<PAGE> 1
EXHIBIT 1.3
NORTEL NETWORKS LIMITED AGENCY AGREEMENT
New York, New York
To the Agent or Agents named in
Schedule I hereto
Ladies and Gentlemen:
Nortel Networks Limited, a Canadian corporation (the "Corporation"),
proposes to authorize the firm or firms named in Schedule I hereto
(collectively, the "Agent") to act as its agent to solicit orders for all or
part of its debt securities identified in Schedule I hereto (the "Debt
Securities"), to be issued under an indenture dated as of December 15, 2000 (the
"Indenture"), among the Corporation, Nortel Networks Capital Corporation and
Citibank, N. A., as trustee (the "Trustee"), and/or all or part of its warrants
to purchase debt securities identified in Schedule I hereto (the "Warrants") to
be issued pursuant to the warrant agreement (the "Warrant Agreement") identified
in the Schedule. The Debt Securities and Warrants may be issued separately or
together in units (the "Units"). The Debt Securities and/or Warrants and/or
Units to be so issued as identified in Schedule I hereto are referred to herein
as the "Securities". This Agreement applies only to the sale of the Securities
and not to sales of any other securities or evidences of indebtedness of the
Corporation.
1. REGISTRATION STATEMENT AND COMPLIANCE WITH APPLICABLE LAW
The Corporation represents and warrants to and agrees with the Agent
that:
(a) The registration statement on Form S-3 with respect to the
Securities has been prepared by the Corporation and Nortel Networks
Capital Corporation in conformity with the requirements of the
Securities Act of 1933 (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, has been filed with the Commission and has
become effective. As used in this Agreement: (i) "Registration
Statement" means such registration statement (including all documents
incorporated therein by reference), as amended at the date of this
Agreement; (ii) "Basic Prospectus" means the prospectus (including all
documents incorporated therein by reference) included in the
Registration Statement; and (iii) "Prospectus" means the Basic
Prospectus, together with any amendments or supplements thereto
(including in each case all documents incorporated therein by
reference) specifically related to the Securities, as filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. The
Commission has not issued any order preventing or suspending the use of
the Prospectus and, to the Corporation's knowledge, no proceedings for
such purpose are pending before or threatened by the Commission.
(b) As of the date hereof, when the Prospectus is first filed under the
Act, at the Closing Date (as defined in Section 6 hereof), when any
amendment to the Registration
<PAGE> 2
Statement becomes effective and when any supplement to the Prospectus
is filed with the Commission pursuant to Rule 424(b), the Registration
Statement, as amended as of any such time, and the Prospectus, as
amended or supplemented as of any such time, complies and will comply,
in all material respects, with the provisions of the Act, the Rules and
Regulations, the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules and regulations of the Commission thereunder; and the
Indenture, including any amendments and supplements thereto pursuant to
which the Securities will be issued, complies and will comply with the
requirements of the Trust Indenture Act of 1939 (the "Trust Indenture
Act") and the rules and regulations of the Commission thereunder. The
Registration Statement, as amended as of any such time, does not and
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as
amended or supplemented as of any such time, does not and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Corporation makes no representation or warranty as to: (i) that
part of the Registration Statement that constitutes the Statement of
Eligibility and Qualification under the Trust Indenture Act (Form T-1)
of the Trustee; or (ii) information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Corporation by or
on behalf of the Agent specifically for use in connection with the
preparation thereof.
2. APPOINTMENT OF AGENT
(a) Subject to the terms and conditions set forth herein, the
Corporation hereby appoints the Agent as an agent of the Corporation
for the purpose of soliciting orders to purchase the Securities from
the Corporation by others. The appointment of the Agent hereunder is
not exclusive and the Corporation may from time to time offer
Securities for sale otherwise than through the Agent or appoint
additional agents to solicit offers to purchase the Securities.
(b) The Agent agrees to use its best efforts to solicit the sale of all
or part of the Securities, upon the terms set forth in the Prospectus,
during a period beginning on the date hereof and ending on the date the
Corporation shall specify to the Agent in writing. Orders for the sale
of Securities may be solicited by the Agent as agent for the
Corporation at such time and in such amounts as it deems advisable.
(c) The Corporation agrees to pay the Agent a commission with respect
to each sale of Securities by the Corporation as a result of a
solicitation made by the Agent, in an amount equal to that specified in
Schedule I hereto with respect to the Securities sold by the Agent.
Such commission shall be payable as specified in the agreement as to
procedural details referred to in Section 3(b) hereof.
(d) If the term Agent includes more than one firm, each such Agent
shall act in connection with the Securities individually and not
collectively or jointly. The Corporation reserves the right, in its
sole discretion, to suspend the solicitation of purchases of Securities
commencing at any time for a period of time or permanently and,
2
<PAGE> 3
upon receipt of notice thereof from the Corporation, the Agent shall
forthwith suspend the solicitation of purchases of Securities from the
Corporation until such time as the Corporation has advised the Agent
that such solicitation may be resumed. During the period of time that
this Agreement is suspended the Corporation shall not be required to
deliver any opinions or letters in accordance with Sections 5(i) and
(j); provided, however, that the Agent shall not be required to resume
soliciting offers to purchase Securities until the Corporation has
delivered such opinions or letters as requested by the Agent if any of
the events described in Sections 5(i) and (j) have occurred during the
period of suspension.
