agreement
provided by the Collateral Agent and necessary to grant Transaction Liens on all
Material Recordable Intellectual Property owned by it on such March 31 or
September 30 or such Drawdown Date that is not covered by any previous
Intellectual Property Security Agreement so signed and delivered by it. In each
case, it will, as soon as practicable upon the request of the Collateral Agent,
provide the Collateral Agent with all documentation necessary in order to enable
the Collateral Agent to make all Intellectual Property Filings necessary to
perfect the Transaction Liens on Material Recordable Intellectual Property.
(b) Such Lien Grantor will maintain its Material Intellectual Property
in a commercially reasonable, prudent manner consistent with its past practices
and with respect to any Material Intellectual Property which has been infringed,
misappropriated or diluted, in each case in a material respect, by a third
party, the relevant Lien Grantor will, unless such Lien Grantor shall reasonably
determine that such action would be of negligible value, economic or otherwise,
take commercially reasonable steps consistent with its past practices to ▇▇▇ for
infringement, misappropriation or dilution and to recover any and all damages
for such infringement, misappropriation or dilution, and/or take such other
actions as such Lien Grantor shall reasonably deem appropriate under the
circumstances to protect such Material Intellectual Property.
SECTION 7. Investment Property. Each Lien Grantor represents and
warrants, at the time set forth below, and 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
29
hereunder all certificates representing (i) any Pledged Certificated Security
owned as of such date by such Lien Grantor and not credited to a Securities
Account evidencing an Equity Interest in a Material Subsidiary that is a U.S.
Subsidiary of such Lien Grantor and (ii) any other Pledged Certificated Security
owned as of such date by such Lien Grantor and not credited to a Securities
Account having a fair market value in excess of $3,000,000 (other than
certificates evidencing (x) Equity Interests in Subsidiaries, (y) Equity
Interest constituting minority investments in privately held companies and (z)
Equity Interests of Arris Group Inc., and Elastic Networks Inc. Such Lien
Grantor covenants that whenever such Lien Grantor acquires any certificate
representing a Pledged Certificated Security described in clauses (i) or (ii) of
the immediately preceding sentence, such Lien Grantor will as promptly as
practicable deliver such certificate to the Collateral Agent as Collateral
hereunder.
(b) Uncertificated Securities. On the first day of the first Collateral
Period and on each Drawdown Date, such Lien Grantor represents and warrants
that, it has entered into (and caused the relevant issuer to enter into) an
Issuer Control Agreement in respect of (i) each Pledged Uncertificated Security
of owned by such Lien Grantor as of such date and not credited to a Securities
Account evidencing an Equity Interest in a Material Subsidiary that is a U.S.
Subsidiary of such Lien Grantor and (ii) any other Pledged Uncertificated
Security a U.S. issuer owned by such Lien Grantor as of such date and not
credited to a Securities Account having a fair market value in excess of
$5,000,000 (except Securities evidencing Equity Interests in Subsidiaries and
Equity Interest constituting minority investments in privately held companies),
and deliver each such Issuer Control Agreement to the Collateral Agent (which
shall enter into the same). Such Lien Grantor covenants that whenever such Lien
Grantor acquires any Pledged Uncertificated Security described in clauses (i) or
(ii) of the immediately preceding sentence, such Lien Grantor will enter into
(and cause the relevant issuer to enter into), as promptly as practicable, an
Issuer Control Agreement in respect of such Pledged Uncertificated Security and
deliver such Issuer Control Agreement to the Collateral Agent (which shall enter
into the same); provided that such Lien Grantor shall not be deemed in breach of
this covenant if any such agreement shall fail to be finalized solely other than
as a result of any action or inaction on the part of such Lien Grantor and, if
the issuer under any such agreement is a Material Subsidiary, such Material
Subsidiary.
(c) Security Entitlements. On the first day of the first Collateral
Period and on each Drawdown Date, such Lien Grantor represents and warrants that
it has, with respect to each Pledged Security Entitlement owned by it at such
time, entered into (and caused the relevant Securities Intermediary to enter
into) a Securities Account Control Agreement in respect of such Pledged Security
Entitlement and the Securities Account to which the underlying Financial Asset
is credited and will deliver such Securities Account Control Agreement to the
Collateral Agent (which shall enter into the same) so long as Financial Assets
with
30
a fair market value in excess of $5,000,000 are credited to such account at such
time unless such agreement has not been entered into solely other than as a
result of any action or inaction on the part of the Lien Grantor; provided that
NNL shall be deemed to have made this representation and warranty only with
respect to Securities Accounts for which the relevant Securities Intermediary's
jurisdiction is in the United States. Such Lien Grantor covenants that whenever
such Lien Grantor acquires any other Pledged Security Entitlements the
underlying Financial Assets of which, together with all other Financial Assets
credited to the same Securities Account, have an aggregate fair market value in
excess of $5,000,000, such Lien Grantor will, as promptly as practicable, cause
the underlying Financial Asset to be credited to a Controlled Securities
Account; provided that NNL shall not be so obligated if the jurisdiction of the
relevant Securities Intermediary is not in the United States
(d) Commodity Accounts. On the first day of the first Collateral Period
and on each Drawdown Date, such Lien Grantor represents and warrants that it has
entered into (and cause the relevant Commodity Intermediary to enter into) a
Commodity Account Control Agreement in respect of each Commodity Account owned
by it at such time and will deliver such Commodity Account Control Agreement to
the Collateral Agent (which shall enter into the same) so long as Commodity
Contracts with a fair market value in excess of $3,000,000 are credited to such
account at such time unless such agreement has not been entered into solely
other than as a result of any action or inaction on the part of the Lien
Grantor; provided that NNL shall be deemed to have made this representation and
warranty only with respect to Commodity Accounts for which the relevant
Commodity Intermediary's jurisdiction is in the United States. Such Lien Grantor
covenants that such Lien Grantor will cause, as promptly as practicable, each
Commodity Contract owned by it with a fair market value in excess of $3,000,000
to be carried at all times in a Controlled Commodity Account; provided that NNL
shall not be so obligated if the jurisdiction of the Commodity Intermediary for
the Commodity Account in which such Commodities Contract is carried is not in
the United States.
(e) Perfection as to Certificated Securities. Such Lien Grantor
represents and warrants that, at the time that such Lien Grantor delivers the
certificate representing any Pledged Certificated Security owned by it to the
Collateral Agent in the United States and complies with Section 7(j) in
connection with such delivery, and assuming the Collateral Agent has no notice
of any adverse claim, (i) the Transaction Lien on such Pledged Certificated
Security will be perfected, subject to no prior Liens or rights of others other
than tax liens, judgment liens, put/call arrangements and Liens existing on the
date of this Agreement that are Permitted Liens, and (ii) the Collateral Agent
will have Control of such Pledged Certificated Security.
31
(f) Perfection as to Uncertificated Securities. Such Lien Grantor
represents and warrants that, at the time that such Lien Grantor, the Collateral
Agent and the U.S. issuer of any Pledged Uncertificated Security owned by such
Lien Grantor enter into an Issuer Control Agreement with respect thereto, and
assuming the Collateral Agent has no notice of any adverse claim, (i) the
Transaction Lien on such Pledged Uncertificated Security will be perfected,
subject to no prior Liens or rights of others other than tax liens, judgment
liens, put/call arrangements and Liens existing on the date of this Agreement
that are Permitted Liens and (ii) the Collateral Agent will have Control of such
Pledged Uncertificated Security.
(g) Perfection as to Security Entitlements. Such Lien Grantor
represents and warrants that, at the time that the Financial Asset underlying
any Pledged Security Entitlement owned by such Lien Grantor is credited to the
applicable Controlled Securities Account, (i) the Transaction Lien on such
Pledged Security Entitlement will be perfected, subject to no prior Liens or
rights of others (except Liens and rights of the relevant Securities
Intermediary that are Permitted Liens) other than tax liens, judgment liens,
put/call arrangements and Liens existing on the date of this Agreement that are
Permitted Liens and (ii) the Collateral Agent will have Control of such Pledged
Security Entitlement; provided that NNL shall be deemed to have made this
representation and warranty only with respect to Securities Accounts for which
the relevant Securities Intermediary's jurisdiction is in the United States.
(h) Perfection as to Commodity Accounts. Each Lien Grantor covenants
that so long as any Commodity Account is subject to a Commodity Account Control
Agreement, and assuming the Collateral Agent has no notice of any adverse claim
(i) the Transaction Liens on such Pledged Commodity Account and all Pledged
Commodity Contracts carried therein will be perfected, subject to no prior Liens
or rights of others (except Liens and rights of the relevant Commodity
Intermediary permitted by such Commodity Account Control Agreement) other than
tax liens, judgment liens, put/call arrangements and Liens existing on the date
of this Agreement that are Permitted Liens and (ii) the Collateral Agent will
have Control of such Commodity Account and all Commodity Contracts carried
therein from time to time, provided that NNL shall be deemed to have made this
representation and warranty only with respect to Commodity Accounts for which
the relevant Commodity Intermediary's jurisdiction is in the United States.
(i) Agreement as to Applicable Jurisdiction. Each Lien Grantor (other
than NNL) covenants that in respect of all Pledged Security Entitlements owned
by such Lien Grantor, and all Securities Accounts to which the related Financial
Assets are credited, the Securities Intermediary's jurisdiction (determined as
provided in UCC Section 8-110(e)) will at all times be located in the United
States. In respect of all Commodity Contracts owned by such Lien Grantor (other
than NNL) and all Commodity Accounts in which such Commodity Contracts are
32
carried, the Commodity Intermediary's jurisdiction (determined as provided in
UCC Section 9-305 (b)) will at all times be located in the United States.
(j) Delivery of Pledged Certificates. Each Lien Grantor covenants that
all Pledged Certificates, when delivered to the Collateral Agent, will be in
suitable form for transfer by delivery, or accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent.
SECTION 8. Controlled Deposit Accounts. Each Lien Grantor (other than
NNL) covenants as follows:
(a) Such Lien Grantor covenants that, no later than March 31, 2002, it
will deliver to the Collateral Agent duly executed Deposit Account Control
Agreements with respect to each account agreed upon between the Collateral Agent
and such Lien Grantor on or prior to March 31, 2002. Upon the occurrence and
during the continuance of a Specified Event of Default, all cash owned by such
Lien Grantor will be deposited, upon or promptly after the receipt thereof, in
one or more Controlled Deposit Accounts or, with respect to NNL only, in
accordance with any other Security Document to which NNL is a party containing
provisions governing the deposit of such cash. Each Controlled Deposit Account
will be operated as provided in Section 10.
(b) Such Lien Grantor covenants that, in respect of each Controlled
Deposit Account, the Depositary Bank's jurisdiction (determined as provided in
UCC Section 9-304) will at all times be a jurisdiction in which Article 9 of the
Uniform Commercial Code (including without limitation the UCC) is in effect.
(c) Such Lien Grantor covenants that, so long as the Collateral Agent
has Control of a Controlled Deposit Account, the Transaction Lien on such
Controlled Deposit Account will be perfected, subject to no prior Liens or
rights of others (except the Depositary Bank's right to deduct its normal
operating charges and any uncollected funds previously credited thereto) other
than tax liens, judgment liens, put/call arrangements and Liens existing on the
date of this Agreement that are Permitted Liens.
SECTION 9. Cash Collateral Accounts. (a) If and when required for
purposes hereof, the Collateral Agent will establish with respect to each Lien
Grantor an account (its "CASH COLLATERAL ACCOUNT"), in the name and under the
exclusive control of the Collateral Agent, subject to subsection 9(d). Each Cash
Collateral Account will be operated as provided in this Section 9 and Section
10.
(b) The Collateral Agent shall deposit the following amounts, as and
when received by it, in each Lien Grantor's Cash Collateral Account: each amount
required to be deposited therein by any provision of any Credit Agreement or
other
33
Loan Document referred to therein; each Cash Distribution required by Section 13
to be deposited therein; 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 Security 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 9(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 9(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, at the
relevant Lien Grantor's request, (x) be withdrawn and applied to pay Secured
Obligations that are then due and payable or (y) if no Event of Default has
occurred and is continuing, be withdrawn and returned to such Lien Grantor.
SECTION 10. Operation of Collateral Accounts. (a) All Cash
Distributions received with respect to assets held in any Collateral Account
shall be deposited therein promptly upon receipt thereof.
(b) Funds held in any Controlled Securities Account may, until
withdrawn, be invested and reinvested in Permitted Investments as the relevant
Lien Grantor shall determine from time to time; provided that, if a Specified
Event of Default shall have occurred and be continuing, Collateral Agent may
select such Permitted Investments.
(c) So long as no Specified Event of Default shall have occurred and be
continuing, funds held in any Controlled Deposit Account or Cash Collateral
Account may, until withdrawn, be invested and reinvested in Permitted
Investments; provided that (i) if a Specified Event of Default shall have
occurred and be continuing, Collateral Agent may select such Permitted
Investments and (ii) if such Permitted Investments are to be held in a
Securities Account, either (x) the Collateral Agent is the Entitlement Holder
with respect to such Permitted Investments or (y) the relevant Entitlement
Holder and the relevant Securities Intermediary shall have theretofore entered
into a Securities Account Control Agreement with respect to such Securities
Account and delivered it to the Collateral Agent (which shall enter into the
same).
(d) With respect to each Collateral Account (except a Cash Collateral
Account, as to which Section 9 applies), the Collateral Agent will instruct the
34
relevant Securities Intermediary or Depositary Bank that the relevant Lien
Grantor may withdraw, or direct the disposition of, funds held therein unless
and until the Collateral Agent rescinds such instruction. The Collateral Agent
will not rescind such instructions unless a Specified Event of Default shall
have occurred and be continuing.
(e) So long as a Specified Event of Default shall have occurred and be
continuing, no Lien Grantor will cause funds to be transferred from a Collateral
Account to any other account owned by an NNL Company unless such other account
is a Collateral Account (except, with respect to any account of NNL only, if the
relevant Securities Intermediary's or Depositary Bank's jurisdiction is not in
the United States) and such transfer is permitted under the Credit Agreements by
which such Lien Grantor is bound.
(f) If a Specified Event of Default shall have occurred and be
continuing, the Collateral Agent may (i) retain, or instruct the relevant
Securities Intermediary or Depositary Bank to retain, all cash and investments
then held in any Collateral Account, (ii) liquidate, or instruct the relevant
Securities Intermediary or Depositary Bank to liquidate, any or all investments
held therein and/or (iii) withdraw any amounts held therein and apply such
amounts as provided in Section 15.
(g) If a Specified Event of Default shall have occurred and be
continuing, and immediately available cash on deposit in any 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 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 11. Transfer of Record Ownership. (a) At any time when an Event
of Default shall have occurred and be continuing, the Collateral Agent may (and
to the extent that action by it is required, the relevant Lien Grantor, if
directed to do so by the Collateral Agent, will as promptly as practicable):
cause each of the Pledged Certificated Securities (or any portion thereof
specified in such direction) to be transferred of record into the name of the
Collateral Agent or its nominee. Promptly upon receiving any such direction, the
Collateral Agent will notify each relevant Lien Grantor thereof, and from time
to time thereafter such Lien Grantor will take any and all actions reasonably
requested by the Collateral Agent to facilitate compliance with this subsection
11(a).
(b) Communications after Transfer of Record Ownership. The Collateral
Agent will promptly give to the relevant Lien Grantor copies of any notices and
other communications received by the Collateral Agent with respect to Pledged
35
Certificated Securities registered in the name of the Collateral Agent or its
nominee.
SECTION 12. Right to Vote Securities. (a) Unless (x) with respect to
any Pledged Security not credited to a Securities Account other than any
Uncertificated Security representing shares in a money market fund, an Event of
Default shall have occurred and be continuing or (y) with respect to any Pledged
Security credited to a Securities Account and any Financial Asset underlying any
Pledged Security Entitlement owned by it and any Uncertificated Securities
representing shares in a money market fund, a Specified 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 Security owned by it and the Financial Asset underlying
any Pledged Security Entitlement 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
Security that is registered in the name of the Collateral Agent or its nominee
or any such Pledged Security Entitlement as to which the Collateral Agent or its
nominee is the Entitlement Holder, in each case as shall be specified in such
request and be in form and substance reasonably satisfactory to the Collateral
Agent. Unless (x) with respect to any Pledged Security not credited to a
Securities Account other than any Uncertificated Security representing shares in
a money market fund, an Event of Default shall have occurred and be continuing
or (y) with respect to any Pledged Security credited to a Securities Account and
any Financial Asset underlying any Pledged Security Entitlement owned by it and
any Uncertificated Securities representing of shares in a money market fund, a
Specified 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
Security, Pledged Partnership Interest or Pledged LLC Interest is entitled to
take with respect thereto, except the right to receive payments and other
distributions to the extent provided herein.
(b) If (x) with respect to any Pledged Security not credited to a
Securities Account other than any Uncertificated Security representing shares in
any money market fund, an Event of Default shall have occurred and be continuing
or (y) with respect to any Pledged Security credited to a Securities Account and
any Financial Asset underlying any Security Entitlement owned by it and any
Uncertificated Securities consisting of shares in a money market fund, a
Specified Event of Default shall have occurred and be continuing, the Collateral
Agent will have the right to the extent permitted by law (and, in the case of a
Pledged Security, Pledged Partnership Interest or Pledged LLC Interest, by the
relevant partnership agreement, limited liability company agreement, operating
agreement or other governing document) to vote, to give consents, ratifications
and waivers and to take any other action with respect to the Pledged Investment
Property, the other Pledged Equity Interests (if any) and the Financial Assets
underlying the Pledged
36
Security Entitlements, 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 13. Certain Cash Distributions. Cash Distributions with respect
to assets held in a Collateral Account shall be deposited and held therein, or
withdrawn therefrom, as provided in Section 9 and Section 10. If a Specified
Event of Default shall have occurred and be continuing, Cash Distributions
(other than in amounts less than $3,000,000) with respect to any Pledged Equity
Interest that is not held in a Collateral Account (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 practicable upon receipt thereof, in a Controlled Deposit
Account of the relevant Lien Grantor if such account exists at such time and if
applicable, applied in accordance with the prepayment provisions of the 2001
364-Day Agreements.
SECTION 14. Remedies upon Event of Default or Specified Event of
Default. (a) 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 Security
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 UCC
(whether or not in effect in the jurisdiction where such rights are exercised)
with respect to Illiquid Collateral or Liquid Collateral, as applicable, and, in
addition, the Collateral Agent may, 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 Collateral Accounts and apply such cash as provided in
Section 15 and, if there shall be no such cash or if such cash shall be
insufficient to pay all the Secured Obligations in full, sell, lease, license or
otherwise dispose of (x) if a Event of Default has occurred and is continuing,
the Illiquid Collateral or any part thereof and (y) if 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(s) as required by Section 17.
(b) Without limiting the generality of the foregoing, if a Specified
Event of Default shall have occurred and be continuing: (i) the Collateral Agent
may license or sublicense, whether general, special or otherwise, and whether on
an exclusive or non-exclusive basis, any Pledged Intellectual Property
(including any Pledged Recordable Intellectual Property) throughout the world
for such term or
37
terms, on such conditions and in such manner as the Collateral Agent shall in
its sole discretion determine;provided the Collateral Agent shall notify the
relevant Lien Grantor of any license or sublicenses so granted (but failure to
give such notice shall not effect validity of such license) and that such
licenses or sublicenses do not conflict with any existing license or applicable
law; (ii) the Collateral Agent may (without assuming any obligation or liability
thereunder), at any time and from time to time, in its sole and reasonable
discretion, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of any Lien Grantor in, to and
under any of its Pledged Intellectual Property and take or refrain from taking
any action under any thereof, and each Lien Grantor releases the Collateral
Agent and each other Secured Party from liability for, and agrees to hold the
Collateral Agent and each other Secured Party free and harmless from and against
any claims and reasonable expenses arising out of, any lawful action so taken or
omitted to be taken with respect thereto, except for claims and reasonable
expenses arising from the Collateral Agent's or such Secured Party's gross
negligence or willful misconduct or a breach of any duty that the Collateral
Agent has under this Agreement (after giving effect to Sections 18 and 19); and
(iii) upon request by the Collateral Agent (which shall not be construed as
implying any limitation on rights or powers), each Lien Grantor will execute and
deliver to the Collateral Agent a power of attorney, in form and substance
satisfactory to the Collateral Agent, for the implementation of any sale, lease,
license or other disposition of any of such Lien Grantor's Pledged Intellectual
Property or any action related thereto. In connection with any such disposition,
but subject to any confidentiality restrictions imposed on such Lien Grantor in
any license or similar agreement, such Lien Grantor will supply to the
Collateral Agent its know-how and expertise relating to the relevant
Intellectual Property or the products or services made or rendered in connection
with such Intellectual Property, and its customer lists and other records
relating to such Intellectual Property and to the distribution of said products
or services.
SECTION 15. 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 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:
(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 16 or any amounts owing to any
Indenture Trustee under (x)
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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 15(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
15(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;
provided that Collateral owned by any Guarantor and any proceeds thereof shall
be applied pursuant to the foregoing clauses (1), (2), (3) and (4) of this
Section 15(a) to the Secured Obligations of such Guarantor consisting of the
Guaranteed Obligations of such Guarantor only to the extent permitted by the
limitation in Section 2(i); provided further that Collateral owned by any
Subsidiary Lien Grantor and any proceeds thereof shall be applied pursuant to
the foregoing clauses (1), (2), (3) and (4) of this Section 15(a) to the Secured
Obligations of such Subsidiary Lien Grantor only up to an aggregate amount equal
to the largest amount that would not render such application of Collateral or
proceeds subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of applicable law. 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 15(b), be
payable pursuant to Section 15(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 Obligations
excluding the holder of any Secured Bond Obligation, request the 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
39
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 15(b) rather than Section 15(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 15(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 15(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 15(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 15(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 15(a)(2), 15(a)(3) and 15(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 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 15(b) to cover the Contingent Secured Obligations relating
to the Credit Agreements at such Level in accordance with Section 15(b).
Notwithstanding the foregoing, if the amount to be applied to the Secured Bond
Obligations at any Level would be greater if the Ratio
40
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 15 of this
Agreement (including this Section 15(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 15,
the Collateral Agent may rely upon information supplied to it pursuant to
Section 19(f). All distributions made by the Collateral Agent pursuant to this
Section 15 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 16. Fees and Expenses. Each Lien Grantor will forthwith upon
demand pay to the Collateral Agent: (i) 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; (ii) 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 (except (x) so long as no Specified Event of Default shall have
occurred and be continuing, any filing fees with respect to Intellectual
Property Filings other than with respect to Material Recordable Intellectual
Property and (y) Intellectual Property Filings with respect to Trademarks which
are not Material Recordable Intellectual Property) in connection with (x) 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,
(y) the collection, sale or other disposition of any Collateral or (z) the
exercise by the Collateral Agent of any of its rights or powers under the
Security Documents; (iii) the amount of any fees that the Borrower 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 (iv) 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 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 (x) so long as no Specified Event of Default
shall
41
have occurred and be continuing, any filing fees with respect to or arising in
connection with Intellectual Property Filings other than with respect to
Material Recordable Intellectual Property and (y) Intellectual Property Filings
with respect to Trademarks which are not Material Recordable Intellectual
Property), except to the extent that such loss, liability or expense arises from
the Collateral Agent's gross negligence or willful misconduct or a breach of any
duty that the Collateral Agent has under this Agreement (after giving effect to
Sections 18 and 19). 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 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 17. 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 NNI'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, lease, license 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 is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Collateral Agent will give the relevant Lien Grantor at least ten
days' prior written notice of the time and place of any public sale thereof or
the time after which any private sale or other intended disposition thereof will
be made. Any such notice shall (i) contain the information specified in UCC
Section 9-613, (ii) be Authenticated and (iii) be sent to the parties required
to be notified pursuant
42
to UCC Section 9-611(c); provided that, if the Collateral Agent fails to comply
with this sentence in any respect, its liability for such failure shall be
limited to the liability (if any) imposed on it as a matter of law under the
UCC.