(e) Any sale of Securities to the Agent as principal for resale to
others shall be made in accordance with the terms of this Agreement and
a terms agreement (a "Terms Agreement") and, in any such case, any
commission schedule with respect to sales as Agent shall not be
applicable. A Terms Agreement may also specify certain provisions
related to the reoffering of such Securities by such Agent. The Agent's
commitment to purchase Securities pursuant to any Terms Agreement shall
be deemed to have been made on the basis of the representations and
warranties of the Corporation herein contained and shall be subject to
the terms and conditions herein set forth. Each Terms Agreement shall
specify the principal amount or number of Securities to be purchased by
the Agent pursuant thereto, the price or prices to be paid to the
Corporation for such Securities, the initial public offering price or
prices, if any, at which the Securities are proposed to be reoffered,
the time and place of delivery of and payment for such Securities and
any terms of the Securities not already specified in the Indenture or
Warrant Agreement, as the case may be. Such Terms Agreement shall also
specify any requirements for officers' certificates, opinions of
counsel and letters from independent certified accountants of the
Corporation pursuant to Section 6 hereof. Terms Agreements may take the
form of an exchange of any standard form of written telecommunication
between the Agent and the Corporation. Any sale of Securities to the
Agent, as representative of a group of investment banking firms, shall
be made in accordance with the terms of a terms agreement substantially
in the form previously filed as an exhibit to the Registration
Statement.
3. OFFERING PROCEDURE
(a) The Agent shall communicate to the Corporation, orally or in
writing, each reasonable order that it has solicited or received to
purchase Securities on terms previously communicated by the Corporation
to the Agent, and the Corporation shall have the sole right to accept
such orders to purchase Securities and may refuse any proposed purchase
of Securities in whole or in part for any reason. The Agent shall have
the right, in its discretion reasonably exercised, to reject any order
to purchase Securities, as a whole or in part, and any such rejection
shall not be deemed a breach of its agreement contained herein.
(b) On or prior to the first sale of Securities hereunder, the
Corporation and the Agent shall agree in writing as to the procedural
details related to the communication of orders and acceptances and the
issue and delivery of, and payment for, the Securities. The
3
<PAGE> 4
Agent and the Corporation shall each perform their respective duties
and obligations in such agreement, as amended from time to time.
(c) The Agent shall not offer or sell, directly or indirectly, any
Securities in (i) Canada or any province or territory thereof or to, or
for the benefit of, any resident of Canada in contravention of the
securities laws of Canada or any province or territory thereof or
(ii) any jurisdiction in the United States other than to institutional
investors or as otherwise permitted by state securities or blue sky
laws. The Agent shall not distribute any offering material related to
the Securities in Canada. The Agent shall send to any broker-dealer who
purchases any of the Securities from it a notice stating that, by
purchasing such Securities, such broker-dealer represents that it has
not offered or sold and shall not offer or sell, directly or
indirectly, any of such Securities in Canada or to, or for the benefit
of, any resident of Canada in contravention of the securities laws of
Canada or any province or territory thereof and that it shall deliver
to any other broker-dealer to whom it sells any of such Securities a
notice containing substantially the same statement as is contained in
this sentence. Any other broker-dealer offering or selling any
Securities may be required to furnish a certificate stating that it has
complied with the restrictions set forth in this paragraph.
4. MANNER OF SALES
(a) The Agent may effect sales of the Securities directly or by selling
to or through other broker-dealers, and such other broker-dealers may
receive compensation in the form of underwriting commissions or other
compensation from the Agent and commissions from the purchasers of
Securities for whom they may act as agent (which commissions or other
compensation will not exceed those customary in the types of
transactions involved). In connection with the sale of Securities, any
Agent may also receive commissions from the purchasers of Securities
for whom it may act as agent.
(b) The Corporation acknowledges that, subject to Section 3(c), nothing
in this Agreement shall prohibit any Agent from: (i) acting as broker
for the sale of Securities by customers other than the Corporation;
(ii) soliciting the sale of Securities as broker for the seller,
soliciting the sale of Securities as principal and soliciting offers to
buy Securities; (iii) purchasing Securities otherwise than pursuant to
this Agreement; and (iv) offering and selling as principal for its own
account Securities which such Agent has purchased otherwise than
pursuant to this Agreement.
5. OBLIGATIONS OF THE CORPORATION
(a) The Corporation shall furnish promptly to the Agent and to counsel
for the Agent a signed copy of the Registration Statement as originally
filed and a copy of each amendment thereto (in each case together with
all exhibits filed therewith) filed prior to or on the date of this
Agreement or related to or covering the Securities, and a copy of the
Prospectus filed with the Commission.
(b) The Corporation shall deliver promptly to the Agent, without
charge, such number of the following documents as the Agent may
reasonably request: (i) conformed
4
<PAGE> 5
copies of the Registration Statement (excluding exhibits other than the
Indenture, the Warrant Agreement and this Agreement); (ii) the
Prospectus; and (iii) any documents incorporated by reference in the
Prospectus; provided that the Corporation shall be deemed to have
complied with the requirements of clause (iii) of this paragraph with
respect to any document filed electronically with the Commission.
(c) Prior to the termination or temporary suspension of the offering of
the Securities, the Corporation will not file any amendment of the
Registration Statement or supplement (including the Prospectus) to the
Basic Prospectus (other than periodic or current reports filed under
the Exchange Act or an amendment or supplement providing solely for, if
Debt Securities are being issued, a change in the interest rates on the
Securities or a change in the range of maturities of the Securities,
or, if Warrants are being issued, a change in the exercise dates or
prices or the principal amount of the debt securities issuable upon
exercise thereof, or a change in the principal amount or number, as the
case may be, of Securities remaining to be sold or other changes in the
judgment of the Corporation and its counsel not material to the offer
or sale of the Securities) unless the Corporation has furnished to the
Agent a copy for its review prior to filing and will not file any such
proposed amendment or supplement to which the Agent shall reasonably
object; provided that without the consent of the Agent but after
consultation with the Agent, including the furnishing of drafts
thereof, the Corporation may file any such proposed amendment or
supplement which in the opinion of its counsel it is required by law to
file. Subject to the foregoing sentence, the Corporation shall cause
the Prospectus to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations.
(d) The Corporation shall advise the Agent promptly: (i) when the
Prospectus shall have been first filed with the Commission pursuant to
Rule 424(b); (ii) when any post-effective amendment to the Registration
Statement related to or covering the Securities becomes effective;
(iii) of any request by the Commission for an amendment or supplement
(insofar as the amendment or supplement relates to or covers the
Securities) to the Registration Statement, to the Prospectus, to any
document incorporated by reference in any of the foregoing or for any
additional information related to the Registration Statement (insofar
as such information relates to or covers the Securities); (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any order directed to
the Prospectus or any document incorporated therein by reference or the
initiation of any stop order proceeding or of any challenge to the
accuracy or adequacy of any document incorporated by reference in the
Prospectus; and (v) of receipt by the Corporation of any notification
with respect to the suspension of the qualification of the Securities
for sale in any jurisdiction or the initiation of any proceeding for
that purpose; and upon the filing of any supplement to the Prospectus
not reviewed in advance by the Agent pursuant to Section 5(c). If at
any time when a Prospectus related to the Securities is required to be
delivered under the Act, any event occurs as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of material fact or omit to state a material fact necessary
in order to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend or supplement the Prospectus to comply with the
Act, the Rules and Regulations, the Exchange Act or the rules and
regulations of the Commission thereunder, the Corporation shall
promptly
5
<PAGE> 6
prepare and file with the Commission, subject to Section 5(c), an
amendment or supplement that will correct such statement or omission or
an amendment or supplement which will effect such compliance.
(e) If the Commission shall issue a stop order suspending the
effectiveness of the Registration Statement, the Corporation shall make
every reasonable effort to obtain the lifting of that order at the
earliest possible time.
(f) As soon as practicable, or in accordance with Rule 158 of the Rules
and Regulations, the Corporation shall make generally available to its
security holders and to the Agent an earnings statement (which need not
be audited) of the Corporation and its consolidated subsidiaries, that
will satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(g) The Corporation shall make every reasonable effort to arrange for
the qualification of the Securities for sale under the laws of such
jurisdictions (other than jurisdictions outside the United States) as
the Agent may reasonably designate and the Corporation shall pay all
expenses (including reasonable fees and disbursements of counsel) in
connection with such qualifications, to maintain such qualifications in
effect so long as required for the distribution of the Securities and
to arrange for the determination of the legality of the Securities for
purchase by institutional investors; provided, however, that the
Corporation shall not be required to qualify to do business in any
jurisdiction where it is not so qualified at the date of this Agreement
or to take any action that would subject it to general or unlimited
service of process or to the imposition of any taxes based on, or
measured by, all or any part of the income of the Corporation, in any
jurisdiction where it is not at such date so subject.
(h) Each acceptance by the Corporation of an order for the purchase of
Securities shall be deemed to be an affirmation that the
representations and warranties of the Corporation contained in this
Agreement are true and correct at the time of such acceptance, and an
undertaking that such representations and warranties will be true and
correct at the time of delivery to the purchaser or his agent of the
Securities related to such acceptance, as though made at such time
(except that such representations and warranties shall be deemed to
relate to the Registration Statement as then in effect and the
Prospectus then in use).