SECTION 18. 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 willful misconduct.
SECTION 19. 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,
(a) the Collateral Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether an Event of Default has occurred and is
continuing, (b) 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 (c) 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
43
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
Requisite Lenders 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 willful 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.
(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
sub-agent 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 18 and this Section 19 shall
apply to any such sub-agent and to the Related Parties of the Collateral Agent
and any such sub-agent.
(f) Information as to Secured Obligations and Actions by Secured
Parties. For all purposes of the Security Documents, including determining the
amounts of
44
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) NNI, 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
19(h), the Collateral Agent may resign at any time by notifying the Banks and
NNI. Upon any such resignation, the Required Secured Banks shall have the right
to appoint a successor Collateral Agent reasonably acceptable to NNI. 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 NNI, which shall be a bank with an office in New York,
New York, 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 Collateral Agent hereunder, and the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder. The fees payable by NNI to
a successor Collateral Agent shall be the same as those payable to its
predecessor unless otherwise agreed by NNI and such successor. After the
Collateral Agent's resignation hereunder, the provisions of this Section 19 and
Section 18 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 20. Termination of Transaction Liens; Release of Collateral.
(a) The Transaction Liens granted by each Lien Grantor shall terminate on the
earlier of (i) any Investment Grade Date and (ii) the Bank Termination Date.
45
(b) 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 Transaction Liens on the assets
sold or disposed of (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.
(c) Upon any Collateral of any Lien Grantor becoming Transferred
Receivables or Related Transferred Rights, the Transaction Lien thereon (but not
in any Proceeds thereof) 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 Transferred Receivables or Related
Transferred Rights is an Asset Sale referred to in Section 5.13(g) of either
2001 364-Day Agreement, no Specified Event of Default shall have occurred and be
continuing. The Collateral Agent shall be fully protected in relying on a
certificate of the relevant Lien Grantor stating that any Collateral qualifies
as Transferred Receivables or Related Transferred Rights.
(d) Upon any Collateral of any Lien Grantor consisting of cash, cash
equivalents or Permitted Investments becoming the subject of a hedging
transaction permitted under the terms of the Credit Agreements, the Transaction
Lien thereon (but not in any Proceeds thereof) will cease immediately without
any action by the Collateral Agent or any other Secured Party; provided that, if
the transaction pursuant to which such Collateral becoming the subject of a
hedging transaction is an Asset Sale referred to in Section 5.13(g) of either
2001 364-Day Agreement, no Specified Event of Default shall have occurred and be
continuing.
(e) Upon any Collateral of any Lien Grantor consisting of Investment
Property 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 Transaction Lien
thereon (but not in any Proceeds thereof) will cease immediately without any
action by the Collateral Agent or any other Secured Party; provided that, if the
transaction pursuant to which such Collateral being so transferred is an Asset
Sale referred to in Section 5.13(g) of either 2001 364-Day Agreement, no
Specified Event of Default shall have occurred and be continuing.
(f) In addition to the foregoing, at any time before the Transaction
Liens terminate, the Collateral Agent may (i) release any Collateral (but not
all or any substantial part of the Total Collateral) with the prior written
consent of the Required Secured Banks, (ii) release all or any substantial part
of the Total Collateral with the prior written consent of all the Banks under
the 2001 364-Day
46
Agreements or (iii) amend this Agreement so that the Secured Obligations of any
Lien Grantor excludes the obligations of such Lien Grantor under any Credit
Agreement with the prior written consent of all Banks party to such Credit
Agreement.
(g) Upon any termination of a Transaction Lien or release of
Collateral, or change in the Secured Obligations of any Lien Grantor, the
Collateral Agent will, promptly, at the expense of the relevant Lien Grantor,
execute and deliver to such Lien Grantor such documents as such Lien Grantor
shall reasonably request to evidence the termination of such Transaction Lien or
the release of such Collateral, or change in the Secured Obligations, as the
case may be, and shall deliver to such Lien Grantor any documents or
instruments, including without limitation stock certificates, evidencing any
Collateral no longer subject to any Transaction Liens.
SECTION 21. Additional Lien Grantors. Any Person may become a party
hereto by signing and delivering to the Collateral Agent a Security Agreement
Supplement, whereupon such Person shall become a "Lien Grantor" as defined
herein. Any NNI Subsidiary that is a U.S. Subsidiary shall be required to become
a "Lien Grantor" hereunder only if required by the provisions of any of the
Credit Agreements.
SECTION 22. Additional Secured Obligations. (a) NNI, NNL and NNFI may
from time to time designate its obligations under any Hedging Agreement (a
"DESIGNATED HEDGING AGREEMENT") as an additional Secured Obligation for purposes
hereof by delivering to the Collateral Agent a certificate signed by a financial
officer that (i) identifies such Hedging Agreement, specifying the name and
address of the other party thereto, the notional principal amount thereof and
the expiration date thereof and (ii) states that NNI's, NNL's or NNFI's
obligations, as applicable, thereunder are designated as Secured Obligations for
purposes hereof.
(b) NNI, NNL and any other Lien Grantor may from time to time designate
any indebtedness constituting a Capital Markets Event ("DESIGNATED CAPITAL
MARKETS DEBT") as an additional Secured Obligation for purposes hereof by
delivering to the Collateral Agent a certificate signed by a financial officer
that (i) identifies such indebtedness and the material terms thereof and (ii)
states that the obligations thereunder are designated as Secured Obligations for
purposes hereof; 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.
47
(c) Any Lien Grantor that is a Material Subsidiary of NNI or NNL may
from time to time designate any indebtedness for borrowed money (other than
indebtedness constituting a Capital Markets Event) owed by any Material
Subsidiary of NNI or NNL to any Bank or any wholly-owned subsidiary of any Bank
or any other financial institution and outstanding on December 20, 2001 or
incurred pursuant to a commitment to extend credit in effect on such date or any
extensions, renewals, replacements and refinancings thereof ("DESIGNATED BANK
DEBT") as an additional Secured Obligation for purposes hereof by delivering to
the Collateral Agent a certificate signed by a financial officer that (i)
identifies such indebtedness and the material terms thereof and (ii) states that
such Lien Grantor's obligations thereunder are designated as Secured Obligations
for purposes hereof; 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
respective Material Subsidiaries for the benefit of the Secured Parties will not
exceed $300,000,000 in aggregate principal amount.
SECTION 23. Notices. Each notice, request or other communication given
to any party hereunder shall be in writing (which term includes facsimile or
other electronic transmission) and shall be effective (i) when hand delivered or
sent by courier to such party at its address specified below, (ii) when sent to
such party by facsimile or other electronic transmission, addressed to it at its
facsimile number or electronic address specified below, and such party sends
back an electronic confirmation of receipt or (iii) ten days after being sent to
such party by certified or registered United States mail, addressed to it at its
address specified below, with first class or airmail postage prepaid:
(a) in the case of any Lien Grantor listed on the signature
pages hereof:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇: 036/NO/230
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: Corporate Secretary
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) in the case of any other Lien Grantor, its address,
facsimile number or e-mail address set forth in its first Security
Agreement Supplement;
(c) in the case of the Collateral Agent:
▇▇ ▇▇▇▇▇▇ Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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 23 by giving notice of such change to the Collateral
Agent and the Lien Grantors in the manner specified above.
SECTION 24. 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 Security 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 25. 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 26. 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 (x) any such
agreement that effects a release of any Collateral or amends the definition of
Secured Obligations shall be made in accordance with 20(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.
49
SECTION 27. Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York, except as
otherwise required by mandatory provisions of law.
SECTION 28. Waiver of Jury Trial. EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY SECURITY DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 29. Severability. If any provision of any Security Document is
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) 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
(ii) the invalidity or unenforceability of such provision in such jurisdiction
shall not affect the validity or enforceability thereof in any other
jurisdiction.
50
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 INC.
By: __________________________________
Name:
Title:
NORTEL NETWORKS LIMITED
By: __________________________________
Name:
Title:
JPMORGAN CHASE BANK,
as Collateral Agent
By: __________________________________
Name:
Title:
SUBSIDIARY LIEN GRANTORS:
NORTEL NETWORKS HPOCS INC.
By: __________________________________
Name:
Title:
NORTEL NETWORKS OPTICAL
COMPONENTS INC.
51
By: __________________________________
Name:
Title:
NORTEL NETWORKS U.S. FINANCE INC.
By: __________________________________
Name:
Title:
NORTEL NETWORKS CAPITAL
CORPORATION
By: __________________________________
Name:
Title:
QTERA CORPORATION
By: __________________________________
Name:
Title:
NORTEL GOVERNMENT SERVICES INC.
By: __________________________________
Name:
Title:
NORTHERN TELECOM
INTERNATIONAL INC.
52
By: __________________________________
Name:
Title:
NORTEL NETWORKS (CALA) INC.
By: __________________________________
Name:
Title:
53
SCHEDULE 1
EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES
OWNED BY LIEN GRANTORS
(AS OF THE DATE HEREOF)
JURISDICTION
OF OWNER OF PERCENTAGE NUMBER OF
ISSUER ORGANIZATION EQUITY INTEREST OWNED SHARES OR UNITS
------ ------------ --------------- ----- ---------------
Nortel Government Services Inc. Delaware Nortel Networks Inc. 100.00 1
Nortel Networks (CALA) Inc. Florida Nortel Networks Inc. 100.00 50,000
Nortel Networks Capital Corporation Delaware Nortel Networks Inc. 100.00 1
Northern Telecom International Inc. Delaware Nortel Networks Inc. 100.00 100
Qtera Corporation Delaware Nortel Networks Inc. 100.00 22,422,253
Common Stock
and 1 Series A
Preferred Stock
Nortel Networks Optical Components Inc. Delaware Nortel Networks Inc. 99.00 106,383,498 Class
B Common Stock
Nortel Networks HPOCS Inc. (f/k/a NN Delaware Nortel Networks 100.00 31,516
Optical Components Inc.) Optical Components Inc.