(i) Each time the Prospectus shall be amended or supplemented (other
than by: (i) an amendment or supplement providing solely for, if Debt
Securities are being issued, a change in the interest rates on the
Securities or a change in the range of maturities of the Securities,
or, if Warrants are being issued, a change in the exercise dates or
prices or the principal amount of the debt securities issuable upon
exercise thereof; (ii) an amendment or supplement as a result solely of
the incorporation by reference of any document that the Corporation has
filed under the Exchange Act; or (iii) a change in the principal amount
or number, as the case may be, of Securities remaining to be sold or
other changes not material in the judgment of the Corporation and its
counsel to the offer or sale of the Securities), the Corporation shall
furnish or cause to be furnished forthwith to the Agent: (x) a
certificate in form satisfactory to the Agent in its reasonable
judgment to
6
<PAGE> 7
the effect that the statements contained in the certificate referred to
in Section 6(i) hereof that was last furnished to the Agent are true
and correct at the time of such amendment or supplement as though made
at and as of such time (except that such statements shall be deemed to
relate to the Registration Statement as then in effect and the
Prospectus then in use) or, in lieu of such certificate, a certificate
of the same tenor as the certificate referred to in Section 6(i) but
modified to relate to the Registration Statement as then in effect and
the Prospectus then in use; and (y) the written opinion of counsel to
the Corporation of the same tenor as the opinion referred to in Section
6(c) but modified to relate to the Prospectus then in use or, in lieu
of such opinion, such counsel shall furnish the Agent with a letter to
the effect that the Agent may rely on such last furnished opinion to
the same extent as though such opinion were dated the date of such
letter authorizing reliance (except that statements in such last
opinion shall be deemed to relate to the Prospectus as in use at the
time of delivery of such letter authorizing reliance).
(j) Each time the Prospectus shall be amended or supplemented to set
forth amended or supplemental financial information, the Corporation
shall cause Deloitte & Touche LLP, or another internationally
recognized firm of chartered accountants or certified public
accountants, forthwith to furnish to the Agent a letter, dated the date
of filing of such amendment or supplement with the Commission, in form
reasonably satisfactory to the Agent, of the same tenor as the letter
referred to in Section 6(g) but modified to relate to the Prospectus
then in use; provided, however, that if the Prospectus is amended or
supplemented solely as a result of the incorporation by reference of
financial information as of and for a fiscal quarter, Deloitte & Touche
LLP, or such other internationally recognized firm of chartered
accountants or certified public accountants, may limit the scope of
such letter to the unaudited financial statements, the related
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and any other information of an accounting,
financial or statistical nature included in such amendment or
supplement, as may be agreed between the Agent and the Corporation.
(k) The Corporation shall reimburse the Agent for reasonable
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) incurred by the Agent in connection with this Agreement and
the sale of Securities hereunder, but only if and to the extent so
provided in Schedule I.
(l) If specified in any Terms Agreement with respect to the purchase of
Securities by the Agent as principal at the request of the Corporation,
the Corporation shall not, except as set forth in such Terms Agreement
or as consented to by the Agent, issue or announce the proposed
issuance of any of its debt securities or warrants to purchase debt
securities, as the case may be, including the Securities, with terms
substantially similar to the Securities being purchased pursuant to
such Terms Agreement prior to the delivery of such Securities.
6. ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE AGENT
(a) The obligations of the Agent under this Agreement shall be subject
to the accuracy in all material respects of the representations and
warranties of the Corporation contained herein, as of the date hereof,
as of the date set forth in Schedule I hereto for the
7
<PAGE> 8
initial closing hereunder (the "Closing Date") and as of the date of
the effectiveness of any amendment to the Registration Statement in so
far as such amendment relates to the Securities, to the performance in
all material respects of its obligations hereunder, and to each of the
following additional terms and conditions.
(b) At or before the Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any order directed to
any document incorporated by reference in the Prospectus shall have
been issued and remain in effect and no proceeding for that purpose
shall be pending or, to the knowledge of the Corporation or the Agent,
threatened by the Commission.
(c) The Corporation shall have furnished to the Agent, on the Closing
Date, the opinion of Nicholas J. DeRoma, Chief Legal Officer of the
Corporation ("Counsel"), dated the Closing Date, to the effect that:
(i) the Corporation has been duly incorporated and is a
validly existing corporation under the laws of Canada, with
corporate power and authority to conduct its business as
currently conducted and described in the Prospectus;
(ii) the execution and delivery of the Indenture have been
duly authorized, the Indenture has been executed and delivered
by the Corporation and is qualified under the Trust Indenture
Act and, assuming the requisite corporate capacity and powers
of, and the due authorization, execution and delivery by
Nortel Networks Capital Corporation and by the Trustee,
constitutes a valid and binding agreement of the Corporation
enforceable in accordance with its terms;
(iii) the issue, execution and delivery of the Securities have
been duly authorized in accordance with the Indenture and the
Securities have been duly executed and delivered by the
Corporation and, assuming authentication by the Trustee,
constitute valid and binding obligations of the Corporation
enforceable in accordance with their terms;
(iv) the execution and delivery of the Warrant Agreement have
been duly authorized, the Warrant Agreement has been executed
and delivered by the Corporation and, assuming the requisite
corporate capacity and powers of, and the due authorization,
execution and delivery by the warrant agent named in the
Warrant Agreement, constitutes a valid and binding agreement
of the Corporation enforceable in accordance with its terms;
(v) the execution and delivery of this Agreement have been
duly authorized and the Agreement has been duly executed and
delivered by the Corporation;
(vi) the issue and sale of the Securities to the Agent
pursuant to this Agreement and the consummation of the other
transactions herein contemplated (x) do not require (except
for the exemption orders of the Director under the Canada
Business Corporations Act pursuant to Section 82(3) of such
Act and of the Commission des valeurs mobilieres du Quebec
pursuant to Section 12 of the Securities Act (Quebec), which
orders were granted, and the sending of the
8
<PAGE> 9
Prospectus to the Director under the Canada Business
Corporations Act pursuant to Section 193 thereunder, which was
effected) the consent, approval or authorization of or filing
or registration with, any governmental body or regulatory
authority in Canada, and (y) do not conflict with or
constitute a breach of or default under the constating
documents or bylaws of the Corporation;
(vii) the Registration Statement is effective under the Act
and, to the best of Counsel's knowledge, no stop order with
respect thereto has been issued, or proceeding for that
purpose has been instituted or threatened, by the Commission;
(viii) to the best of Counsel's knowledge, no order directed
to any document incorporated by reference in the Prospectus
has been issued and remains in effect, or is threatened to be
issued, by the Commission; and
(ix) to the best of Counsel's knowledge, other than as
disclosed in the Prospectus, neither the Corporation nor any
of its subsidiaries is involved in any litigation, arbitration
or legal proceedings which are material to the Corporation and
its subsidiaries taken as a whole nor is there any such
litigation, arbitration or legal proceedings pending or
threatened.