S-1-1
SCHEDULE 2
INVESTMENT PROPERTY
(OTHER THAN EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES)
OWNED BY LIEN GRANTORS
(AS OF THE DATE HEREOF)
PART 1 - SECURITIES
A. CERTIFICATED SECURITIES
JURISDICTION
OF AMOUNT
ISSUER ORGANIZATION OWNER OF SECURITIES OWNED TYPE OF SECURITY
------ ------------ ------------------- ----- ----------------
Concur Technologies, Inc. Washington Nortel Networks Inc. Publicly Traded Stock
FiberNet Telecom Group, Inc. Delaware Nortel Networks Inc. Publicly Traded Stock
Net2000 Communications, Inc. Delaware Nortel Networks Inc. Publicly Traded Stock
Talarian Corporation California Nortel Networks Inc. Publicly Traded Stock
Metromedia Fiber Networks Inc. Delaware Nortel Networks Inc. Publicly Traded Stock
Infospace Inc. Delaware Nortel Networks Limited Publicly Traded Stock
▇▇▇▇▇▇ Securities Corp. Delaware Nortel Networks Limited Publicly Traded Stock
B. UNCERTIFICATED SECURITIES
ISSUER OWNER TYPE OF SECURITY
------ ----- ----------------
Citigroup Asset Management. Nortel Networks Inc Mutual Fund (A/c 104132)
▇▇ ▇▇▇▇▇▇ Funds Nortel Networks Inc. Mutual Fund (a/c 5015021)
PART 2 - SECURITIES ACCOUNTS
The Lien Grantors own Security Entitlements with respect to Financial Assets
credited to the following Securities Accounts:
SECURITIES
OWNER INTERMEDIARY ACCOUNT NUMBER
----- ------------ --------------
Nortel Networks Inc. Bank One 155-5107520
Nortel Networks Inc. Fleet Global Capital Markets 042486332
Nortel Networks Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 12071090050
Nortel Networks Inc. ▇▇ ▇▇▇▇▇▇ 30559371
Nortel Networks Inc. ▇▇▇▇▇▇ Brothers 83545364
S-2-1
PART 3 - COMMODITY ACCOUNTS
The Lien Grantors are Commodity Customers with respect to the following
Commodity Accounts:
COMMODITY
OWNER INTERMEDIARY ACCOUNT NUMBER
----- ------------ --------------
NONE
S-2-2
SCHEDULE 3
DESCRIPTION OF COLLATERAL
All Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, General
Intangibles (including any Equity Interests in other Persons that do not
constitute Investment Property), Instruments, Inventory, Investment Property,
Letter-of-Credit Rights, all Material Commercial Tort Claims with respect to
which such Lien Grantor is the claimant arising out of Material Recordable
Intellectual Property, books and records (including customer lists, credit
files, computer programs, printouts and other computer materials and records) of
such Lien Grantor pertaining to any of its Collateral, such Lien Grantor's
ownership interest in (1) its Collateral Accounts, (2) all Financial Assets
credited to its Collateral Accounts from time to time and all Security
Entitlements in respect thereof, (3) all cash held in its Collateral Accounts
from time to time and (4) all other money in the possession of the Collateral
Agent, and all Proceeds thereof.
The following property shall be excluded from the foregoing security interests:
(A) any Equity Interests held by any Lien Grantor in any Subsidiary that is not
a U.S. Subsidiary, (B) Equity Interests held by such Lien Grantor in any
Subsidiary that is not a Material Subsidiary, (C) Equipment leased by any Lien
Grantor under a lease that prohibits the granting of a Lien on such Equipment,
(D) any general intangibles or other rights arising under any contract,
instrument, license or other document if (but only to the extent that) the grant
of a security interest therein would constitute a violation of a valid and
enforceable restriction in favor of a third party (other than any NNL Company)
or would result in an enforceable right to declare a default or an enforceable
right to terminate or annul unless and until all required consents shall have
been obtained, it being understood that no Lien Grantor is obliged to obtain
such consent, (E) any Equity Interests in or any debt of any Person (other than
a Material Subsidiary) if the grant of a security interest therein would
constitute a violation of any shareholder agreement or other agreement with
respect to such Equity Interests or debt among such Lien Grantors and any other
holders of Equity Interests or debt of such Person, (F) any assets of such Lien
Grantor that constitute Transferred Receivables and Related Transferred Rights
on the date on which such Lien Grantor becomes a party to this Agreement, (G)
Letter-of-Credit Rights for which the jurisdiction whose laws govern the
liability of the Issuer or Nominated Person with respect thereto is not a
jurisdiction in the United States, (H) Deposit Accounts for which the relevant
Depository Bank's jurisdiction is not in the United States, (I) with respect to
NNL only, any asset of NNL which is not located in the United States or any
State thereof, it being understood that accounts receivable and rights
constituting General Intangibles (other than Intellectual Property registered
with the United States Patent and Trademark Office or the United States
Copyright Office) are not located in the United States or any State thereof for
the purpose of this clause (I), (J) with respect to any Lien Grantor other than
NNL, any asset of such Lien Grantor which is not
S-2-3
located in the United States or any State thereof, it being understood that
accounts receivable and rights constituting General Intangibles (including
Intellectual Property registered with the United States Patent and Trademark
Office or the United States Copyright Office) are located in the United States
or any State thereof for the purpose of this clause (J), (K) any Equity Interest
held by NNL in NNI and any Equity Interest held by NNI in NNFI, Arris Group,
Inc. and Elastic Networks Inc. and (L) any Equity Interest held by NNI in NNTC,
but only so long as an NNTC Agreement is in full force and effect.
DEFINITIONS
As used herein, each of the following terms has the meaning specified in the
UCC:
Term UCC
---- ---
Account 9-102
Authenticate 9-102
Certificated Security 8-102
Chattel Paper 9-102
Commercial Tort Claim 9-102
Commodity Account 9-102
Commodity Contract 9-102
Commodity Customer 9-102
Commodity Intermediary 9-102
Deposit Account 9-102
Document 9-102
Electronic Chattel Paper 9-102
Entitlement Holder 8-102
Entitlement Order 8-102
Equipment 9-102
Financial Asset 8-102 & 103
General Intangibles 9-102
Instrument ▇-▇▇▇
▇▇▇▇▇▇▇▇▇ 9-102
Investment Property 9-102
Issuer 5-102
Letter-of-Credit Right 9-102
Payment Intangible 9-102
Record 9-102
Securities Account 8-501
Securities Intermediary 8-102
Security 8-102 & 103
Security Entitlement 8-102
Supporting Obligations 9-102
Tangible Chattel Paper 9-102
S-2-4
Uncertificated Security 8-102
The following additional terms, as used herein, have the following
meanings:
"BANK TERMINATION DATE" means the first date on which all of the
following conditions are satisfied: (i) all commitments to extend credit under
any Credit Agreement shall have expired or been terminated, (ii) all
Non-Contingent Secured Obligations 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.
"CAPITAL MARKETS EVENT" has the meaning set forth in either 2001
364-Day Agreement.
"CASH COLLATERAL ACCOUNTS" has the meaning specified in Section 9(a).
"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, and all
condemnation and insurance proceeds received with respect to Real Property
Collateral.
"COLLATERAL" means all property, except for Real Property Collateral,
whether now owned or hereafter acquired, on which a Lien is granted or purports
to be granted to the Collateral Agent pursuant to this Agreement, the Security
Agreement Supplements, the Deposit Control Agreements, the Issuer Control
Agreements, the Security Account Control Agreements, the Intellectual Property
Security Agreements and all other documents required to be delivered under any
of the foregoing. When used with respect to a specific Lien Grantor, the term
"Collateral" means any of the foregoing Collateral in which such a Lien is
granted or is purported to be granted (other than Real Property Collateral).
"COLLATERAL ACCOUNTS" means the Cash Collateral Accounts, the
Controlled Deposit Accounts and the Controlled Securities Accounts.
"COLLATERAL AGENT" means JPMorgan Case Bank, in its capacity as
Collateral Agent under this Agreement and the other Security Documents, and its
successors in such capacity.
S-2-5
"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.
"COMMODITY ACCOUNT CONTROL AGREEMENT" means, with respect to any
Commodity Account as to which a Lien Grantor is the Commodity Customer, an
agreement by such Lien Grantor, the Collateral Agent and the relevant Commodity
Intermediary that the Commodity Intermediary will apply any value distributed on
account of the Commodity Contracts carried in such Commodity Account as directed
by the Collateral Agent without further consent by such Lien Grantor. Each such
agreement must be reasonably satisfactory in form and substance to the
Collateral Agent.
"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.
"CONTROL" has the following meanings: (i) when used with respect to any
Security or Security Entitlement, the meaning specified in UCC Section 8-106,
(ii) when used with respect to any Deposit Account, the meaning specified in UCC
Section 9-104, (iii) when used with respect to any Commodity Account or
Commodity Contract, the meaning specified in UCC Section 9-106(b) and (iv) when
used with respect to any right to payment or performance by the issuer or a
Nominated Person in respect of a letter of credit, the meaning specified in UCC
Section 9-107.
"CONTROLLED COMMODITY ACCOUNT" means a Commodity Account as to which
(i) a Lien Grantor is the Commodity Customer and (ii) a Commodity Account
Control Agreement is in effect.
"CONTROLLED DEPOSIT ACCOUNT" means a Deposit Account (i) that is
subject to a Deposit Account Control Agreement or (ii) as to which the
Collateral Agent is the Depositary Bank's "customer" (as defined in UCC Section
4-104).
"CONTROLLED SECURITIES ACCOUNT" means a Securities Account that (i) is
maintained in the name of a Lien Grantor at an office of a Securities
Intermediary located in the United States and (ii) together with all Financial
Assets credited thereto and all related Security Entitlements, is subject to a
Securities Account Control Agreement among such Lien Grantor, the Collateral
Agent and such Securities Intermediary.
S-2-6
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which a
Copyright is in existence or may come into existence.
"COPYRIGHTS" means all the following: (i) all copyrights under the laws
of the United States or any other country (whether or not the underlying works
of authorship have been published), all registrations and recordings thereof,
all copyrightable works of authorship (whether or not published), and all
applications for copyrights under the laws of the United States or any other
country, including registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Copyright Security Agreement,
(ii) all renewals of any of the foregoing, (iii) all claims for, and rights to
▇▇▇ for, past or future infringements of any of the foregoing and (iv) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including damages and payments for past or
future infringements thereof.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement,
substantially in the form of Exhibit B, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"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.
"DEPOSIT ACCOUNT CONTROL AGREEMENT" means, with respect to any Deposit
Account of any Lien Grantor, an agreement among such Lien Grantor, the
Collateral Agent and the relevant Depositary Bank, set forth in an Authenticated
Record, (i) that such Depositary Bank will comply with instructions originated
by the Collateral Agent directing disposition of the funds in such Deposit
Account without further consent by such Lien Grantor and (ii) subordinating to
the relevant Transaction Lien all claims of the Depositary Bank to such Deposit
Account (except its right to deduct its normal operating charges and any
uncollected funds previously credited thereto).
"DEPOSITARY BANK" means a bank at which a Controlled Deposit Account is
maintained.
"DESIGNATED BANK DEBT" has the meaning specified in Section 22(c).
S-2-7
"DESIGNATED CAPITAL MARKETS DEBT" has the meaning specified in Section
22(b).
"DESIGNATED HEDGING AGREEMENT" has the meaning specified in Section
22(a).
"DRAWDOWN DATE" means any date during any Collateral Period on which an
extension of credit is made under either 2001 364-Day 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, (v) any warrant, option or other right to acquire any Equity Interest
described in this definition or (vi) any Security Entitlement in respect of any
Equity Interest described in this definition.
"EVENT OF DEFAULT" means an "Event of Default" under any Credit
Agreement.
"GUARANTEE" means the guarantee under Section 2 hereof.
"GUARANTEED OBLIGATIONS" means (i) with respect to NNI, the NNL Bank
Obligations, the NNL Bond Obligations, the NNL Hedging Obligations, the NNFI
Hedging Obligations and any Designated Capital Markets Debt (ii) with respect to
NNFI, the NNI Bank Obligations, the NNL Bond Obligations, the NNL Bank
Obligations, the NNI Hedging Obligations, the NNL Hedging Obligations and any
Designated Capital Markets Debt.
"GUARANTOR" means either of NNI or NNFI, as the context may require,
and "GUARANTORS" means both of them.
"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 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
S-2-8
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.
"INTELLECTUAL PROPERTY" means (i) Patents, (ii) Patent Licenses, (iii)
Trademarks, (iv) Trademark Licenses, (v) Copyrights under the laws of the United
States and (vi) Copyright Licenses, and all rights in or under any of the
foregoing.
"INTELLECTUAL PROPERTY FILING" means (i) with respect to any Patent or
Trademark, the filing of the applicable Patent Security Agreement or Trademark
Security Agreement with the United States Patent and Trademark Office, together
with an appropriately completed recordation form and (ii) with respect to any
Copyright, the filing of the applicable Copyright Security Agreement with the
United States Copyright Office, together with an appropriately completed
recordation form, in each case sufficient to record the Transaction Lien granted
to the Collateral Agent in such Material Recordable Intellectual Property.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means a Copyright Security
Agreement, a Patent Security Agreement or a Trademark Security Agreement.
"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.
"ISSUER CONTROL AGREEMENT" means an Issuer Control Agreement
substantially in the form of Exhibit F (with any changes that the Collateral
Agent shall have reasonably approved).
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) 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 (c) 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, NNI and the Subsidiary Lien Grantors.
"LIQUID COLLATERAL" means (a) Pledged Accounts, (b) Pledged Chattel
Paper, (c) Pledged Instruments, (d) the Cash Collateral Accounts, (e) the
Controlled Deposit Accounts, (f) the Controlled Securities Accounts, (g) the
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Pledged Intellectual Property and (h) any Uncertificated Security evidencing
money market funds.
"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.
"LLC INTEREST" means a membership interest or similar interest in a
limited liability company.
"MATERIAL COMMERCIAL TORT CLAIM" means any Commercial Tort Claim in
excess of $10,000,000.
"MATERIAL GOVERNMENT CONTRACT" means a contract, between a Lien Grantor
and either (i) the federal government of the United States or any agency or
instrumentality thereof or (ii) a state or local government or any agency or
instrumentality thereof, that provides (or can reasonably be expected to
provide) for payments to such Lien Grantor in an aggregate amount exceeding (x)
for the purpose of the first sentence of Section 4(n), $50,000,000 and (y) for
the purpose of the second sentence of Section 4(n), $10,000,000.
"MATERIAL INTELLECTUAL PROPERTY" means, with respect to any Lien
Grantor, any Intellectual Property that is material to the business of the NNL
Companies taken as a whole, as such business is presently conducted or proposed
to be conducted.
"MATERIAL RECORDABLE INTELLECTUAL PROPERTY" means the Recordable
Intellectual Property notified in writing from time to time to the Collateral
Agent by any of the Lien Grantors in accordance with the provisions hereof.
"MATERIAL SUBSIDIARY" has the meaning set forth in the ▇▇▇▇ ▇▇▇ 364-
Day Agreement.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"1988 INDENTURE" means the Indenture dated as of November 30, 1988
among Northern Telecom Limited, and its successors, the subsidiary guarantors
party thereto and The Toronto-Dominion Bank Trust Company as trustee, as amended
from time to time.
S-2-10
"1996 INDENTURE" means the Indenture dated as of February 15, 1996
among Northern Telecom Limited, and its successors, the subsidiary guarantors
party thereto and The Bank of New York as trustee, as amended from time to time.
"NNC" means Nortel Networks Corporation, a Canadian corporation, and
its successors.
"NNFI" 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 and extensions thereof.
"NNFI SECURED OBLIGATIONS" means (i) all obligations of NNFI under
Section 2 of this Agreement, (ii) the NNFI Hedging Obligations and (iii) any
Designated Bank Debt.
"NNI BANK OBLIGATIONS" means (i) all principal of and interest
(including, without limitation, any Post-Petition Interest) on any loan under,
or any note issued pursuant to, any NNI Credit Agreement, (ii) all other amounts
payable by NNI under any NNI Credit Agreement, (iii) all obligations of NNI
under Section 2 of this 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.
"NNI SECURED OBLIGATIONS" means (i) the NNI Bank Obligations, (ii) the
NNI Hedging Obligations and (iii) any Designated Bank Debt.
"NNI SUBSIDIARY" means any Subsidiary of NNI.
"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 under the
2002 Notes, the 2003 Notes, the 2006 Notes, the 2006 NNCC Notes, the 2008 Notes,
the 2023 Notes and the 2026 Notes.
S-2-11
"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 HEDGING OBLIGATIONS" means (i) all obligations of NNL under any
Designated Hedging Agreement and (ii) any renewals or extensions thereof.
"NNL SECURED OBLIGATIONS" means (i) the NNL Bank Obligations, (ii) the
NNL Bond Obligations, (iii) the NNL Hedging Obligations, (iv) the NNI Hedging
Obligations, (v) the NNFI Hedging Obligations, (vi) any Designated Capital
Markets Debt and (vii) any Designated Bank Debt.
"NNL SUBSIDIARY" means any Subsidiary of NNL other than NNI or any
Subsidiary of NNI.
"NNTC" means Nortel Networks Trading Corporation.
"NNTC AGREEMENT" means either (i) a pledge agreement in form and
substance reasonably satisfactory to the Collateral Agent, pursuant to which NNI
pledges all its Equity Interests in NNTC or (ii) a guarantee in form and
substance reasonably satisfactory to the Collateral Agent pursuant to which NNTC
shall have guaranteed the obligations of NNI under the Loan Documents.
"NOMINATED PERSON" means a Person whom the issuer of a letter of credit
(i) designates or authorizes to pay, accept, negotiate or otherwise give value
under such letter of credit and (ii) undertakes by agreement or custom and
practice to reimburse.
"NON-CONTINGENT SECURED OBLIGATION" means at any time any Secured
Obligation (or portion thereof) that is not a Contingent Secured Obligation at
such time.
"NTL" means Northern Telecom Limited, a Canadian corporation.
"OWN" refers to the possession of sufficient rights in property to
grant a security interest therein as contemplated by UCC Section 9-203, and
"ACQUIRE" refers to the acquisition of any such rights.
S-2-12
"PARTNERSHIP INTEREST" means a partnership interest, whether general or
limited.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence or
not.
"PATENTS" means (i) all letters patent and design letters patent issued
by the United States or any other country and all applications for letters
patent or design letters patent pending before the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including those described in Schedule 1 to any Patent Security Agreement, (ii)
all reissues, divisions, continuations, continuations in part, revisions and
extensions of any of the foregoing, (iii) all claims for, and rights to ▇▇▇ for,
past or future infringements of any of the foregoing and (iv) all income,
royalties, damages and payments now or hereafter due or payable with respect to
any of the foregoing, including damages and payments for past or future
infringements thereof.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement,
substantially in the form of Exhibit C, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
"PERFECTION CERTIFICATE" means, with respect to any Lien Grantor, a
certificate substantially in the form of Exhibit E, completed and supplemented
with the schedules contemplated thereby to the satisfaction of the Collateral
Agent, and signed by an officer of such Lien Grantor.
"PERMITTED INVESTMENTS" means investments in:
(a) 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;
(b) 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;
(c) certificates of deposit, banker's acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or
guaranteed
S-2-13
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;
(d) fully collateralized repurchase agreements with a term of not more
than 30 days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above;
and
(e) 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.
"PERMITTED RECEIVABLES FINANCING" means, with respect to any Lien
Grantor, any receivables securitization or financing permitted pursuant to the
terms of the Credit Agreements to which such Lien Grantor is a party or by which
it is bound.
"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.
"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 and "Pledged letter of credit" means
a letter of credit that creates rights to payment or performance that are
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
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, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, any
S-2-14
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 with respect to any
Collateral.
"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.
"REAL PROPERTY COLLATERAL" means all real property (including leasehold
interests in real property).
"RECORDABLE INTELLECTUAL PROPERTY" means (i) Patents (other than
Patents described in clauses (iii) and (iv) of the definition thereof)
registered with the United States Patent and Trademark Office, (ii) Trademarks
(other than Trademarks described in clauses (v) and (vi) of the definition
thereof) registered with the United States Patent and Trademark Office and (iii)
Copyrights (other than Copyrights described in clauses (iii) and (iv) of the
definition thereof) registered with the United States Copyright Office and all
rights in or under any of the foregoing.
"RELATED TRANSFERRED RIGHTS" means (i) Transferred Receivables, (ii)
rights to payment and collections in respect of such Transferred Receivables,
(iii) security interests or Liens and property subject thereto purporting to
secure or guarantee payment of such Transferred Receivables, (iv) guarantees,
letters of credit, acceptances, insurance and other arrangements from time to
time supporting or securing payment of such Transferred Receivables, (v) all
invoices, documents, books, records and other information with respect to such
Transferred Receivables or the obligors thereon, (vi) with respect to any such
Transferred Receivables, the transferee's interest in the product (including
returned product), the sale of which by such transferee gave rise to such
Transferred Receivables and (vii) all Proceeds of the items described in the
foregoing clauses.
"REQUIRED SECURED BANKS" means, at any time, Banks having at least 51%
of the aggregate amount, without duplication, of (i) the "Commitments" under
each of the 2001 364-Day Agreements and (ii) the aggregate unpaid principal
amount of the "Loans" under 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 collectively to each instrument, agreement or other
document that sets forth obligations of such Lien Grantor and/or rights of the
holder with respect to such Secured Obligation.
S-2-15
"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) with respect to NNL, the NNL Secured
Obligations, (ii) with respect to NNI, the NNI Secured Obligations, (iii) with
respect to NNFI, the NNFI Secured Obligations and (iv) with respect to each
Subsidiary Lien Grantor other than NNFI, the NNI Bank Obligations, the NNI
Hedging Obligations, the NNL Bond Obligations, the NNL Bank Obligations, the NNL
Hedging Obligations, the NNFI Hedging Obligations, any Designated Capital
Markets Debt and any Designated Bank Debt.
"SECURED PARTIES" means the holders from time to time of the Secured
Obligations.
"SECURITIES ACCOUNT CONTROL AGREEMENT" means, when used with respect to
a Securities Account, a Securities Account Control Agreement substantially in
the form of Exhibit G (with any changes that the Collateral Agent shall have
reasonably approved) among the relevant Securities Intermediary, the relevant
Lien Grantor and the Collateral Agent to the effect that such Securities
Intermediary will comply with Entitlement Orders originated by the Collateral
Agent with respect to such Securities Account without further consent by the
relevant Lien Grantor.
"SECURITY AGREEMENT SUPPLEMENT" means a Security 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 21 and/or adding additional property to the Collateral.
"SECURITY DOCUMENTS" means this Agreement, the Security Agreement
Supplements, the Commodity Account Control Agreements, the Deposit Account
Control Agreements, the Issuer Control Agreements, the Securities Account
Control Agreements, the Intellectual Property Security Agreements and all other
supplemental or additional security agreements, control agreements or similar
instruments delivered pursuant to any NNL Credit Agreement or NNI Credit
Agreement (other than any such agreement or instrument with respect to Real
Property).
"SPECIFIED EVENT OF DEFAULT" means an event described in Section
6.01(a), (f) or (g) of the Credit Agreements, or any Event of Default caused by
a breach of any financial or debt covenant contained in either 2001 364-Day
Agreement.
S-2-16
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"SUBSIDIARY LIEN GRANTORS" means each Subsidiary of NNI or NNL listed
on the signature pages hereof under the caption "Subsidiary Lien Grantors" and
each Subsidiary of NNI or NNL that shall, at any time after the date hereof,
become a "Subsidiary Lien Grantor" pursuant to Section 21, in each case if such
Subsidiary is a U.S. Subsidiary and is not listed on Annex B to the 2001 364-Day
Agreements.
"SUPPORTING LETTER OF CREDIT" means a letter of credit that supports
the payment or performance of one or more items included in the Collateral.
"TOTAL COLLATERAL" means the "Collateral" as defined in the 2001
364-Day Agreements (assuming, for this purpose, that Collateral includes all
"Foreign Subsidiary Guarantees" as defined in the 2001 364-Day Agreements, in
effect at any time of determination).
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to any Lien Grantor, or pursuant to which any Lien Grantor grants to
any other Person, any right to use any Trademark.
"TRADEMARKS" means: (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos, brand names, trade dress, prints and labels on which any of the
foregoing have appeared or appear, package and other designs, and all other
source or business identifiers, and all general intangibles of like nature, and
the rights in any of the foregoing which arise under applicable law, (ii) the
goodwill of the business symbolized thereby or associated with each of them,
(iii) all registrations and applications in connection therewith, including
registrations and applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, including those
described in Schedule 1 to any Trademark Security Agreement, (iv) all renewals
of any of the foregoing, (v) all claims for, and rights to ▇▇▇ for, past or
future infringements of any of the foregoing and (vi) all income, royalties,
damages and payments now or hereafter due or payable with respect to any of the
foregoing, including damages and payments for past or future infringements
thereof.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement,
substantially in the form of Exhibit D, executed and delivered by a Lien Grantor
in favor of the Collateral Agent for the benefit of the Secured Parties.