(d) The opinions expressed above will be subject to those assumptions
and qualifications reasonably satisfactory to such Counsel, including
without limitation, with respect to the opinions expressed in Sections
6(c)(ii), (iii) and (iv) above that:
(v) enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other laws
affecting the enforcement of creditors' rights generally;
(w) equitable remedies, including the remedies of specific
performance and injunction, may only be granted at the
discretion of a court of competent jurisdiction;
(x) the Currency Act (Canada) precludes the courts in Canada
from awarding a judgment for an amount expressed in a currency
other than Canadian dollars;
(y) any requirement that interest, as defined in Section 347
of the Criminal Code (Canada), be paid by the Corporation at
an effective annual rate in excess of 60 percent is not
enforceable and such requirement may not be severable from the
remainder of the document in which it is contained; and
(z) no opinion is expressed with respect to the enforceability
of any provisions relating to indemnity and contribution.
(e) Counsel, in rendering his opinion, may rely as to matters of fact,
to the extent he deems proper, on certificates of responsible officers
of the Corporation and its subsidiaries or public officials. He may
also rely upon legal opinions provided to him. In addition, he may rely
upon determinations of responsible officers of the Corporation with
respect to the verification, characterization and quantification of
various assets and
9
<PAGE> 10
liabilities. Furthermore, he may assume without independent
investigation: (i) the authenticity of any document or instrument
submitted to him as an original, the conformity to the authentic
original of any document or instrument submitted to him as a certified,
conformed or photographic copy and the genuineness of all signatures on
such originals or copies; and (ii) with respect to parties to an
agreement, other than the Corporation, the due execution and delivery,
pursuant to due authorization, of such agreement, and that such
agreement constitutes a legal, valid and binding agreement of all such
parties.
(f) In addition, Counsel shall advise by letter, based on his
participation in the preparation of the Registration Statement and
Prospectus (but without independent check or verification of the
contents thereof except as specified therein), that:
(i) the Registration Statement, as of its effective date, and
the Prospectus, as of its date and the date of the supplement
to the Basic Prospectus (in each case, except for the
documents incorporated by reference therein, the financial
statements and other financial and statistical data included
or incorporated by reference therein and the information
included therein under the caption "Plan of Distribution" or
"Underwriting," as to which Counsel need express no view),
appeared on their face to be appropriately responsive in all
material respects to the requirements of the Act and the Rules
and Regulations; and
(ii) no information has come to Counsel's attention that
causes him to believe that the Registration Statement (except
the financial statements and other financial and statistical
data included or incorporated by reference therein and the
information included therein under the caption "Plan of
Distribution" or "Underwriting," as to which Counsel need
express no view), at the time it became effective or on the
date of such opinion, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus (except as aforesaid)
contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) The Corporation shall have furnished to the Agent, on the Closing
Date, a letter of Deloitte & Touche LLP or another internationally
recognized firm of chartered accountants or certified public
accountants, addressed to the Agent and dated the Closing Date, of the
type described in the Canadian Institute of Chartered Accountants
Handbook, Section 7100, or in the American Institute of Certified
Public Accountants' Statement on Auditing Standards No. 72 and covering
such specified financial statement items as may be agreed between the
Corporation and the Agent.