S-2-17
"TRANSACTION LIENS" means the Liens granted by the Lien Grantors under
the Security Documents.
"TRANSFERRED RECEIVABLES" means any receivables that have been sold,
pledged, contributed or otherwise transferred in connection with a Permitted
Receivables Financing.
"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.
"2003 NOTES" means the 6% Notes due 2003 issued by NTL pursuant to the
1988 Indenture.
"2008 NOTES" means the 4.25% Convertible Senior Notes due 2008 issued
by NNC and guaranteed by NNL pursuant to the 2001 Indenture.
"2006 NOTES" means the 6.125% Notes due 2006 issued by NNL pursuant to
the 2000 Indenture.
"2006 NNCC NOTES" means the 7.40% Notes due 2006 issued by NTL pursuant
to the 1996 Indenture.
"2023 NOTES" means the 6-7/8% Notes due 2023 issued by NTL pursuant to
the 1988 Indenture.
"2026 NOTES" means the 7.875% Notes due 2026 issued by Northern Telecom
Capital Corporation and guaranteed by NTL pursuant to the 1996 Indenture.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of New York; provided that, if perfection or the effect of
perfection or non-perfection or the priority of any Transaction Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, "UCC" means the Uniform Commercial Code as in
effect from time to time in such other jurisdiction for purposes of the
provisions hereof relating to such perfection, effect of perfection or
non-perfection or priority.
S-2-18
"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.
S-2-19
EXHIBIT A
TO SECURITY AGREEMENT
SECURITY AGREEMENT SUPPLEMENT
SECURITY 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 "LIEN GRANTOR") and JPMORGAN CHASE BANK, as Collateral Agent.
WHEREAS, Nortel Networks Limited, Nortel Networks Inc., the
Subsidiaries party thereto and JPMorgan Chase Bank, as Collateral Agent, are
parties to a Guarantee and Security Agreement dated as of [the first day of the
Collateral Period] (as heretofore amended and/or supplemented, the "SECURITY
AGREEMENT");
WHEREAS, [name of Lien Grantor] desires to become [is] a party to the
Security Agreement as a Lien Grantor thereunder; and
WHEREAS, terms defined in the Security 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:
(1). Grant of Transaction Liens. (a) In order to secure the Secured
Obligations, the Lien Grantor grants to the Collateral Agent for the benefit of
the Secured Parties, effective on [the later of the date hereof (if such date
occurs during a Collateral Period) and the first day of any Collateral Period
following execution hereof] a continuing security interest in all the following
property of the Lien Grantor, whether now owned or existing or hereafter
acquired or arising and regardless of where located (the "NEW COLLATERAL"):
A-1
[describe property being added to the Collateral](1)
The security interests granted by the Lien Grantor pursuant hereto
shall terminate in accordance with Section 20 of the Security Agreement.
(b) With respect to each right to payment or performance included in
the Collateral from time to time, the Transaction Lien granted therein includes
a continuing security interest in (A) any Supporting Obligation that supports
such payment or performance and (B) any Lien that (x) secures such right to
payment or performance or (y) secures any such Supporting Obligation.
(c) The foregoing Transaction Liens 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 the Lien
Grantor with respect to any of the New Collateral or any transaction in
connection therewith.
(2). 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 the first day of any
subsequent Collateral Period, the Lien Grantor has complied with the provisions
of Section 5 of the Security Agreement with respect to Chattel Paper and
Instruments, and either Section 7 or Section 11(a) (as applicable) of the
Security Agreement with respect to Investment Property, in each case if and to
the extent included in the New Collateral at such time.
(3). Party to Security Agreement. Upon delivering this Security
Agreement Supplement to the Collateral Agent, the Lien Grantor will become a
party to the Security Agreement and will thereafter have all the rights and
obligations of a Lien Grantor thereunder and be bound by all the provisions
thereof as fully as if the Lien Grantor were one of the original parties
thereto.(2)
(4). Address of Lien Grantor. The address, facsimile number and e-mail
address of the Lien Grantor for purposes of Section 23(b) of the Security
Agreement are:
[address, facsimile number and e-mail address of Lien Grantor]
----------------
(1) If the Lien Grantor is not already a party to the Security
Agreement, clauses (i) through (xiv) of, and the proviso to, Section 3 of the
Security Agreement may be appropriate.
(2) Delete Sections 3 and 4 if the Lien Grantor is already a party to
the Security Agreement.
A-2
(5). Representations and Warranties.(3) (a) The Lien Grantor 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 organized, validly existing and in good standing under the laws
of the jurisdiction identified as its jurisdiction of organization in its
Perfection Certificate or such other jurisdiction of which the Lien Grantor
gives prior written notice to the Collateral Agent.
(b) The Lien Grantor represents and warrants on [the date of execution
hereof] that at such time it has delivered a Perfection Certificate to the
Collateral Agent. The information set forth therein is correct and complete as
of the date of delivery thereof.
(d) The Lien Grantor represents and warrants that 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 execution and delivery of this Security Agreement
Supplement by the Lien Grantor and the performance by it of its obligations
under the Security Agreement as supplemented hereby (i) are within its corporate
or other powers, have been duly authorized by all necessary corporate or other
action, (ii) require no action by or in respect of, or filing with, any
governmental body, agency or official other than filings for perfection of
Transaction Liens on the New Collateral or filings by the Lien Grantor with
respect to copyrights 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
affect on the ability of the Lien Grantor to perform its obligations under this
Security Agreement Supplement or the Security Agreement.
(e) The Security Agreement as supplemented hereby constitutes a valid
and binding agreement of the Lien Grantor, 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.
(f) Each of the representations and warranties set forth in Sections 4
through 11 of the Security Agreement is true as applied to the Lien Grantor and
the New Collateral. For purposes of the foregoing sentence, references in said
Sections to a "Lien Grantor" shall be deemed to refer to the Lien Grantor,
references to Schedules to the Security Agreement shall be deemed to refer to
the
-----------------
(3) Modify as needed if the Lien Grantor is not a corporation.
A-3
corresponding Schedules to this Security 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.
(6). Governing Law. This Security Agreement Supplement shall be
construed in accordance with and governed by the laws of the State of New York.
A-4
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement Supplement to be duly executed by their respective authorized officers
as of the day and year first above written.
[NAME OF LIEN GRANTOR]
By:
----------------------------------
Name:
Title:
JPMORGAN CHASE BANK, as Collateral
Agent
By:
----------------------------------
Name:
Title:
A-5
SCHEDULE 1
TO SECURITY AGREEMENT
SUPPLEMENT
EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES
OWNED BY LIEN GRANTOR(4)
JURISDICTION
OF PERCENTAGE NUMBER OF
ISSUER ORGANIZATION OWNED SHARES OR UNITS
---------------------------- ------------- ---------- ---------------
-----------------
(4) To be used only for a new Lien Grantor
A-6
SCHEDULE 2
TO SECURITY AGREEMENT
SUPPLEMENT
INVESTMENT PROPERTY(5)
(OTHER THAN EQUITY INTERESTS IN SUBSIDIARIES AND AFFILIATES)
OWNED BY LIEN GRANTOR
PART 1 - SECURITIES
JURISDICTION OF
ISSUER ORGANIZATION AMOUNT OWNED TYPE OF SECURITY
--------------------------- ---------------- ------------ ----------------
PART 2 - SECURITIES ACCOUNTS
The Lien Grantor owns Security Entitlements with respect to Financial Assets
credited to the following Securities Accounts:(6)
SECURITIES INTERMEDIARY ACCOUNT NUMBER
-------------------------------------------- -------------------
---------------
(5) To be used only for a new Lien Grantor
(6) If any such Securities Account holds material long-term investments
and is not a trading account, more detailed information as to such investments
could appropriately be required to be disclosed in this Schedule.
A-7
PART 3 - COMMODITY ACCOUNTS
The Lien Grantor is the Commodity Customer with respect to the following
Commodity Accounts:
COMMODITY INTERMEDIARY ACCOUNT NUMBER
-------------------------------------------- -------------------
A-8
SCHEDULE 3
TO SECURITY AGREEMENT
SUPPLEMENT
MATERIAL COMMERCIAL TORT
CLAIMS(7)
-----------------
(7) To be used if applicable
A-9
EXHIBIT B
TO SECURITY AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHT REGISTRATIONS)
WHEREAS, [name of Lien Grantor], a _____________ corporation(8) (herein
referred to as the "LIEN GRANTOR") owns the Copyright Collateral (as defined
below);
WHEREAS, pursuant to (i) a Guarantee and Security Agreement dated as of
[the first day of the Collateral Period] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiaries party thereto and JPMorgan Chase Bank, as
Collateral Agent for the Secured Parties referred to therein (in such capacity,
together with its successors in such capacity, the "GRANTEE"), and (ii) certain
other Security Documents (including this Copyright Security Agreement), the Lien
Grantor has secured certain obligations (the "SECURED OBLIGATIONS") by granting
to the Grantee for the benefit of such Secured Parties a continuing security
interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Copyright Collateral (as
defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the Secured Obligations, a continuing security interest in
all of the Lien Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "COPYRIGHT COLLATERAL"), whether now owned or
existing or hereafter acquired or arising:
(i) each Copyright (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each
Copyright registration of which the Lien Grantor has provided the
Collateral Agent written notice; and
(ii) all proceeds of, revenues from, and accounts and general
intangibles arising out of, the foregoing, including, without
limitation, all proceeds of and revenues from any claim by the Lien
Grantor against third parties for past, present or future infringement
of any Copyright (including, without limitation, any Copyright owned by
the Lien Grantor and of which the Lien Grantor has provided the
Collateral Agent written notice).
-----------------
(8) Modify as needed if the Lien Grantor is not a corporation.
B-1
The Lien Grantor irrevocably constitutes and appoints the Grantee and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Copyright Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Copyright Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Copyright Security
Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor and the Grantee acknowledge and affirm that
the rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Copyright Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
___ day of __________, ____.
[NAME OF LIEN GRANTOR]
By:
----------------------------------
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
-------------------------
Name:
Title:
B-2
EXHIBIT C
TO SECURITY AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS)
WHEREAS, [name of Lien Grantor], a _____________ corporation(1) (herein
referred to as the "LIEN GRANTOR") owns the Patent Collateral (as defined
below);
WHEREAS, pursuant to (i) a Guarantee and Security Agreement dated as of
[the first day of the Collateral Period] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiaries party thereto and JPMorgan Chase Bank, as
Collateral Agent for the Secured Parties referred to therein (in such capacity,
together with its successors in such capacity, the "GRANTEE"), and (ii) certain
other Security Documents (including this Patent Security Agreement), the Lien
Grantor has secured certain obligations (the "SECURED OBLIGATIONS") by granting
to the Grantee for the benefit of such Secured Parties a continuing security
interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Patent Collateral (as
defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the Secured Obligations, a continuing security interest in
all of the Lien Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "PATENT COLLATERAL"), whether now owned or
existing or hereafter acquired or arising:
(i) each Patent (as defined in the Security Agreement) owned
by the Lien Grantor, including, without limitation, each Patent of
which the Lien Grantor has provided the Collateral Agent written
notice; and
(ii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by the Lien Grantor against third parties for past, present or
future infringement of any Patent owned by the Lien Grantor (including,
without limitation, any Patent of which the Lien Grantor has provided
the Collateral Agent written notice).
---------------------
(1) Modify as needed if the Lien Grantor is not a corporation.
C-1
The Lien Grantor irrevocably constitutes and appoints the Grantee and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Patent Collateral any and all
appropriate action which the Lien Grantor might take with respect to the Patent
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Patent Security Agreement
and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor and the Grantee acknowledge and affirm that
the rights and remedies of the Grantee and the Lien Grantor with respect to the
security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Patent Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of ____________, ____.
[NAME OF LIEN GRANTOR]
By:__________________________________
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:______________________________
Name:
Title:
C-2
EXHIBIT D
TO SECURITY AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS)
WHEREAS, [name of Lien Grantor], a _____________ corporation(2) (herein
referred to as the "LIEN GRANTOR") owns the Trademark Collateral (as defined
below);
WHEREAS, pursuant to (i) a Guarantee and Security Agreement dated as of
[the first day of the Collateral Period] (as amended and/or supplemented from
time to time, the "SECURITY AGREEMENT") among Nortel Networks Limited, Nortel
Networks Inc., the Subsidiaries party thereto and JPMorgan Chase Bank, as
Collateral Agent for the Secured Parties referred to therein (in such capacity,
together with its successors in such capacity, the "GRANTEE"), and (ii) certain
other Security Documents (including this Trademark Security Agreement), the Lien
Grantor has secured certain obligations (the "SECURED OBLIGATIONS") by granting
to the Grantee for the benefit of such Secured Parties a continuing security
interest in personal property of the Lien Grantor, including all right, title
and interest of the Lien Grantor in, to and under the Trademark Collateral (as
defined below);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Lien Grantor grants to the
Grantee, to secure the Secured Obligations, a continuing security interest in
all of the Lien Grantor's right, title and interest in, to and under the
following (all of the following items or types of property being herein
collectively referred to as the "TRADEMARK COLLATERAL"), whether now owned or
existing or hereafter acquired or arising:
(i) each Trademark (as defined in the Security Agreement)
owned by the Lien Grantor, including, without limitation, each
Trademark registration and application of which the Lien Grantor has
given the Collateral Agent written notice, and all of the goodwill of
the business connected with the use of, or symbolized by, each
Trademark; and
(ii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by the Lien Grantor against third parties for past, present or
future unfair competition
----------------------
(2) Modify as needed if the Lien Grantor is not a corporation.
C-3
with, or violation of intellectual property rights in connection with
or injury to, or infringement or dilution of, any Trademark owned by
the Lien Grantor (including, without limitation, any Trademark of which
the Lien Grantor has given the Collateral Agent written notice).
The Lien Grantor irrevocably constitutes and appoints the Grantee and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of the Lien
Grantor or in the Grantee's name, from time to time, in the Grantee's
discretion, so long as any Specified Event of Default shall have occurred and be
continuing, to take with respect to the Trademark Collateral any and all
appropriate action which the Lien Grantor might take with respect to the
Trademark Collateral and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Trademark Security
Agreement and to accomplish the purposes hereof.
The foregoing security interest is granted in conjunction with the
security interests granted by the Lien Grantor to the Grantee pursuant to the
Security Agreement. The Lien Grantor and the Grantee acknowledges and affirms
that the rights and remedies of the Grantee and the Lien Grantor with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, the Lien Grantor has caused this Trademark Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of __________, ____.
[NAME OF LIEN GRANTOR]
By:_________________________________
Name:
Title:
Acknowledged:
JPMORGAN CHASE BANK,
as Collateral Agent
By:_______________________________
Name:
Title:
C-4
EXHIBIT E
TO SECURITY AGREEMENT
PERFECTION CERTIFICATE
The undersigned is a duly authorized officer of [Name of Lien Grantor]
(the "LIEN GRANTOR"). With reference to the Guarantee and Security Agreement
dated as of [the first day of Collateral Period] among Nortel Networks Limited,
Nortel Networks, Inc., each Subsidiary Party thereto and JPMORGAN CHASE BANK, as
Collateral Agent (terms defined therein being used herein as therein defined),
the undersigned certifies to the Collateral Agent and each other Secured Party
as follows:
A. INFORMATION REQUIRED FOR FILINGS AND SEARCHES FOR PRIOR FILINGS.
1. Jurisdiction of Organization. The Lien Grantor is a
[corporation] organized under the laws of ______________________.
2. Name. The exact [corporate] name of the Lien Grantor as such
name appears in its [certificate of incorporation] is as follows:
3. Prior Names. (i) Set forth below is each other corporate name
that the Lien Grantor has had within the past five years, together with the date
of the relevant change:
(ii) Except as set forth below, the Lien Grantor has not
changed its corporate structure in any way within the past five
years(3).
B. ADDITIONAL INFORMATION REQUIRED FOR SEARCHES FOR PRIOR FILINGS UNDER
OLD ARTICLE 9.
-------------------
(3) Changes in corporate structure need only include mergers and
consolidations, as well as any change in the Lien Grantor's form of organization
from or to LLP, LLC or corporation. If any such change has occurred, please
include the information required by Part A of this certificate (except that no
response to paragraphs 3(a) or (b) is required with respect to any period during
which any predecessor entity acquired by merger or consolidation was not an NNL
Company) as to each constituent party to a merger or consolidation. Restrict to
US Lien Grantors.
C-5
1. Current Locations. (a) The chief executive office of the Lien
Grantor is located at the following address:
MAILING ADDRESS COUNTY STATE
---------------------------------- ---------------- ----------------
The Lien Grantor [does] [does not] own or lease real property located in another
county of the State listed above.
(b) The following are all locations where there is real property
owned or leased in the United States by the Lien Grantor:
MAILING ADDRESS COUNTY STATE
---------------------------------- ---------------- ----------------
(c) The following are all current locations in the United States
not identified above where the Lien Grantor maintains any Inventory which is
other than inventory in transit and or with third party logistics providers, on
consignment, on loan, involved in the repair process, in third party marshalling
and distribution centers, on customer premises, with contract manufacturers or
component level providers or inventory that is not on the property at which a
system house is located:
MAILING ADDRESS COUNTY STATE
---------------------------------- ---------------- ----------------
2. Prior Locations. Set forth below is the information required
by paragraphs (a) and (b) of Part B-1 above with respect to the chief executive
office maintained by the Lien Grantor, or where any real property leased or
owned in the United States by the Lien Grantor was located, at any time during
the past four months:
C-6
IN WITNESS WHEREOF, I have hereunto set my hand this __ day of ____ January 15,
2002
_______________________________
Name:
Title:
C-7
EXHIBIT F
TO SECURITY AGREEMENT
ISSUER CONTROL AGREEMENT
ISSUER CONTROL AGREEMENT dated as of [first day of first Collateral
Period] among _____________ (the "LIEN GRANTOR"), JPMORGAN CHASE BANK, as
Collateral Agent (the "SECURED PARTY"), and _________ (the "ISSUER"). All
references herein to the "UCC" refer to the Uniform Commercial Code as in effect
from time to time in [Issuer's jurisdiction of incorporation].
WITNESSETH:
WHEREAS, the Lien Grantor is the registered holder of [specify Pledged
Uncertificated Securities issued by the Issuer] issued by the Issuer (the
"SECURITIES");
WHEREAS, pursuant to a Guarantee and Security Agreement dated as of
[the first day of the Collateral Period] (as such agreement may be amended
and/or supplemented from time to time, the "SECURITY AGREEMENT"), the Lien
Grantor has granted to the Secured Party a continuing security interest (the
"TRANSACTION LIEN") in all right, title and interest of the Lien Grantor in, to
and under the Securities, whether now existing or hereafter arising; and
WHEREAS, the parties hereto are entering into this Agreement in order
to perfect the Transaction Lien on the Securities;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Nature of Securities. The Issuer confirms that (i) the
Securities are "uncertificated securities" (as defined in Section 8-102 of the
UCC) and (ii) the Lien Grantor is registered on the books of the Issuer as the
registered holder of the Securities.
SECTION 2. Instructions. The Issuer agrees to comply with any
"instruction" (as defined in Section 8-102 of the UCC) originated by the Secured
Party and relating to the Securities without further consent by the Lien Grantor
or any other person. The Lien Grantor consents to the foregoing agreement by the
Issuer.
SECTION 3. Waiver of Lien; Waiver of Set-off. The Issuer waives any
security interest, lien or right of setoff that it may now have or hereafter
acquire in
F-1
or with respect to the Securities. The Issuer's obligations in respect of the
Securities will not be subject to deduction, set-off or any other right in favor
of any person other than the Secured Party.
SECTION 4. Choice of Law. This Agreement shall be governed by the laws
of [Issuer's jurisdiction of incorporation].
SECTION 5. Conflict with Other Agreements. There is no agreement
(except this Agreement) between the Issuer and the Lien Grantor with respect to
the Securities [except for [identify any existing other agreements] (the
"EXISTING OTHER AGREEMENTS")]. In the event of any conflict between this
Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Issuer and the Lien Grantor with respect
to the Securities, whether now existing or hereafter entered into, the terms of
this Agreement shall prevail.
SECTION 6. Amendments. No amendment or modification of this
Agreement or waiver of any right hereunder shall be binding on any party hereto
unless it is in writing and is signed by all the parties hereto.
SECTION 7. Notice of Adverse Claims. Except for the claims and
interests of the Secured Party and the Lien Grantor in the Securities, the
Issuer does not know of any claim to, or interest in, the Securities. If any
person asserts any lien, encumbrance or adverse claim (including any writ,
garnishment, judgment, attachment, execution or similar process) against the
Securities, the Issuer will promptly notify the Secured Party and the Lien
Grantor thereof.
SECTION 8. Maintenance of Securities. In addition to, and not in lieu
of, the obligation of the Issuer to honor instructions as agreed in Section 2
hereof, the Issuer agrees as follows:
(i) Lien Grantor Instructions; Notice of Exclusive Control. So
long as the Issuer has not received a Notice of Exclusive Control (as
defined below), the Issuer shall comply with instructions of the Lien
Grantor or any duly authorized agent of the Lien Grantor in respect of
the Securities. After the Issuer receives a written notice from the
Secured Party that it is exercising exclusive control over the
Securities (a "NOTICE OF EXCLUSIVE CONTROL"), the Issuer will cease
complying with instructions of the Lien Grantor or any of its agents.
(ii) Non-Cash Dividends and Distributions. After the Issuer
receives a Notice of Exclusive Control, the Issuer shall deliver to the
Secured Party all dividends, interest and other distributions paid or
made upon or with respect to the Securities.
F-2
(iii) Voting Rights. Until the Issuer receives a Notice of
Exclusive Control, the Lien Grantor shall be entitled to direct the
Issuer with respect to voting the Securities.
(iv) Statements and Confirmations. The Issuer will promptly
send copies of all statements and other correspondence concerning the
Securities simultaneously to each of the Lien Grantor and the Secured
Party at their respective addresses specified in Section 11 hereof.
(v) Tax Reporting. All items of income, gain, expense and loss
recognized in respect of the Securities shall be reported to the
Internal Revenue Service and all state and local taxing authorities
under the name and taxpayer identification number of the Lien Grantor.
SECTION 9. Representations, Warranties and Covenants of the Issuer. The
Issuer makes the following representations, warranties and covenants:
(i) This Agreement is a valid and binding agreement of the
Issuer enforceable in accordance with its terms.
(ii) The Issuer has not entered into, and until the termination
of this Agreement will not without the consent of the Secured Party
enter into, any agreement with any other person relating to the
Securities pursuant to which it has agreed, or will agree, to comply
with instructions (as defined in Section 8-102 of the UCC) of such
person. The Issuer has not entered into any other agreement with the
Lien Grantor or the Secured Party purporting to limit or condition the
obligation of the Issuer to comply with instructions as agreed in
Section 2 hereof.
SECTION 10. Successors. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
SECTION 11. 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 delivered to such
party at its address specified below, (ii) when sent to such party by facsimile
or other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:
Lien Grantor:
F-3
Secured Party:
Issuer:
Any party may change its address, facsimile number and/or e-mail
address for purposes of this Section by giving notice of such change to the
other parties in the manner specified above.