(h) The Agent shall have received, on the Closing Date, from Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Agent, such opinion or
opinions, dated the Closing Date, with respect to the issuance and sale
of the Securities, the Indenture, the Warrant Agreement, the
Registration Statement, the Prospectus and other related matters as the
Agent may reasonably require, and the Corporation shall have furnished
to such
10
<PAGE> 11
counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(i) The Corporation shall have furnished to the Agent, on the Closing
Date, a certificate of the Corporation, signed by any two of the
President and Chief Executive Officer, the Chief Operating Officer, the
Chief Financial Officer, or any one of the aforesaid officers together
with any one of the Corporate Secretary, the Controller, the Treasurer,
any Assistant Controller, any Assistant Secretary or any Assistant
Treasurer, dated the Closing Date, to the effect that the signers of
such certificate have examined the Registration Statement, the
Prospectus and this Agreement and that:
(i) The representations and warranties of the Corporation in
this Agreement are true and correct in all material respects
on and as of the Closing Date with the same effect as if made
on the Closing Date and the Corporation has complied in all
material respects with all the agreements and satisfied in all
material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and remains in effect
and no proceedings for that purpose are pending or, to the
knowledge of each such person, threatened by the Commission,
and no order directed to any document incorporated by
reference in the Prospectus has been issued and remains in
effect or, to the knowledge of each such person, is threatened
to be issued by the Commission; and
(iii) Since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse
change in the condition (financial or other), earnings,
business or properties of the Corporation and its
subsidiaries, taken as a whole, except as set forth in or
contemplated in the Prospectus.
7. INDEMNIFICATION
(a) The Corporation shall indemnify and hold harmless the Agent and
each person who controls the Agent within the meaning of either the Act
or the Exchange Act from and against any loss, claim, damage or
liability, joint or several, and any action in respect thereof, to
which they or any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus consisting of the
Basic Prospectus together with the preliminary prospectus supplement
thereto related to the offering of the Securities that is used prior to
the filing of the Prospectus (the "Preliminary Prospectus") or the
Prospectus or arises out of, or is based upon, the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
Corporation shall reimburse each indemnified party for any reasonable
legal and other expenses reasonably incurred by such indemnified party
in investigating
11
<PAGE> 12
or defending against any such loss, claim, damage, liability or action;
provided that the Corporation shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission: (i) made in the Registration
Statement, the Preliminary Prospectus or the Prospectus in reliance
upon and in conformity with written information furnished to the
Corporation by or on behalf of the Agent for use in connection with the
preparation thereof; or (ii) contained in that part of the Registration
Statement constituting the Statement of Eligibility and Qualification
under the Trust Indenture Act (Form T-1) of the Trustee; provided
further, that the Corporation shall not be liable for the amount of any
settlement of any claim made without its consent, which consent will
not be unreasonably withheld; and provided further, that as to any
Preliminary Prospectus, this indemnity shall not inure to the benefit
of the Agent (or any person controlling such Agent) on account of any
loss, claim, damage, liability or action arising from the sale of
Securities to any person by the Agent if the Agent failed to send or
give a copy of the Prospectus, as the same may be amended or
supplemented (for purposes of this paragraph, the "Final Prospectus"),
to that person within the time required by the Act, and the untrue
statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact in such Preliminary
Prospectus was corrected in the Final Prospectus, unless such failure
resulted from non-compliance by the Corporation with Section 5(b). For
purposes of the final proviso to the immediately preceding sentence,
the term Final Prospectus shall not be deemed to include the documents
incorporated therein by reference, and the Agent shall not be obligated
to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the Final
Prospectus to any person other than a person to whom such Agent has
delivered such incorporated documents in response to a written or oral
request therefor. The foregoing indemnity is in addition to and not in
limitation or duplication of any liability or right that the
Corporation may otherwise have to the Agent or any person who controls
the Agent.
(b) The Agent shall indemnify and hold harmless the Corporation, each
of its directors, each of its officers who signed the Registration
Statement and any person who controls the Corporation within the
meaning of the Act or the Exchange Act, to the same extent (including,
without limitation, the reimbursement of expenses) as the foregoing
indemnity from the Corporation to the Agent as set forth in the above
paragraph, but only with reference to written information furnished to
the Corporation by or on behalf of the Agent for use in connection with
the preparation of the documents referred to in the foregoing
indemnity. The foregoing indemnity is in addition to and not in
limitation or duplication of any liability that the Agent may otherwise
have to the Corporation or any of its directors, officers or
controlling persons.
(c) Promptly after receipt by an indemnified party under Sections 7(a)
or (b) of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under either such paragraph, notify the
indemnifying party in writing of the claim or the commencement of that
action, provided that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an
indemnified party otherwise than under this Section 7. If any action
shall be brought against an indemnified party, and it shall notify
12
<PAGE> 13
the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein, and, to the extent that
it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there are likely to be substantial legal defenses
available to it and the other indemnified parties that are different
from and additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and otherwise to participate in
the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the
indemnifying party shall not be liable to such indemnified party under
this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless:
(i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the immediately preceding sentence (it being understood,
however, that the indemnifying party shall bear only the reasonable
fees and disbursements of separate counsel and shall not be liable for
the expenses of more than one separate counsel, approved by the Agent
in the case of Section 7(a), representing the indemnified parties under
such paragraph, who are parties to such action); (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action; or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be
only in respect of the counsel referred to in such clause (i) or (iii).