SECTION 12. Termination. The rights and powers granted herein to the
Secured Party (i) have been granted in order to perfect the Transaction Lien,
(ii) are powers coupled with an interest and (iii) will not be affected by any
bankruptcy of the Lien Grantor or any lapse of time. The obligations of the
Issuer hereunder shall continue in effect until the Secured Party has notified
the Issuer in writing that the Transaction Lien has been terminated pursuant to
the Security Agreement.
SECTION 13. Counterparts. This Agreement may be executed in any number
of counterparts, all of which shall constitute one and the same instrument, and
any party hereto may execute this Agreement by signing and delivering one or
more counterparts.
[NAME OF LIEN GRANTOR]
By:__________________________________
Name:
Title:
JPMORGAN CHASE BANK,
as Collateral Agent
By:__________________________________
Name:
Title:
[NAME OF ISSUER]
By:__________________________________
Name:
Title:
F-4
EXHIBIT A
[Letterhead of Secured Party]
[Date]
[Name and Address of Issuer]
Attention: ________________________
Re: Notice of Exclusive Control
Ladies and Gentlemen:
As referenced in the Issuer Control Agreement dated as of ______, ____
among [name of Lien Grantor], us and you (a copy of which is attached), we
notify you that we will hereafter exercise exclusive control over [specify
Pledged Uncertificated Securities] registered in the name of [name of Lien
Grantor] (the "SECURITIES"). You are instructed not to accept any directions or
instructions with respect to the Securities from any person other than the
undersigned unless otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [name of Lien Grantor].
Very truly yours,
JPMORGAN CHASE BANK,
as Collateral Agent
By:__________________________________
Title:
cc: [name of Lien Grantor]
F-5
EXHIBIT G
TO SECURITY AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT
SECURITIES ACCOUNT CONTROL AGREEMENT dated as of ______, ____ among
_____________ (the "LIEN GRANTOR"), JPMORGAN CHASE BANK, as Collateral Agent
(the "SECURED PARTY"), and _________ (the "SECURITIES INTERMEDIARY"). All
references herein to the "UCC" refer to the Uniform Commercial Code as in effect
from time to time in the State of New York. Terms defined in the UCC have the
same meanings when used herein.
WITNESSETH:
WHEREAS, the Lien Grantor is the entitlement holder with respect to the
Account (as defined below);
WHEREAS, pursuant to a Guarantee and Security Agreement dated as of
[the first day of the Collateral Period] (as such agreement may be amended
and/or supplemented from time to time, the "SECURITY AGREEMENT"), the Lien
Grantor has granted to the Secured Party a continuing security interest (the
"TRANSACTION LIEN") in all right, title and interest of the Lien Grantor in, to
and under the Account, all financial assets credited thereto and all security
entitlements in respect thereof, whether now owned or existing or hereafter
acquired or arising; and
WHEREAS, the parties hereto are entering into this Agreement in order
to perfect the Transaction Lien on the Account, all financial assets from time
to time credited thereto and all security entitlements in respect thereof;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Establishment of Account. The Securities Intermediary
confirms that:
(i) the Securities Intermediary has established account number
[identify account number] in the name of "[name of Lien Grantor]" (such
account and any successor account, the "ACCOUNT");
(ii) the Account is a "securities account" as defined in
Section 8-501 of the UCC;
G-1
(iii) the Securities Intermediary is acting as a "securities
intermediary" (as defined in Section 8-102 of the UCC) in respect of
the Account;
(iv) the Securities Intermediary shall, subject to the terms of
this Agreement, treat the Lien Grantor as entitled to exercise the
rights that comprise all financial assets from time to time credited to
the Account;
(v) all property delivered to the Securities Intermediary by or
on behalf of the Lien Grantor will be promptly credited to the Account;
and
(vi) all financial assets (except cash) credited to the Account
will be registered in the name of the Securities Intermediary, indorsed
to the Securities Intermediary or in blank or credited to another
securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the
Account be registered in the name of the Lien Grantor, payable to the
order of the Lien Grantor or specially indorsed to the Lien Grantor
unless such financial asset has been further indorsed to the Securities
Intermediary or in blank.
SECTION 2. "Financial Assets" Election. The parties hereto agree that
each item of property (whether investment property, financial asset, security,
instrument, cash or other property) credited to the Account shall be treated as
a "financial asset" within the meaning of Sections 8-102(a)(9) and 8-103 of the
UCC.
SECTION 3. Entitlement Orders. The Securities Intermediary agrees to
comply with any "entitlement order" (as defined in Section 8-102 of the UCC)
originated by the Secured Party and relating to the Account or any financial
asset credited thereto without further consent by the Lien Grantor or any other
person. The Lien Grantor consents to the foregoing agreement by the Securities
Intermediary.
SECTION 4. Waiver of Lien; Waiver of Set-off. The Securities
Intermediary waives any security interest, lien or right to make deductions or
setoffs that it may now have or hereafter acquire in or with respect to the
Account, any financial asset credited thereto or any security entitlement in
respect thereof except with respect to customary fees and commissions. Neither
the financial assets credited to the Account nor the security entitlements in
respect thereof will be subject to deduction, set-off, banker's lien, or any
other right in favor of any person other than the Secured Party (except that the
Securities Intermediary may set off all amounts due to it in respect of its
customary fees and expenses for the routine maintenance and operation of the
Account.
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SECTION 5. Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York. The State of
New York shall be deemed to be the Securities Intermediary's jurisdiction for
purposes of the UCC (including, without limitation, Section 8-110 thereof).
SECTION 6. Conflict with Other Agreements. There is no agreement
(except this Agreement) between the Securities Intermediary and the Lien Grantor
with respect to the Account [except for [identify any existing other agreements]
(the "EXISTING OTHER AGREEMENTS")]. In the event of any conflict between this
Agreement (or any portion hereof) and any other agreement [(including any
Existing Other Agreement)] between the Securities Intermediary and the Lien
Grantor with respect to the Account, whether now existing or hereafter entered
into, the terms of this Agreement shall prevail. [If any Existing Other
Agreement does not specify that it is governed by the laws of the State of New
York, such Existing Other Agreement is hereby amended to specify that it is
governed by the laws of the State of New York.]
SECTION 7. Amendments. No amendment or modification of this Agreement
or waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by all the parties hereto.
SECTION 8. Notice of Adverse Claims. Except for the claims and
interests of the Secured Party and the Lien Grantor, the Securities Intermediary
does not know of any claim to, or interest in, the Account, any financial asset
credited thereto or any security entitlement in respect thereof. If any person
asserts any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, attachment, execution or similar process) against the Account, any
financial asset credited thereto or any security entitlement in respect thereof,
the Securities Intermediary will promptly notify the Secured Party and the Lien
Grantor thereof.
SECTION 9. Maintenance of Account. In addition to, and not in lieu of,
the obligation of the Securities Intermediary to honor entitlement orders as
agreed in Section 3 hereof, the Securities Intermediary agrees to maintain the
Account as follows:
(i) Lien Grantor Entitlement Orders; Notice of Exclusive
Control. So long as the Securities Intermediary has not received a
Notice of Exclusive Control (as defined below), the Securities
Intermediary shall, subject to paragraph (iii) below, comply with
entitlement orders of the Lien Grantor or any duly authorized agent of
the Lien Grantor in respect of the Account and any or all financial
assets credited thereto. After the Securities Intermediary receives a
written notice from the Secured Party that is exercising exclusive
control over the Account (a "NOTICE OF EXCLUSIVE CONTROL"), the
Securities Intermediary will cease complying with entitlement orders of
the Lien Grantor or any of its agents.
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(ii) Voting Rights. Until the Securities Intermediary receives
a Notice of Exclusive Control, the Lien Grantor shall be entitled to
direct the Securities Intermediary with respect to the voting of any
financial assets credited to the Account.
(iii) Permitted Investments. Until the Securities Intermediary
receives a Notice of Exclusive Control, the Lien Grantor shall be
entitled to direct the Securities Intermediary with respect to the
selection of investments to be made and credited to the Account.
(iv) Statements and Confirmations. The Securities Intermediary
will promptly send copies of all statements, confirmations and other
correspondence concerning the Account and/or any financial assets
credited thereto simultaneously to each of the Lien Grantor and the
Secured Party at their respective addresses specified in Section 12
hereof.
(v) Tax Reporting. All items of income, gain, expense and loss
recognized in the Account or in respect of any financial assets
credited thereto shall be reported to the Internal Revenue Service and
all state and local taxing authorities under the name and taxpayer
identification number of the Lien Grantor.
SECTION 10. Representations, Warranties and Covenants of the Securities
Intermediary. The Securities Intermediary makes the following representations,
warranties and covenants:
(i) The Account has been established as set forth in Section 1
above and will be maintained in the manner set forth herein until this
Agreement is terminated. The Securities Intermediary will not change
the name or account number of the Account without the prior written
consent of the Secured Party.
(ii) No financial asset credited to the Account is or will be
registered in the name of the Lien Grantor, payable to the order of the
Lien Grantor, or specially indorsed to the Lien Grantor, unless such
financial asset has been further indorsed by the Lien Grantor to the
Securities Intermediary or in blank.
(iii) This Agreement is a valid and binding agreement of the
Securities Intermediary enforceable in accordance with its terms.
(iv) The Securities Intermediary has not entered into, and
until the termination of this Agreement will not enter into, any
agreement with any person (other than the Secured Party) relating to
the Account and/or any
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financial asset credited thereto pursuant to which it has agreed, or
will agree, to comply with entitlement orders of such person. The
Securities Intermediary has not entered into any other agreement with
the Lien Grantor or the Secured Party purporting to limit or condition
the obligation of the Securities Intermediary to comply with
entitlement orders as agreed in Section 3 hereof.
SECTION 11. Successors. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns.
SECTION 12. Notices. Each notice, request or other communication given
to any party hereunder shall be in writing (which term includes facsimile or
other electronic transmission) and shall be effective (i) when delivered to such
party at its address specified below, (ii) when sent to such party by facsimile
or other electronic transmission, addressed to it at its facsimile number or
electronic address specified below, and such party sends back an electronic
confirmation of receipt or (iii) ten days after being sent to such party by
certified or registered United States mail, addressed to it at its address
specified below, with first class or airmail postage prepaid:
Lien Grantor:
Secured Party:
Securities Intermediary:
Any party may change its address, facsimile number and/or e-mail address for
purposes of this Section by giving notice of such change to the other parties in
the manner specified above.
SECTION 13. Termination. The rights and powers granted herein to the
Secured Party (i) have been granted in order to perfect the Transaction Lien,
(ii) are powers coupled with an interest and (iii) will not be affected by any
bankruptcy of the Lien Grantor or any lapse of time. The obligations of the
Securities Intermediary hereunder shall continue in effect until the Secured
Party has notified the Securities Intermediary in writing that the Transaction
Lien has been terminated pursuant to the terms of the Security Agreement.
[NAME OF LIEN GRANTOR]
By:__________________________________
Name:
Title:
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JPMORGAN CHASE BANK, as Collateral
Agent
By:__________________________________
Name:
Title:
[NAME OF SECURITIES INTERMEDIARY]
By:__________________________________
Name:
Title:
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EXHIBIT A
[Letterhead of Secured Party]
[Date]
[Name and Address of Securities Intermediary]
Attention: ________________________
Re: Notice of Exclusive Control
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement dated as of
______, ____ among [name of Lien Grantor], us and you (a copy of which is
attached), we notify you that we will hereafter exercise exclusive control over
securities account number __________ (the "ACCOUNT"), all financial assets from
time to time credited thereto and all security entitlements in respect thereof.
You are instructed not to accept any directions, instructions or entitlement
orders with respect to the Account or the financial assets credited thereto from
any person other than the undersigned unless otherwise ordered by a court of
competent jurisdiction.
You are instructed to deliver a copy of this notice by facsimile
transmission to [name of Lien Grantor].
Very truly yours,
JPMORGAN CHASE BANK,
as Collateral Agent
By:_________________________________
Title:
cc: [name of Lien Grantor]
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