(d) To provide for just and equitable contribution in circumstances in
which the indemnification provided for in Sections 7(a) or (b) is due
in accordance with its terms but is for any reason other than as
specified in Section 7(a) held by a court to be unavailable on the
grounds of policy or otherwise, the Corporation and the Agent shall
contribute to the aggregate losses, claims, damages and liabilities
(including reasonable legal or other expenses reasonably incurred in
connection with investigating or defending same) to which the
Corporation and the Agent may be subject in such proportion so that the
Agent is responsible for that portion represented by the percentage
that the sum of the aggregate commissions received by the Agent
pursuant to Section 2(c) bears to the aggregate sales prices received
by the Corporation in respect of the Securities sold hereunder and
under all Terms Agreements and the Corporation is responsible for the
balance; provided, however, that: (i) in no case shall the Agent be
responsible for any amount in excess of the sales commissions or other
compensation applicable to the Securities purchased through or by the
Agent; and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person who
controls the Agent within the meaning of the Act or the Exchange Act
shall without duplication have the same rights to
13
<PAGE> 14
contribution as the Agent, and each person who controls the Corporation
within the meaning of the Act or the Exchange Act, each officer of the
Corporation who shall have signed the Registration Statement and each
director of the Corporation shall have the same rights to contribution
as the Corporation, subject in each case to clauses (i) and (ii) of
this paragraph. Any party entitled to contribution shall, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have otherwise than under this
paragraph.
8. DUTIES OF AGENT
In soliciting purchases of the Securities, the Agent is acting solely
as agent for the Corporation, and not as principal. The Agent will make
reasonable efforts to assist the Corporation in obtaining performance by each
purchaser whose offer to purchase the Securities has been accepted by the
Corporation, but the Agent shall not have any liability to the Corporation in
the event such purchase is delayed or not consummated for any reason whatsoever.
Under no circumstances shall the Agent be obligated to purchase any of the
Securities for its own account, except as otherwise provided in Section 2(e).
9. TERMINATION
This Agreement may be terminated at any time by the Agent or by the
Corporation, by written notice to the other without liability of any party to
any other party except as provided in Sections 7 and 10 hereof and except that,
if such termination shall be the act of the Corporation and at the time of such
termination an offer for the purchase of Securities solicited by the Agent shall
have been accepted by the Corporation but the time of delivery to the purchaser
of the Securities related thereto shall not yet have occurred, the Corporation
shall be obligated to pay the Agent the sales commissions in respect of such
purchase. Any Terms Agreement may be terminated only in accordance with the
terms thereof.
10. SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION
The respective agreements, representations, warranties, indemnities and
other statements of the Corporation or its officers and of the Agent set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Agent or the
Corporation or any of the officers, directors or controlling persons referred to
in Section 7 hereof, and will survive delivery of and payment for the Securities
for a period of two years after such delivery.
11. NOTICES
All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Agent will be mailed, delivered or sent by
electronic transfer, including facsimile, and confirmed to the Agent at the
address specified in Schedule I hereto, or, if sent to the Corporation, will be
mailed, delivered or sent by electronic transfer, including facsimile, and
14
<PAGE> 15
confirmed to it at Nortel Networks Limited, 8200 Dixie Road, Suite 100,
Brampton, Ontario, Canada, L6T 5P6, Attention: Corporate Secretary (facsimile
number (905) 863-8423).
12. SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers and directors
and controlling persons referred to in Section 7 hereof, and no other person
will have any right or obligation hereunder.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
14. APPLICABLE LAW
This Agreement will be governed by and construed in accordance with the
laws of the Province of Ontario, Canada except that Sections 1, 5(c), (d), (e),
(f) and (g) and 7 will be governed by and construed in accordance with the laws
of the State of New York, United States.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Corporation and the Agent.
Very truly yours,
NORTEL NETWORKS LIMITED
By:
----------------------------------------
Title:
By:
----------------------------------------
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date
specified in Schedule I hereto.
[Name(s) of Agent(s)]
By:
--------------------------------------------------
Title:
15
<PAGE> 16
SCHEDULE I
Agency Agreement dated as of ___________ __, 20__.
Registration Statement No. 333-____________.
Agent:
Address of Agent for purposes of notices:
Facsimile Number of Agent for Notices:
Description of Securities Subject to Agency Agreement:
[Description of Debt Securities:
Title:
Principal amount (including currency or composite currency):
Sinking fund provisions:
Redemption provisions:
Other provisions:]
[Description of Warrants:
Title of Warrants:
Number:
Warrant Agent:
Warrant Agreement:
Warrant exercise price and currency:
Principal amount (including currency or composite currency) of debt securities
issuable upon exercise of one Warrant:
Date after which Warrants may be exercised:
Expiration date:
Other provisions:]
[Description of Units
Schedule I-1
<PAGE> 17
Detachable date (if applicable):
Other provisions:]
[Description of debt securities issuable upon exercise of one Warrant:
Title:
Principal amount (including currency or composite currency):
Sinking fund provisions:
Redemption provisions:
Other provisions:]
Expenses of Agent to be paid by the Corporation:
Closing Date (including time) and location:
Commissions to Agent
[With respect to Debt Securities:
<TABLE>
<CAPTION>
% of principal amount of
Debt Securities sold to
Maturity purchasers through the Agent
-------- ----------------------------
<S> <C>
[with respect to :]
[with respect to Units:]
</TABLE>
Schedule I-2
<PAGE> 18
ANNEX I
NORTEL NETWORKS LIMITED
[Title of Security or Securities]
TERMS AGREEMENT
-------- --, ----
[Name(s) and address(es)
of Agent(s) purchasing Securities
as principal(s)]
Ladies and Gentlemen:
NORTEL NETWORKS LIMITED (the "Corporation") proposes, subject to the
terms and conditions stated herein and in the Agency Agreement, dated _______
__, ___, (the "Agency Agreement") between the Corporation and [Name(s) of
Agent(s)] (the "Agent"), to issue and sell to _______ the securities specified
in Schedule A hereto (the "Purchased Securities"). Each of the provisions of the
Agency Agreement not specifically related to the solicitation by the Agent, as
agent of the Corporation, of offers to purchase Securities is incorporated
herein by reference in its entirety, and shall be deemed to be part of this
Terms Agreement to the same extent as if such provisions had been set forth in
full herein. Each of the representations and warranties set forth therein shall
be deemed to have been made at and as of the date of this Terms Agreement,
except that each representation and warranty in Section 1 of the Agency
Agreement which made reference to the Prospectus shall be deemed to be a
representation and warranty as of the date of the Agency Agreement in relation
to the Prospectus (as therein defined), and also a representation and warranty
as of the date of this Terms Agreement in relation to the Prospectus as amended
and supplemented to relate to the Purchased Securities.
A supplement to the Prospectus related to the Purchased Securities, in
the form heretofore delivered to you, is now proposed to be filed with the
United States Securities and Exchange Commission (the "Commission").
Subject to the terms and conditions set forth herein and in the Agency
Agreement incorporated herein by reference, the Corporation agrees to issue and
sell to ________, and _________ agree[s] to purchase from the Corporation, the
Purchased Securities, at the time and date (the "Delivery Date") and place, in
the [principal amount] [number] and at the purchase price set forth in Schedule
A hereto.
The obligations of __________ hereunder may be terminated by
__________, in its absolute discretion, by notice given to and received by the
Corporation prior to the delivery of and payment for the Purchased Securities,
if, during the period beginning on the date hereof to and including the Delivery
Date, (a) trading in securities generally on the New York Stock Exchange, Inc.
shall have been suspended or limited or minimum prices shall have been
established on such Exchange by order of the Commission, (b) a banking
moratorium is declared by either United States federal or New York state
authorities, or (c) there shall have occurred any
<PAGE> 19
outbreak or material escalation of hostilities the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of ____________, impracticable to market the Purchased Securities.
If the foregoing is in accordance with your understanding, please sign
and return to us at ___________ a counterpart hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including those provisions of
the Agency Agreement incorporated herein by reference, shall constitute a
binding agreement between __________ and the Corporation.
NORTEL NETWORKS LIMITED
By:
-----------------------------------------
Title:
By:
-----------------------------------------
Title:
Accepted:
[Name(s) of Agent(s)]
By:
---------------------------------
Title:
Annex I-2
<PAGE> 20
Schedule A to Annex I
Description of Purchased Securities
[Description of Debt Securities:
Title
Principal amount (including currency or composite currency):
Indenture: Indenture, dated as of December 15, 2000, among the Corporation as
Issuer and Guarantor, Nortel Networks Capital Corporation, as Issuer, and
Citibank, N. A., as Trustee.
If Debt Securities are not to be purchased with Warrants as units, purchase
price (include accrued interest or amortization, if any), public offering price,
if any, and underwriting discount:
Sinking fund provisions:
Redemption provisions:
Closing Location:
Other provisions:]
[Description of Warrants:
Title of Warrants:
Number:
If Warrants are not to be purchased with Debt Securities as units, purchase
price, currency, public offering price, if any, and underwriting discount:
Warrant Agent:
Warrant Agreement:
Warrant exercise price and currency:
Principal amount (including currency or composite currency) of debt securities
issuable upon exercise of one Warrant:
Date after which Warrants may be exercised:
Expiration date:
Closing Location:
Other provisions:]
Annex I-3
<PAGE> 21
[Description of Units:
Purchase price and currency:
Public offering price, if any, and underwriting commission:
Detachable date (if applicable):
Closing Location:
Other provisions:]
[Description of debt securities issuable upon exercise of Warrants:
Title:
Principal amount (including currency or composite currency):
Sinking fund provisions:
Redemption provisions:
Other provisions:]
Delivery Date and time:
Closing location:
Documents to be delivered:
The following documents referred to in the Agency Agreement shall be delivered
with appropriate modification:
(1) The opinion of Nicholas J. DeRoma referred to in Section 6(c).
(2) The accountants' letter referred to in Section 6(g).
(3) The officers' certificate referred to in Section 6(i).
Whether similar securities may not be sold pursuant to Section 5(l) of the
Agency Agreement from the date hereof to the Delivery Date and exceptions
thereto:
Other provisions:
Annex I-4
